M/S AVINASH HITECH CITY 2 SOCIETY & ORS. versus BODDU MANIKYA MALINI & ANR. ETC.

Citation: [2019] 12 S.C.R. 95 · Decided: 06-09-2019 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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M/S AVINASH HITECH CITY 2 SOCIETY & ORS.
v.
BODDU MANIKYA MALINI & ANR. ETC.
(Civil Appeal Nos. 7047-7049 of 2019)
   SEPTEMBER 06, 2019
[ARUN MISHRA AND M. R. SHAH, JJ.]
Arbitration and conciliation Act, 1996 – s. 8 – The original
land-owners executed 17 development agreements cum power of
attorney in favour of one developer for developing an integrated
complex – Subsequently, the owners constituted themselves into three
societies which included appellant no.1-society – Thereafter, the
parties to each of the Development Agreements executed
supplementary Development agreements to their respective
Development agreement – Accordingly, the developer was allotted
11 commercial complexes and the owners were allotted 4 commercial
complexes – Respondents-owners were allotted a share in a building
H1B and they were also the members of the appellant no. 1 society
– Respondents and appellants entered into an Addendum to the
supplementary Development agreement – Various spaces in building
H1B were leased out to a company and rents were collected by the
appellant no.1– Respondents sought sharing of the rent of the leased
space – Pursuant thereto, respondents filed applications u/s. 23 of
Societies Registration Act before the District Judge – Appellants
filed applications u/s. 8 of the Arbitration Act and sought the
appointment of Arbitrator in the light of the arbitration cl. 19 of the
addendum – District Judge held disputes between the parties were
not covered u/cl. 19 of the Addendum – Aggrieved, appellants filed
appeals before the High Court, which were dismissed – On appeal,
held: As per cl. 13 of the Addendum/Agreement, the societies were
the “sole authorities” to collect/receive the lease rents in respect of
the extends leased out in a given building earmarked as the share
of the owners in the completion and pool the entire revenue
generated from each of the buildings by way of lease rents and
distribute the same to the owners – Therefore, the dispute between
the respondents and the appellants with respect to the sharing of
the rent with respect to the leased space can be said to be related to
 [2019] 12 S.C.R. 95
95
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SUPREME COURT REPORTS
[2019] 12 S.C.R.
the Addendum and /or in connection with or relating to the Addendum
– Cl.19 was applicable in the event of any dispute and difference
arising among the parties out of, in connection with or relating to
the agreement – Both the High Court and District Judge committed
error in not referring the dispute between the appellants and the
respondents to the arbitration – Parties referred to the Arbitration
– Andhra Pradesh Societies Registration Act, 2001 – s. 23.
Allowing the appeals, the Court
HELD: 1. On reading Clause 19 of the Addendum as a
whole, it appears that in the event of dispute or difference among
the parties out of, in connection with or relating to the agreement,
the same shall be referred to arbitration. However, sub-clauses
(c), (d) and (e) provide for different procedure in the event of any
disputes and differences between the owners; between two or
more societies or owners who are the members of two different
societies and between two or more owners of the space in the
same building. Sub-clause (c) of Clause 19 provides that any
disputes or differences whatsoever arising between owners, which
could not be resolved by the parties through negotiations, within
a period of 30 days from the service of the notice of dispute, the
same shall be referred to and shall finally be settled by the
arbitration in accordance with the (Indian) Arbitration and
Conciliation Act, 1996. Sub-clause (d) of Clause 19 provides that
in the event of any dispute which involves two or more societies
or owners who are the members of two different societies, the
arbitral tribunal shall comprise of three or more arbitrators.  It
further provides, “who shall be appointed as a presiding
arbitrator; who shall be the Chairman of the arbitral tribunal and
the venue of the arbitration”. Sub-clause (e) of Clause 19 provides
that in the event of any dispute which involves two or more
owners of the space in the same building, the arbitral tribunal
shall comprise of the sole arbitrator and, in such a situation, each
party to the dispute shall refer the matter to the office bearers of
their respective Society which shall be the arbitral tribunal and
the venue of arbitration shall be in Hyderabad. [Para 7.1][104-H;
105-A-E]
2. As observed hereinabove, Clause 19 shal

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