VISHWASMULKI Vs. M/S. UPAKARMA INDUSTRUCTURE PRIVETE LIMITED

JUDGEMENT

(1.) This Arbitration Application is filed under Sec. 11(c) of the Arbitration and Conciliation Act, 1996.

(2.) The case of the applicants is that they are self-employed persons and investors in the Respondent Company and the Respondent Company had approached the applicants for investing in their proposed Construction Project in respect of their house admeasuring 316.00 Sq. Yards bearing Municipal No.1/1/385/40, situated at Gandhinagar, Hyderabad, Telangana State. Accordingly, agreements were entered into between the applicants and the Respondent Company vide MOU dtd. 25/1/2012 and MOU dtd. 22/3/2013, as per which the applicants have invested an amount of Rs.1,00,00,000.00 (Rupees one Crore) jointly as 'Project Investor' and Rs.10,00,000.00 (Rupees ten lakhs only) by Applicant No.2 as 'Investor', respectively. It is also proposed to the applicants that the Second Floor comprising of 2,250 Sq. feet in the proposed properties as security for the investment of Rs.1.00 Crore soon after completion of construction of the Second Floor. However, even by the time of filing the present Arbitration Application, the construction has not started and the applicants made several demands to repay the amounts, but the respondent did not repay the said amounts to the applicants. Therefore, the applicants issued Notice dtd. 17/10/2015 for repayment of the amounts with assured interest indicating that, in default of repayment of the amounts, Arbitration proceedings will be initiated. Thereafter, a letter dtd. 17/12/2015 was issued to Sri Ranji Bhandari, since he was sole Arbitrator in terms of Clause No.1 in mutual responsibilities of the terms of MOU's as the applicants and Respondent Company have agreed to refer all disputes, differences, claims etc. for arbitration to a sole Arbitrator i.e. Sri Ranji Bhandari. However, Sri Ranji Bhandari vide letter dtd. 24/12/2015 addressed to the applicants stated that due to old age and ill-health, he could not take up the arbitration and suggested for appointment of a fresh Arbitrator. However, as the respondent has not repaid the amounts, the applicants issued Notice dtd. 1/9/2016 invoking Arbitration clause and suggesting the names of three persons as Arbitrators. The same is replied by the respondent vide Reply Notice dtd. 2/11/2016 disputing the claim of the applicants on merits and refusing to appoint any Arbitrator. It is also stated that since the Respondent Company is indebted to various people in the market and their business is in financial losses and the respondents are on the verge of secreting away their assets in order to avoid litigations, the applicants filed C.O.P.No.166 of 2017 on the file of XXIV Additional Chief Judge, City Civil Court, Hyderabad, for interim measures of protecting their rights and monies and the said Court passed order on 23/6/2017 directing the Respondent Company to furnish security for the claimed sum within 72 hours, failing which the schedule property would be attached. Though the order of attachment was served on the Respondent Company, the Respondent Company has not taken any steps for furnishing security within 72 hours nor appeared before the Court. As such, the Bailiff of the said Court, as per the directions of the Warrant, proceeded for attachment after completion of 72 hours and attached the property as per the procedure. In view of the same, the applicants have no other go, except to file the present application under Sec. 11(c) of the Arbitration and Conciliation Act.

(3.) Counter affidavit is filed by the Respondent Company stating that the claim of the applicants is hopelessly barred by limitation, inasmuch as the applicants failed to take steps for appointment of an Arbitrator seeking resolution of various disputes within three years from 25/1/2012 i.e. the date of execution of the first MOU. It is also stated that the applicants cannot maintain a single proceeding in respect of two separate MOUs. That as per the MOUs, amount would be reimbursed only on completion of Project. Admittedly, the subject Project has not been completed and, as such, no cause of action or dispute has arisen as of now from the applicants to initiate the present application. The respondent states that the applicants have approached the respondent for investing in their proposed Construction Project, but the respondent never approached the applicants. The applicants had, in fact, undertaken to invest a total sum of Rs.30,00,000.00 (Rupees thirty lakhs only), instead only a sum of Rs.10,00,000.00 (Rupees ten lakhs only) was invested making it difficult for the respondent to continue the proposed Project. Applicant No.1 was also inducted as a Director of the Respondent Company and has been privy to and involved in delaying the Construction Project. Subsequent to the execution of MOUs, the applicants, after coming to know about the other Projects proposed to be taken by the respondent, had offered to invest their monies in the same and also offered to bring in other financial partners for the said Projects. Thus, in view of the said assurances, the respondent had undertaken two Projects at Coorg and Kochi, respectively. On such commitment, the Respondent Company had diverted all their manpower towards the said two proposed Projects. It is stated that the respondent has spent an amount of Rs.2,24,40,750.00 towards development of the said Projects.