IMPORTANT POINT
The main legal point established in the judgment is that an arbitration agreement under an unstamped and unregistered contract is not enforceable, as per the recent law laid down by the Constitutional Bench of the Supreme Court.

ORDER:

Heard the learned counsel for the Petitioner and learned counsel for the respondent

2. This Arbitration Application is filed praying to appoint a Sole Arbitrator to adjudicate the claims and disputes between the Applicant and Respondent Pursuant to the Agreement of Sale dated 27.09.2018.

3. The case of the Petitioner, in brief, is as follows:

a) The Applicant and the Respondent entered into an unregistered Agreement of Sale dated 27-09-2018 for the land admeasuring Acres 0.20 Gts as well as residential house admeasuring 4000 sq. Ft bearing House No. 3 forming part of the total land belonging to the Respondent herein admeasuring Ac. 2.39 Gts forming part of Sy. No. 680/1 and 680/2 (Ac. 2-20 gts in Sy. No. 680/1 & Ac. 0.19 Gts in Sy. No. 680/2) of Janwada Grampanchayath, Sankarpally Mandal, Rangareddy District, Telangana.

b) As per the Agreement of Sale, the Applicant had paid an amount of Rs. 1,25,00,000/-at the time of entering the Agreement of Sale and later the Applicant had Rs. 50,00,000/-on various dates through various mode of transfers and cash.

c) As per the terms of the Agreement of Sale, the Respondent herein has agreed to complete the construction of residential house and the same shall be completed in eighteen months i.e. on or before March, 2020 with a grace period of 3 months but the Respondent failed to adhere to terms of the agreement and no construction work has even been started at the time of filing of this case.

d) The Respondent herein without following terms of the Agreement of Sale is clandestinely trying to sell the Schedule Property illegally to the third parties and the Respondent is also entering into multiple agreements for illegal second sale of the Schedule Property.

e) It came to the Applicant's knowledge that the Respondent is in financial trouble and is illegally trying to dispose of the entire property out of which 2420 Sq Yds belongs to the Applicant. Since the Respondent herein has constructed no house or structure till date and applicant did part payment, the property in question now belongs to the Applicant.

f) The Agreement of Sale dated 27-09-2018, clause No. 10 states as under: "Any dispute arising out of this agreement shall be settled through arbitration under the provisions of Arbitration and Conciliation Act, 1996. The venue of the arbitration shall be Hyderabad"

g) However, the Respondent refused to settle the dispute amicably and thus the Applicant, was forced to file an Arbitration Original Petition No.1/2022 and Court was pleased to pass a Status Quo order dated 26.04.2022, directing the Respondent herein not to sell or modify the Schedule Property, till the dispute is settled.

h) Subsequently, on 27.06.2022, the Applicant has sent notice 2 to the Respondent, requesting him to send a list of nominees of the appointment of an arbitrator, however, there has been no response from with regard to the same. Hence this Arbitration Application.

4. The case of the respondent, in brief, is as follows

a) The purported Agreement of Sale dated 27.09.2018, is a sham document which was never intended to be acted upon by the Parties. No consideration whatsoever is paid in lieu of the fabricated transaction recited in the said sham Agreement of Sale. The Statement of Accounts that are filed in support of the case to demonstrate payment of consideration, also categorically establish that the said payments were made to a third-party entity, in respect of a business conducted by the Petitioner's son along with one Mohit Korpal.

b) The amount was paid by the Applicant on behalf of his son Saripalli Karthik for entering into a business named and styled as 'Penalty Box', which is run by Mr. Mohit Korpal.The said Penalty Box was supposed to pay 25% of its Revenue generated from restaurant sales and party sales to the respondents, as consideration for occupying the Respondent’s land.

c) The Petitioner's son, Karthik had entered into a partnership with Mohit Korpal and in that context, the said amount of Rs.13,00