VIDE ORDER DATED 17.04.2023, PETITION AGAINST R3 & R4 IS DISMISSED)

THIS WP IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER DATED 03/01/2023 PASSED BY THE LXXXIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT COMPLEX AT BENGALURU IN COM A.S.NO.152/2019 REJECTING IA NO.2/2022 FILED BY THE PETITIONERS MARKED AS ANNEXURE A.

THIS PETITION HAVING BEEN RESERVED FOR ORDERS ON 04.02.2026, COMING ON FOR PRONOUNCEMENT THIS DAY, THROUGH VIDEO CONFERENCING, SITTING AT DHARWAD BENCH, THE ORDER WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MS. JUSTICE TARA VITASTA GANJU

CAV ORDER

Contents

I. Preface ................................................................... 4

II. Brief Facts ............................................................. 4

III. Contentions by the Petitioners: ............................... 8

IV. Contentions by the Respondents: ........................... 12

V. Issue for Consideration: ......................................... 16

VI. Analysis and Findings ........................................... 16

(a) The Statute: ..................................................... 17

(b) The Tenets of the Agreements: ........................... 23

(c) The Law: .......................................................... 34

(d) Two judgments of Karnataka High Court ............... 47

(e) The Contrary View: ............................................ 50

VII. Conclusion: ........................................................ 61

I. Preface

1. The present writ petition is filed seeking to set aside an Order dated 03.01.2023 passed by the LXXXIII Additional City Civil & Sessions Judge, Commercial Court Complex, Bengaluru in Com.A.S.No.152/2019, (hereinafter referred to as the “Impugned Order”), whereby I.A. No.2 under Section 151 of Code of Civil Procedure, 1908 (hereinafter referred to as ‘the CPC’) seeking return of the petition presented under Section 34 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the “A&C Act”) was rejected, in view of the fact that the dispute constitutes a “commercial dispute” within the meaning of Section 2(1)(c) of the Commercial Courts Act, 2015 (hereinafter referred to as the “CC Act”) and that it ought to be tried by the Commercial Court.

II. Brief Facts

2. Briefly, the facts are that the respondents herein claimed to be the owners of non-agricultural land which is immovable property bearing Old Sy.No.57/1A, New Sy.No.57/1A1 of Devarabisanahalli Village, Varthur Hobli, earlier Bangalore South Taluk, presently Bangalore East Taluk, admeasuring 7.12 guntas [hereinafter referred to as the “suit schedule property”]. Initially a Memorandum of Understanding dated 25.07.2010 (hereinafter referred to as the “MOU”) was entered between the parties for the purpose of jointly developing the suit schedule property into an apartment complex. A Joint Development Agreement dated 24.03.2011 thereafter came to be executed between the landowners and the Petitioner No.1 (hereinafter referred to as the “JDA”). Subsequently, supplementary agreements were also entered into on 17.12.2011 and on 02.06.2014 between the parties.

2.1 The respondents are also referred to as the ‘landowners’, while the petitioners as the ‘developers’ for clarity.

2.2 Under the terms of the said JDA, the parties agreed upon a sharing arrangement whereby 40% of the super built-up area in the proposed apartment complex was to be allotted to the landowners and 60% to the developer. Simultaneously, a General Power of Attorney dated 24.03.2011 was executed by the landowners in favour of the developer authorising him to undertake acts necessary for development of the property.

2.3 Pursuant to the JDA, the developer obtained sanction of the building plan from the competent authority, and proceeded to construct a residential apartment project. The construction was undertaken initially in respect of what has been described in the record as “Block-A” and subsequently in respect