- 1 - CMP No.41 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM CIVIL MISC. PETITION NO.41 OF 2023 BETWEEN: M/S. ORANGE SELF STORAGE PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT NO.107, ANDREW BUILDING M.G. ROAD BENGALURU - 560 001. REPRESENTED BY ITS DIRECTOR MR. GANAPATHI MALA JOSHY. …PETITIONER (BY SRI. UDAYA HOLLA, SENIOR ADVOCATE FOR SRI. SIDDHARTH SUMAN, ADVOCATE) AND: 1. SRI. ABHAYARAJ SHETTY S/O LATE SHRI B. RAMANATH SHETTY 'PRAKRUTI', RAGHUVANAHALLI VILLAGE UTTARAHALLI BANGALORE SOUTH TALUK BENGALURU - 560 061. ALSO AT: NO.24, MN KRISHNA RAO ROAD BASAVANAGUDI, BENGALURU SOUTH BENGALURU - 560 064. 2. SRI. SANJAY SHETTY S/O LATE SHRI B. RAMANATH SHETTY 'PRAKRUTI', RAGHUVANAHALLI VILLAGE UTTARAHALLI BANGALORE SOUTH TALUK BENGALURU - 560 061. - 2 - CMP No.41 of 2023 ALSO AT: NO.24, MN KRISHNA RAO ROAD BASAVANAGUDI, BENGALURU SOUTH BENGALURU - 560 064. 3. SMT. JYOTHI w/o LATE SHRI B. RAMANATH SHETTY 'PRAKRUTI', RAGHUVANAHALLI VILLAGE UTTARAHALLI BANGALORE SOUTH TALUK BENGALURU - 560 061. ALSO AT: NO.24, MN KRISHNA RAO ROAD BASAVANAGUDI, BENGALURU SOUTH BENGALURU - 560 064. …RESPONDENTS (BY SRI. D.R. RAVISHANKAR, SENIOR ADVOCATE FOR SRI. RAVINDRA PRASAD B., ADVOCATE) THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO APPOINT SRI. S.R. SOMASHEKARA, RETIRED DISTRICT AND SESSIONS JUDGE, ARBITRATION CENTRE, KARNATAKA (DOMESTIC AND INTERNATIONAL), RACE COURSE ROAD, BENGALURU - 560 001 AS ARBITRATOR TO ENTER UPON REFERENCE AND PASS AWARD IN THE MATTER OF DISPUTES BETWEEN THE PETITIONER ON THE ONE SIDE AND THE RESPONDENTS ON THE OTHER SIDE AS PER CLAUSE 4(A) OF THE ADDENDUM OF LEASE DEED DATED 27.08.2020 I.E. ANNEXURE-C. THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 24.01.2025, THIS DAY ORDER WAS PRONOUNCED THEREIN, AS UNDER: CORAM: HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM - 3 - CMP No.41 of 2023 CAV ORDER This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking appointment of sole Arbitrator to resolve the dispute between the parties in terms of an Addendum to lease deed dated 27.08.2020 evidenced at Annexure-C. 2. After receipt of notice, the respondents tendered appearance through learned counsel. 3. The petitioner states that it has leased a commercial space measuring 33,227 sq.ft. in the building known as ‘Nitesh Ceaser’s Palace’ under a lease deed dated 01.06.2017, executed by Late B. Ramanath Shetty and M/s.NEL Holdings South Limited. The lease agreement, supplemented by a supplementary agreement dated 16.06.2020 and an addendum dated 27.08.2020, remains valid for 15 years from the amended commencement date. - 4 - CMP No.41 of 2023 4. Referring to the aforementioned lease documents, petitioner asserts that the developer, M/s. NEL Holdings South Limited, executed a Memorandum of Understanding (MoU) on 15.01.2018, granting the petitioner the 'right of first refusal' should the developer intend to sell a portion of the schedule premises. The petitioner alleges that representatives of the respondents have been obstructing access to the premises and preventing its employees from entering. Consequently, a legal notice was issued on 12.12.2022, invoking the arbitration clause stipulated in Clause 4 of the Addendum dated 27.08.2020 and nominating an arbitrator. 5. This civil miscellaneous petition is filed alleging that respondents have defaulted in not complying with the conditions of lease deed dated 01.06.2017, supplementary agreement dated 16.06.2020 and Addendum to lease deed dated 27.08.2020. 6. Learned Senior Counsel appearing for the petitioner has taken this Court through the relevant clauses in Addendum and would submit that in case there - 5 - CMP No.41 of 2023 is a dispute, there is a clear clause providing that all disputes have to be resolved by referring to a sole Arbitrator. 7. In support of his contention, learned Senior Counsel has placed reliance on the following judgments: 1) Duro Felguera,S.A. vs. Gangavaram Port Limited - (2017) 9 SCC 729 2) Mayavati Trading Private Limited vs. Pradyuat Deb Burman - (2019) 8 SCC 714 3) National Insurance Company Limited vs. Boghara Polyfab Private Limited - (2009) 1 SCC 267 4) Ameet Lalchand Shah and Others vs. Rishabh Enterprises and Another - (2018) 15 SCC 678 5) Sunder Kukreja and Others vs. Mohan Lal Kukreja and Another - (2009) 4 SCC 585 6) Swiss Timing Limited vs. Commonwealth Games 2010 Organising Committee - (2014) 6 SCC 677 7) Hema Khattar and Another vs. Shiv Khera - (2017) 7 SCC 716 8. Per contra, learned Senior Counsel for the respondents contends that all the documents relied upon - 6 - CMP No.41 of 2023 by the petitioner, including the lease deed dated 01.06.2017, the supplementary agreement dated 16.06.2020, and the addendum to the lease deed dated 27.08.2020, are seriously disputed. In particular, the execution and validity of these documents are challenged. Drawing the Court’s attention to the General Power of Attorney (GPA), the learned Senior Counsel argues that M/s. NEL Holdings South Limited, which holds a substantial stake in the petitioner’s company, cannot invoke the arbitration clause by relying on the doctrine of the ‘group of companies.’ In support of this contention, reliance is placed on the judgment of the Hon’ble Supreme Court in Cox and Kings Limited v. SAP India Private Limited & Another, reported in AIR Online 2022 SC 637. 9. Learned Senior Counsel further submits that various documents indicate that M/s. NEL Holdings South Limited holds a 99% share in the petitioner’s company. Consequently, there exists a bar under the GPA preventing - 7 - CMP No.41 of 2023 the petitioner from raising any dispute against the respondents, who are the owners of the land. 10. Heard the learned Senior Counsel for the petitioner and the learned Senior Counsel for the respondents. 11. The respondents have raised several contentious issues, including the very existence of the arbitration agreement by disputing the validity of the lease deed, the supplementary agreement, and the addendum to the lease deed. The respondents’ contention that Mr. Nitesh Shetty, who holds a substantial stake in the petitioner’s company and is also the Director of M/s. NEL Holdings South Limited, controls both entities and, therefore, the petitioner, as part of the same group, cannot invoke the arbitration clause, is an issue that falls within the domain of the Arbitrator. Additionally, the respondents’ denial of the authenticity of crucial documents further necessitates adjudication by the Arbitrator. - 8 - CMP No.41 of 2023 12. The question of whether Mr. Nitesh Shetty holds a 99% share and exercises control over the petitioner’s company is also a matter requiring adjudication by the Arbitrator. The respondents’ assertion that the lease deed, the supplementary agreement, and the addendum are merely paper transactions, that no physical possession of the premises was handed over, and that the petitioner is a shell company of M/s. NEL Holdings South Limited involve complex factual determinations that must be resolved through arbitration. 13. However, upon a thorough review of the petition and the annexed documents, this Court is satisfied that the petitioner has fulfilled the procedural requirements under Section 11(4) of the Arbitration and Conciliation Act. 14. In the light of aforesaid clause of arbitration and contentions advanced by petitioner and respondents, this Court proceeds to pass the following: - 9 - CMP No.41 of 2023 ORDER (i) Civil Miscellaneous Petition is allowed appointing Sri. Justice A.V.Chandrashekar, Former Judge, High Court of Karnataka as the sole Arbitrator to enter reference of the disputes between the petitioner and the respondents and conduct proceeding at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules governing the said Arbitration Centre; (ii) All contentions inter se parties are left open for adjudication in the arbitration proceedings; (iii) Office is directed to communicate this order to the Arbitration and Conciliation Centre and to Sri. Justice A.V.Chandrashekar, Former Judge, High Court of Karnataka, as required under the Arbitration and Conciliation Centre Rules, 2012. SD/- (SACHIN SHANKAR MAGADUM) JUDGE CA