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Arbitration Case Study: Real Estate Dispute in Bangalore, Exercises of Corporate Law

A real-life case study involving a dispute over a real estate sale agreement in bangalore, india. It outlines the facts of the case, the issues raised, arguments advanced by the claimant, and the prayer for relief. The case study provides insights into the legal framework governing real estate transactions and arbitration proceedings in india, particularly focusing on the application of the specific relief act and the arbitration and conciliation act. It also highlights the importance of clear contractual terms and the potential consequences of breach of contract.

Typology: Exercises

2024/2025

Uploaded on 01/20/2025

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STATEMENT OF CLAIM
BEFORE THE ARBITRAL TRIBUNAL AT BANGALORE
Arbitration Case No. /2024
Between
Mohanraj,………………………………………Claimant
S/o Ramlal
Aged 55
#53/2 Ujala Factory,
Near Bus Stop,
Bommanahalli,
Bangalore-560068
Vs.
Sunil,…………………………………………….Respondent
S/o Manoj
Aged 49
Near Koramangala Water Tank,
Madivala Post,
Bangalore-560068
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STATEMENT OF CLAIM

BEFORE THE ARBITRAL TRIBUNAL AT BANGALORE

Arbitration Case No. /

Between

Mohanraj,………………………………………Claimant

S/o Ramlal Aged 55 #53/2 Ujala Factory, Near Bus Stop, Bommanahalli, Bangalore- Vs.

Sunil,…………………………………………….Respondent

S/o Manoj Aged 49 Near Koramangala Water Tank, Madivala Post, Bangalore-

FACTS OF THE CASE

Mohanraj…………………………………………………Claimant Vs. Sunil……………………………………………………….Respondent

  1. Mr. Mohanraj entered in to an Agreement of sale with Mr. Sunil for the purpose of buying house property bearing No. 222, 4th Cross, VII Block, Bangalore-560019, measuring 30 x 40 feet, and paid an advance amount of Rs. 99,00,000/-( Rupees Ninety Nine lakhs only). The sale consideration amount fixed for the said sale was Rs.5,00,00,000/- (Rupees Five Crores only) only. It was further agreed between the parties that in case of any dispute, the dispute shall be referred to an Arbitral Tribunal consisting of a Sole Arbitrator or Arbitral Tribunal consisting of 3 Arbitrators and the provisions of the Arbitration and Conciliation Act. 1996, shall apply to the arbitration proceedings. Jayanagar is a beautiful commercial and residential area and it is known for its cool and pollution free atmosphere. Mr. Mohanraj (purchaser) further agreed to pay the remaining balance amount of Rs.4,01,00,000 (Rs. Four Crores and One lakh only) towards the sale consideration amount to Mr. Sunil (seller) within 3 months. Mr. Sunil handed over all the original documents pertaining to title in respect of the aforesaid property to the purchaser Mr. Mohanraj. Meanwhile in a month’s time the property prices in the said locality increased by 50% due to rise in demand for house properties and for other reasons which usually govern the real estate market.
  2. After the expiry of 45 days from the date of the agreement of sale Mr. Mohanraj approached the seller Mr. Sunil and informed him that he is ready and willing to perform his part of the contract by paying the remaining balance amount and accordingly requested him to fix a date for completion of sale transacƟon and also for registraƟon of Absolute Sale Deed in respect of the aforesaid site property in favour of Mr. Mohanraj. At this juncture, the seller Mr. Sunil informed Mr. Mohanraj that he would not be able to complete the sale transacƟon as his family members consisƟng of his wife, Two sons and a daughter have clearly instructed him to cancel the said sale agreement
  3. According to clause 10 of the Sale Agreement, if seller is unable to perform his part of the contract, he shall refund the advance amount paid along with interest to be calculated at 18 % p.a. and also penalty amount of Rs. 1,00,00,000/- only. The purchaser wanted to buy a site in Jayanagar only. Aggrieved by the negaƟve aƫtude of the Seller to sell the site, Mr. Mohanraj caused a legal noƟce demanding the seller to execute an absolute sale deed in respect of aforesaid property by receiving the remaining amount of sale consideraƟon. He also cauƟoned the seller that if he fails to comply with his demands within 15 days he would iniƟate ArbitraƟon proceedings and accordingly named his Arbitrator in the Legal NoƟce. The seller failed to comply with the demands raised by the purchaser and subsequently an Arbitral Tribunal came to be consƟtuted. Accordingly, the dispute is now pending before the Arbitral Tribunal.

ISSUES RAISED

  1. Whether the claimant proves that this Hon’ble Tribunal has jurisdiction to try the matter and pass an award directing part performance under the provisions of specific relief act?
  2. Whether the claimant proves that he is a bonafide purchaser and whether he has sufficient cause of action in his petition?
  3. Whether the claimant proves that the respondent is bound to perform his part of contract?
  4. What order/award to the extent?

ARGUMENTS ADVANCED

ISSUE 1

There is no prohibition in specific relief act that issues relating to specific performance of contract relating to immovable property cannot be referred to Arbitration nor there is any prohibition contained in the Arbitration and Conciliation Act 1996. The Supreme Court in the case ‘Olympics Superstructures pvt ltd v/s Meena Vijay Ketan and ors’ held that the arbitrator can grant specific performance under the specific relief act based on the judgment made by Punjab High Court in the case ‘Laxminarayan v/s Ragubir Singh’ and Bombay High Court in the case ‘Fertilizer co-operation of India v/s Chemical Construction’ and Calcutta High Court in the case ‘Keventer argo ltd v/s Sugram Co-operation ltd’. ‘Overruled the decision made by the Delhi High Court in the case ‘PNB Finance Limited v/s Shital Prasad Jain and others’. The High court has taken a view that an arbitrator can grant the specific performance of an agreement of sale deeds with immovable property. The Supreme Court in the above mention case of ‘Olympics Superstructures pvt ltd v/s Meena Vijay Khetan’ reported in AIR 1999 8C 2101 held the right to specific performance of an agreement of sale deeds with contractual right and it is certainly open to the parties to agree- to shorten litigation in regular courts- to refer the issues relating to specific performance to arbitration there is no prohibition in the Specific to Relief Act 1963 that issues relating to specific performance of a contract relating to immovable property cannot be referred to arbitration nor there is such a prohibition contained in the Arbitration and Conciliation Act, 1996 which contained a prohibition relating to Specific Performance of contracts concerning the immovable property. Therefore, the Supreme court agreed with the reasoning of the Calcutta High Court and overruled the view of the Delhi High Court. Section 17 of Arbitration and Conciliation Act gives prohibition for the interim measure ordered by Arbitral Tribunal. ISSUE 2 While entering into the agreement, there was offer, acceptance, and both the parties were competent for performing their part contract. My client 99,00,000/- and in spite of having three months of time approached the respondent within 45 days to pay the remaining the balance amount of rupees 4,01,00,000 complete the said transaction.

PRAYER

Wherefore, the claimant in the above petition most respectfully prays that this Hon’ble tribunal may kindly be pleased to pass an order as follows:

  1. To direct the respondent to enforce the contract by performing his part of contract and handover the vacant possession of the property OR To direct the respondent to refund the advance amount along with interest of 18% per annum along with further penalty as reasonable for damages caused due to the breach of contract as mutually as to agreed by the parties as per the clause of the agreement of the sale.
  2. To direct the respondent to additional damages of 5,00,000/- for having under gone mental agony and trauma caused due to the breach.
  3. To direct the respondent to pay a sum of five lakhs towards the cost of proceedings.
  4. Grant such other relief or reliefs as this court/Tribunal deems fit in the facts and circumstances of the case in the interest of justice and equity.

VERIFICATION

I, Mohanraj s/o Ramlal , the claimant do hereby declare and verify that what is stated is true and best of my knowledge , information and belief. PLACE DATE CLAIMANT