PADMA MAHADEV Vs. SIERRA CONSTRUCTIONS PRIVATE LIMITED

JUDGEMENT

(1.) The appellants who are the owners of the schedule property are the respondents before the learned Judge of the Commercial Court, Bengaluru Urban District in Com.A.A. No.45/2020. The impugned order dated 19th November 2020 has been passed on an application made by the respondent- developer before the Commercial Court under Rules 1 and 2, Order XXXIX of the Code of Civil Procedure, 1908 (for short "the said Code"). The application was made in an application filed under section 9 of the Arbitration and Conciliation Act, 1996 (for short, 'the Arbitration Act').

(2.) With a view to appreciate the submissions made across the Bar, a brief reference to the facts will be necessary. The appellants are the owners of the schedule property and the respondent is the developer. The property which is the subject matter of the application filed by the respondent-developer under Section 9 of the Arbitration Act, is the land bearing No.19/1, new No.165 and 165/1, R.V. Road, Visweswarapuram, Bengaluru- 560004. The area of the said property (for short, 'the schedule property') is 9533 square feet (out of 10725 square feet). On 14th December, 2007, a Joint Development Agreement (for short, 'the JDA') was entered into by and between the appellants and the respondent. As per the terms of the said JDA, the respondent had agreed to construct a commercial complex or a Hotel complex structure on the schedule property. According to the case of the respondent, it has spent a sum of Rs.16,00,00,000/- (rupees sixteen crores) on the construction of a building on the schedule property. According to the case of the respondent, a commercial complex was required to be constructed by it within a period of thirty six months as stipulated in the JDA. As per the JDA, time of eighteen months was granted to the respondent to complete the construction work from the date of issuance of commencement certificate. By a memorandum of understanding dated 12th November, 2009 executed by and between the appellants and the respondent, it was agreed that the construction shall be completed within 18 months from first January, 2010 with a grace period of four months. On 27th June 2013, another memorandum of understanding was entered into by and between the parties under which, the respondent had agreed to complete the construction work by 30th June 2015. On 16th July 2016, the appellants issued a legal notice, terminating the JDA dated 14th December 2007 and two subsequent memorandum of understanding dated 12th November 2009 and 27th June 2013. The notice was replied by the respondent. Thereafter, an application under section 9 of the Arbitration Act, bearing A.A. No.339 of 2016 was filed by the respondent before the City Civil Court at Bengaluru. A prayer was made in the said application seeking an order of injunction restraining the appellants from interfering with the respondent's share in the schedule property and restraining the appellants from creating third party interests over the schedule property. By the Judgment and order dated 24th March 2017, the said application was rejected.

(3.) On the basis of a petition filed by the respondent under section 11 of the Arbitration Act, by the order dated 25th July 2018 passed by this Court in CMP No.208/2017, the dispute was referred to sole Arbitrator for adjudication which came to be registered as AC. No.131/2018. The claim made by the respondent was for passing of an award against the appellants directing them to convey 50% share of the respondent in the undivided area along with possession of 50% share in the super built up area and covered/open car parking area in the commercial complex constructed on the schedule property and to direct the appellants to pay a sum of Rs.21 crores towards cost of construction, damages for unlawful termination of the JDA and compensatory damages. The present appellants made a counter claim in a sum of Rs.32,20,000/-.