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2020 Supreme(Telangana) 808
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
A. RAJASEKHAR REDDY, J.
A. Raghunandan Raj – Appellant
Versus
Fortune Monarch Associates – Respondent
Arbitration Application No. 157 of 2014
Decided On : 23-06-2020
Advocate Appeared:
For the Appellant : Raghavendra Rao for D. Madhava Rao.
For the Respondent: Manasi Ganu for Sunil B. Ganu.
The duty of the Chief Justice or his Designate in an application under Section 11 of the Act includes deciding whether the claim is a live claim, whether the parties have concluded the contract by recording satisfaction of their mutual rights and obligations, and whether a claim falls within the arbitration clause. The Court emphasized the importance of establishing a prima facie case of fraud and undue influence when pleading coercion.
Headnote:
Arbitration - Dispute over Development Agreement - Arbitration and Conciliation Act, 1996, Section 11(5) and (6) - 06.09.2008 Development Agreement-cum-GPA, Supplementary Agreement dated 04.05.2009, and Rectification Deed dated 09.01.2014 - [Section 11(5), Section 11(6)]
Fact of the Case:
Dispute arises from a Development Agreement-cum-GPA for construction of a commercial complex. Applicant alleges non-compliance by respondents, leading to losses. Respondents deny and claim full and final satisfaction through a Rectification Deed, which applicant alleges was executed under coercion.
Finding of the Court:
Court finds that the applicant suppressed material facts regarding the Supplementary Agreement and Rectification Deed. The existence of full and final satisfaction in the Rectification Deed is established, and the applicant's plea of coercion is not substantiated. The Court dismisses the Arbitration Application.
Issues: (1) Whether the applicant is entitled to relief in view of suppression of supplementary agreement and rectification deed? (2) Whether the existence of full and final satisfaction pleaded by the respondents through the rectification deed can be a ground to dismiss the application? (3) Whether the applicant established coercion and undue influence in executing the rectification deed?
Ratio Decidendi: The Court held that the suppression of the Rectification Deed, which recorded full and final satisfaction, is a material fact. The applicant's plea of coercion and undue influence was not substantiated, and the existence of full and final satisfaction in the Rectification Deed was established. The Court found no arbitral dispute between the parties and dismissed the Arbitration Application.
Final Decision: The Arbitration Application is dismissed, and there shall be no order as to costs. Any pending miscellaneous applications in this Arbitration Application shall stand dismissed.
ORDER :
1. Arbitration Application is filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator.
2. It is the case of the applicant that he is the owner and possessor of the plot bearing No. 708, admeasuring 1210 sq. yds (before road widening) and 1050 sq. yds (after road widening) bearing Municipal No. 8-2-293/82/A/708 in Old Survey No. 403/1 and New Sy. No. 120 of Shaikpet village, forming part of Jubilee Hills Co-operative House Building Society, Hyderabad situated at Road No. 36, Jubilee Hills, Hyderabad, having purchased the same from Jubilee Hills Co-operative House Building Society vide registered sale deed bearing No. 559/1986 dated 05.03.1986. Out of 1050 sq.y ds of land, he sold 350 sq. yds to the respondents and retained 700 sq. yds with him. The 1st respondent is a partnership firm and the respondents 2 to 6 are its partners. The applicant entered into registered Development Agreement-cum-General Power of Attorney with the respondents on 06.09.2008 vide document No. 3536/2008. As the respondents failed to complete the project within the time agreed upon, the applicant suffered losses due to the negligence of the respondents the applicant got issued legal notice dated 11.07.2014 to the respondents to complete the construction, but there is no reply from the respondents. The applicant once again got issued legal notice on 25.08.2014 invoking arbitration clause to nominate the arbitrator of their choice, but the respondents have not acted upon. Hence, this application.
3. Counter affidavit is filed by the respondents denying the averments in the affidavit filed in support of this application admitting about the execution of Development Agreement-cum-GPA dated 06.09.2008 between the parties. There is no violation of any conditions of the development agreement and that there is no liability cast upon the respondents, to pay damages, as alleged by the applicant. That issuance of legal notice dated 11.07.2014 followed by second notice dated 25.08.2014 is not disputed, but it is stated that the said notice is an inappropriate notice without any cause of action. It is asserted that after execution of the development agreement and after obtaining necessary permissions/sanctions from the concerned authorities, they have proceeded for development of the property, but due to various exigencies and circumstances that arose during such development, a supplementary agreement bearing No. 1392 of 2009, dated 04.05.2009 was entered into between the applicant and the respondents, which fact has been suppressed by the applicant in this application. Subsequent thereto, as per mutual understanding arrived at after incorporating appropriate changes in the building plan etc., an agreement dated 09.01.2014 was executed between the parties which is styled as Rectification Deed relating to the supplementary agreement bearing document No. 650/2014. As per clause (g) of the development agreement dated 06.09.2008, the respondents had paid a total sum of Rs. 1,80,00,000/- towards interest free refundable deposit to the applicant, which was agreed to be refunded by the applicant on completion of the construction of super structure as and when the super structure is fit for occupation or from the first sale of owners share. That after completion of construction and after incorporation of necessary changes, an understanding was arrived at between the applicant and the respondents specifically as to completion of the project and it is in the said circumstances a Rectification deed relating to the supplementary agreement dated 09.01.2014 was executed between the applicant and the respondents and clauses (2), (3) and (4) of the said agreement deals with the same. It is specifically agreed that he will have no further claim of whatsoever nature about the area allotted to him or entitlement by him under the original development agreement or under the supplementary agreement. The respective areas allott
