The court’s legal analysis in a recent case underscores the significance of settlement in arbitration proceedings. The decision to appoint a sole arbitrator to resolve the dispute highlights the court’s focus on ensuring a fair resolution of disputes between parties. Stay tuned to understand the nuances of arbitration and the role of settlement in legal proceedings.
Facts
- The appellant disputed the allegations made by the respondent and replied to the same on 21.02.2007.
- The respondent issued a legal notice on 17.04.2008 canceling the agreement of sale and forfeiting the advance amount paid.
- The appellant attempted to settle the dispute amicably through extensive discussions and visits but was left with no legal remedy.
- The appellant filed an application under Section 11(6) of the Act in the High Court of Karnataka seeking appointment of an arbitrator to resolve the dispute.
- Despite a proposed settlement, the matter remained unresolved, leading to the filing of another petition under Section 11(6) in CMP No.228/2015.
- The appellant later withdrew the petition from Karnataka High Court and filed a fresh application before the High Court of Judicature at Hyderabad seeking appointment of an arbitrator.
- The dispute between the parties stemmed from an Agreement of Sale dated 23.11.2006 for a property in Bangalore.
- The respondent’s failure to execute a sale deed as per the agreement led to the continuation of the dispute.
- Several petitions and applications were filed by the appellant seeking the appointment of an arbitrator to resolve the ongoing dispute.
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Issue
- The issue revolves around determining if there was a concluded settlement between the parties after the application in CMP No. 297/2009 was filed.
- The key consideration is whether the dispute between the parties can be deemed as not subsisting for resolution through arbitration in light of any settlement.
- The question of whether there is a settlement in the nature of Novation of the agreement of sale dated 23.11.2006 also needs to be addressed.
- The order dated 05.07.2011 in CMP No. 297/2009, indicating that the matter has been settled out of court, is a crucial point for consideration in determining the existence of a settlement.
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Analysis
- The High Court of Karnataka had recorded a settlement, but sworn statements indicated that the proposed settlement did not fructify.
- Efforts to settle differences with the help of mediators during the pending case were unsuccessful.
- The settlement mentioned in the order dated 05.07.2011 was not recorded or made a part of the order, and no material was placed to show it was reduced to writing.
- Despite notices, the respondent did not consent to the appointment of a sole arbitrator within the specified time.
- The application for arbitration was made after withdrawing a previous petition, with no objection from the respondent’s counsel, indicating a revived dispute.
- The failure to resolve the dispute amicably revives the original dispute, making it referable to arbitration.
- The original dispute and the question of settlement between the parties are considered as disputes arising from the agreement between them.
- The rejection of the application by the Chief Justice on grounds of Order II Rule 2 of CPC and res-judicata was not justified.
- There was no abandonment of any claim or conclusive adjudication to establish res-judicata.
- The alleged settlement was not recorded in previous proceedings or supported by documents, making it questionable.
- A party to the arbitration agreement claiming a dispute should not be deprived of a forum based on technical grounds.
- The resolution of the dispute, settlement status, limitation period, relief sought, and other merits should be considered in the arbitral proceedings.
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Decision
- The petition is disposed of
- A sole arbitrator is appointed to resolve the dispute between the parties
- The High Court of Uttarakhand is appointed as the sole arbitrator
- The appeal is allowed
- The order dated 31.12.2018 passed in AA No.52/2016 is set aside
Case Title: V. SREENIVASA REDDY Vs. B. L. RATHNAMMA (2021 INSC 237)
Case Number: C.A. No.-001510-001510 / 2021
