LATEEF BROTHERS REAL ESTATES Vs. VARUN CONSTRUCTIONS

JUDGEMENT

(1.) THIS application has been taken out under sub-section (6) of Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an Arbitrator for resolution of the disputes between the applicant and the respondent arising out of the Development Agreement-cum-General Power of Attorney dated 3.2.2001.

(2.) (a) The applicant No.1 is a partnership firm and applicants 2 and 3 are managing partners of the partnership firm. The partnership firm owns property bearing H.No.6-3-1099/1/1/, 2 & 2/3 comprising 5075 square yards forming Survey No.23 (part) and 20/4 (part) corresponding to TS No.20/ 2 (part) and 20/1/A (part) situated at Somajiguda, Hyderabad. The partnership firm entered into Development Agreement dated 7.10.2000 with Varun Constructions-1st respondent. Thereafter, the partnership firm and the 1st respondent entered into Development Agreement-cum-General Power of Attorney dated 3.2.2001 with 5th respondent for development on the property. As per the Development Agreement-cum-General Power of Attorney dated 3.2.2001, the constructed built up area is agreed to be shared as follows: (a) Applicant No.1 37% (b) Respondent No.1 13% (c) Respondent No.5 50% The applicants 2 and 3 appointed the 2nd respondent who is the managing partner of 1st respondent firm and Sri V. Ananda Prasad, Managing Director of the 5th respondent firm as their General Power of Attorney. Accordingly, the 2nd respondent represented the applicants in receiving Flat Nos.201, 202, 203, 204, 205, 206, 207, 208, 209,210,211,303,304, 305, 306, 307, 308, 309, 310, 311 and also 56% of Flat No.509 towards his 37% share in the constructed area. The 2nd applicant visited Hyderabad in September 2009 and went to the schedule property along with an engineer and found the actual constructed area on the property was more and the applicants should get more area towards 37% share than the area of the flats allotted to them under the revised sharing agreement. 2. (b) The applicants issued a legal notice dated 27.11.2009 to the respondents calling upon them, particularly 5th respondent, to furnish the particulars as to total constructed area for the stilt, cellar and upper floors including the penthouses, total built up area allotted to the 1st respondent and 5th respondent respectively. Respondents 1 to 4 and 5 got issued reply notices dated 15.12.2009 and 18.12.2009 respectively. Respondents 1 to 4 in their reply notice took the plea that the applicants, after taking into account the construction of two penthouses on the terrace being Flat Nos.601 and 602 had agreed under the revised sharing agreement dated 29.6.2005 to take flats in the 2nd floor, Flat Nos.303 and 311 on the third floor in exchange to their original share in third and fifth floors and 67% in Flat No.309 after deduction of the expenditure relating to the two penthouses. The 5th respondent stated in its reply notice dated 18.12.2009 that the 1st respondent has been in custody of area admeasuring 3169 Sft. over and above the area fallen to its share. According to the applicants, the development agreement dated 7.10.2000 and Development Agreement-cum-General Power of Attorney dated 3.2.2001 crystallize the right in respect of areas due to them under the said Development agreements and in no way transfer the title from the applicants firm or their nominees in the absence of registered sale deeds. 2. (c)After receiving the reply notice from respondents 1 to 4 and 5 respectively, the applicant got issued rejoinder notice dated 3.12.2009 to respondents 1 to 4 calling upon them to hand over area of 2444 square feet as per the Development Agreement and to account for the rent received by them. Respondents 1 to 4 issued a reply dated 7.1.2010 disputing the claim of the applicants. The applicants got issued another notice dated 28.1.2010 invoking the arbitration clause in the Development Agreement-cum-General Power of Attorney dated 3.2.2001 by nominating Hon'ble Sri Justice A. Gopala Rao, a retired Judge of the High Court as Sole Arbitrator for resolution of the disputes. Respondents 1 to 4 issued reply dated 10.2.2010 stating that there is no dispute which is required to be referred for arbitration. Hence, this application seeking the prayer stated supra.

(3.) THE applicants filed reply affidavit. It is stated in the reply affidavit that the agreement of sharing of flats will disclose the area of each flat and hence the said agreement cannot be said to be conclusive proof of the constructed area delivered to each party. It was the 2nd respondent who was dealing with the 5th respondent on behalf of the applicants as well as on behalf of the 1st respondent and made the applicants to believe that flats were allotted to them towards their 37% share in the constructed area. THE earlier arbitration was not in respect of sharing of flats inter se in between the applicants and the 1st respondent. THE reference under earlier arbitration was in respect of disputes between Bhavya Constructions (P) Ltd. on one hand and contesting respondents herein on the other hand and the applicants had no knowledge about the same. Inter se disputes with regard to sharing of flats in between the applicants and the contesting respondents were neither resolved by the Arbitrator nor the same were the subject-matter before the Arbitrator. THE 2nd respondent was handling the affairs of the applicants prior to cancellation of General Power of Attorney and all facts came to light only after cancelling the General Power of Attorney and as disputes with regard to sharing arose subsequent thereto, the present application is maintainable.