Case Note & Summary
The case involves a dispute between M/s Avinash Hitech City 2 Society and its members (appellants) and Boddu Manikya Malini and another (respondents) concerning the sharing of lease rents collected by the society from a building developed under a series of agreements. The original landowners executed development agreements cum power of attorney with Phoenix Infocity Private Limited for developing an integrated complex. Subsequently, the landowners formed three societies, including appellant no. 1 society. An Addendum to the Supplementary Development Agreement was executed on 12.03.2010, which contained Clause 19 providing for arbitration of disputes. The respondents filed petitions under Section 23 of the Andhra Pradesh Societies Registration Act, 2001 before the Principal District Judge, alleging non-payment of their share of rents and seeking accounts. The appellants filed applications under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the dispute to arbitration, which were dismissed by the District Judge on the ground that the disputes were not covered under Clause 19. The High Court upheld this dismissal. The Supreme Court, allowing the appeals, held that the dispute regarding sharing of lease rents arises out of the agreements and falls within the broad language of Clause 19, which covers disputes arising out of, in connection with, or relating to the agreement. The Court set aside the orders of the High Court and District Judge and referred the dispute to arbitration in accordance with Clause 19.
Headnote
A) Arbitration Law - Reference to Arbitration - Section 8 of Arbitration and Conciliation Act, 1996 - Interpretation of Arbitration Clause - Dispute between society and its members regarding sharing of lease rents collected by society under Development Agreements and Addendum - Clause 19 of Addendum provides for arbitration of disputes arising out of, in connection with, or relating to the agreement - Held that the dispute is covered by Clause 19 and must be referred to arbitration (Paras 7-9).
Issue of Consideration
Whether the dispute between the appellants (society and its members) and the respondents (owners/members) regarding sharing of lease rents collected by the society falls within the ambit of Clause 19 of the Addendum to the Supplementary Development Agreement, thereby requiring reference to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court allowed the appeals, set aside the impugned common judgment and order of the High Court and the orders of the District Judge, and allowed the applications under Section 8 of the Arbitration and Conciliation Act, 1996, referring the dispute between the parties to arbitration in accordance with Clause 19 of the Addendum dated 12.03.2010.
Law Points
- Arbitration agreement
- Section 8 of Arbitration and Conciliation Act
- 1996
- interpretation of arbitration clause
- dispute arising out of agreement
- reference to arbitration
Case Details
Civil Appeal Nos. 7047-7049 of 2019 (Arising out of SLP (Civil) Nos. 4213-4215 of 2019)
M/s Avinash Hitech City 2 Society & Ors.
Boddu Manikya Malini & Anr. Etc.
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Nature of Litigation
Civil appeals against High Court order dismissing appeals against District Judge's order rejecting applications under Section 8 of Arbitration and Conciliation Act, 1996 for reference to arbitration.
Remedy Sought
Appellants sought quashing of High Court order and reference of dispute to arbitration under Clause 19 of Addendum.
Filing Reason
Respondents filed petitions under Section 23 of Societies Registration Act claiming share in lease rents; appellants sought arbitration under Clause 19.
Previous Decisions
District Judge dismissed Section 8 applications; High Court dismissed appeals.
Issues
Whether the dispute between the parties falls within the ambit of Clause 19 of the Addendum to the Supplementary Development Agreement.
Whether the High Court erred in dismissing the appeals and confirming the District Judge's order rejecting Section 8 applications.
Submissions/Arguments
Appellants argued that the dispute regarding sharing of lease rents arises out of the agreements and is covered by Clause 19, which provides for arbitration of disputes arising out of, in connection with, or relating to the agreement.
Respondents argued that Clause 19 only covers disputes between owners or between societies, and the present dispute is between society and its members, thus not covered.
Ratio Decidendi
The dispute between the society and its members regarding sharing of lease rents collected under the Development Agreements and Addendum arises out of the agreements and falls within the broad language of Clause 19, which covers disputes arising out of, in connection with, or relating to the agreement. Therefore, the dispute must be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
Clause 19 of the Addendum is very clear and, as per Clause 19, any dispute between the owners, including the dispute relating to the Addendum and all questions relating to its interpretation shall be construed in accordance with the laws of India.
the dispute between the parties for which the respondents filed the application under Section 23 of the Societies Registration Act before the District Judge shall be squarely covered within Clause 19 and therefore the High Court ought to have allowed the appeals and ought to have referred the dispute to Arbitrator as per Clause 19 of the Addendum.
Procedural History
Respondents filed petitions under Section 23 of Andhra Pradesh Societies Registration Act, 2001 before Principal District Judge, Ranga Reddy. Appellants filed applications under Section 8 of Arbitration and Conciliation Act, 1996 seeking reference to arbitration. District Judge dismissed applications. Appellants appealed to High Court, which dismissed appeals. Appellants then appealed to Supreme Court.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 8
- Andhra Pradesh Societies Registration Act, 2001: Section 23
