DESAI HOMES Vs. K.M.JACOB

JUDGEMENT

(1.) The petitioner, a builder and developer partnership firm, entered into an agreement dtd. 2/1/2002 with the respondent for the construction of a multi-storied building consisting of commercial rooms and office rooms in the 30 cents of land belonging to the respondent. As per clause 19 of the said agreement, dispute regarding the interpretation of any clause of that agreement or the part to be performed by the parties to the agreement shall be referred for arbitration by two arbitrators among whom one has to be appointed by the petitioner and the other by the respondent. Alleging non-co-operation on the part of the respondent, for the appointment of arbitrators as above for the resolution of a dispute relating to the alleged failure of the respondent to execute sale deed in accordance with the terms of that agreement, the petitioner has filed this Arbitration Request under Sec. 11(5) of the Arbitration and Conciliation Act, 1996.

(2.) As per the terms and conditions of Annexure-I agreement executed by the petitioner and the respondent on 2/1/2002, the respondent is said to have received an amount of Rs.15,00,000.00 from the petitioner towards compensation for the demolition of the building which existed in the 30 cents of land belonging to him. The aforesaid agreement further provides that the petitioner is entitled to 55% of the undivided share in the property and built-up area, and the remaining 45% shall be retained by the respondent. As regards the sale of the portions of the building so constructed in the said property, the agreement stipulated that all amounts due as value of undivided share in the land to the extent of 55% of the total area, and construction made to the extent of 55% of the super built up area, shall be collected exclusively by the petitioner from the purchasers concerned, and that the respondent has to execute the necessary sale deeds in that regard as and when requested by the petitioner. After the completion of the construction, at the request of the petitioner, the respondent is said to have executed sale deed in favour of persons who entered into agreement with the petitioner for the purchase of shops and office spaces to the extent of 58% (8668 sq.ft) out of the 55% of super built up area set apart to the petitioner as per the terms of the agreement. The remaining 42% (6264 sq.ft) out of the super built up area allotted to the petitioner, is said to be remaining with the petitioner as unsold. According to the petitioner, many prospective purchasers showed interest in respect of shop No.18 (610 sq.ft) which formed part of the building portion retained by the petitioner, and that after the receipt of full consideration, the petitioner requested the respondent to execute sale deed pertaining to that portion of the built up area and undivided share in the land in favour of such prospective purchasers, but the respondent evaded from the execution of sale deed saying one reason or other. Since the above refusal on the part of the respondent was against the terms of Annexure-I agreement, the petitioner issued a lawyer's notice calling upon the respondent to execute the sale deed, as requested. To the above notice, the respondent is said to have issued a reply notice contending false and untenable grounds. Thereupon the petitioner is said to have issued notice to the respondent under Sec. 11 of the Arbitration and Conciliation Act, 1996 appointing an Advocate as Arbitrator on its part to resolve the dispute with the respondent. To the above notice, the respondent is said to have sent a reply raising false and untenable contentions. It is in the above circumstances that the petitioner has approached this Court for the appointment of arbitrator.

(3.) The respondent appeared through his counsel and filed counter affidavit contending that the matters relating to execution of sale deed in accordance with the terms of agreement, cannot be referred for arbitration since clause No.22 of Annexure I agreement provided for the institution of a suit for specific performance in the event of refusal of the respondent to execute the sale deeds as requested by the petitioner. It is the further contention of the respondent that a suit for specific performance for the execution of sale deed in respect of those portions of the building and undivided share of land held by the petitioner, is hopelessly barred by limitation. According to the respondent, the attempt of the petitioner is to try whether the above bar of limitation could be circumvented by opting for the appointment of an arbitrator.