- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM CIVIL MISC. PETITION NO.69 OF 2023 BETWEEN: SMT. ANJANA DEVI D/O SMT. SITA MAHA LAKSHMI AGED ABOUT 51 YEARS NO.20, ANU SIX YARDS NEW RAJANNA LAYOUT HORAMAVU AGARA BANGALORE-560 043. …PETITIONER (BY SRI. HARINATH M.S., ADVOCATE) AND: 1. SRI. INAYATULLAH JILANI S/O SRI. S.M. NOORULLAH JILANI AGED ABOUT 58 YEARS NO.23, 6TH A CROSS DEFENCE COLONY, KAVERY LAYOUT HORAMAVU AGARA, BANGALORE EAST TALUK BANGALORE-560 043. AND ALSO AT CARE OF SEEMA SARAATH NO.11-1, PLOT 34-35 LLOYDS AVENUE, PODANUR COIMBATORE-641 023 AND ALSO AT PLOT NO. 12 AND 13 NEW RAJANNA LAYOUT HORAMAVU AGARA BANGALORE-560 043. 2. SRI JOPHY VARGHESES AGED BOUT 46 YEARS - 2 - S/O K.V.VARGHESE R/AT NO.11, 1ST 'B' CROSS, NEW RAJANNA LAYOUT HORAMAVU, AGARA BANGALORE - 560 043. (R2 IMPLEADED V/C/O DATED: 25.02.2025) …RESPONDENTS (BY SRI SYED PEER ULLA SHA KHADRI, ADVOCATE FOR R1; SMT. JAYNA KOTHARI, SENIOR ADVOCATE FOR SRI NAVEEN CHANDRA V., ADVOCATE FOR R2) THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO APPOINT AN ARBITRATOR TO ARBITRATE UPON THE DIFFERENCES/DISPUTES BETWEEN THE PETITIONER AND THE RESPONDENT PERTAINING TO THE AGREEMENT FOR SALE DATED AUGUST 25, 2022 (ANNEXURE-A) AS PER CLAUSE 9 OF SAID AGREEMENT. THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 25.02.2025, THIS DAY ORDER WAS PRONOUNCED THEREIN, AS UNDER: CORAM: HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM CAV ORDER This Civil Miscellaneous Petition is filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking appointment of a sole Arbitrator to resolve the dispute and difference between the parties in terms of arbitration clause provided under the agreement of sale dated 25.08.2022 evidenced at Annexure-A. - 3 - 2. The respondent No.2 has engaged a learned counsel and has contested the proceedings by filing statement of objections. 3. Petitioner based on agreement of sale dated 25.08.2022 has invoked the arbitration clause alleging that respondent No.1 has not performed his part of contract and has issued a notice on 09.12.2022 thereby terminating the sale agreement based on false allegations that petitioner expressed to cancel the agreement. This prompted the petitioner to issue a rejoinder on 15.12.2022. Petitioner alleging that there is failure on the part of respondent No.1 in performing his part of contract, petitioner has invoked clause 9.1 of the sale agreement which provides arbitration to resolve the dispute and the present civil miscellaneous petition is filed. 4. There is no contest by respondent No.1. 5. Learned Senior Counsel appearing for the respondent No.2, however, contends that respondent No.1 had instituted a suit in O.S.No.26995/2022 against the - 4 - petitioner herein and obtained exparte injunction. Respondent No.2 claims that even in Section 9 proceedings, the impleading application filed by the petitioner is rejected and therefore, she would point out that respondent No.2 is a necessary party to the arbitration proceedings. Reliance is placed on the judgment rendered by the Hon'ble Apex Court in the case of S.N.Prasad, Hitek Industries (Bihar) Ltd. vs. Monnet Finance Limited and Others1. 6. This Court has meticulously examined the annexures more particularly the agreement of sale which provides for arbitration in case of dispute between the parties. Whether subsequent purchaser is a necessary party is dealt with by the Division Bench in the reported judgment rendered in MFA.No.2978/2024. Para 18 would be relevant and the same is extracted as under: "18. For the reasons assigned above, this Court is of the view that the appellant Company being a person who is not a party to the arbitration agreement, and being the purchaser of the 1 (2011) 1 SCC 320 - 5 - properties from a person who is a party to the arbitration agreement, is bound by the arbitration clause binding on its vendor. It is not open to the appellant to contend that the arbitration agreement which is binding on its vendors is not binding on the appellant on a specious plea that it is not a signatory to the arbitration agreement." 7. The Division Bench in the aforementioned judgment has categorically held that a subsequent purchaser, though not a signatory to the arbitration agreement, is nevertheless bound by the arbitration clause insofar as the vendor was a party to the agreement. The Court emphasized that a subsequent purchaser, by stepping into the shoes of the original contracting party, inherits both the benefits and obligations arising out of the agreement, including the arbitration clause. This principle is well-founded in law, as arbitration agreements are not merely personal covenants but attach to the rights and obligations that pass along with the subject matter of the transaction. 8. Furthermore, Section 8 of the Arbitration and Conciliation Act, 1996, provides a statutory mandate for - 6 - referring parties to arbitration where a valid arbitration agreement exists. Section 8(1) stipulates that when a party to an arbitration agreement, or any person claiming through or under them, brings an action before a judicial authority in a matter which is subject to arbitration, the judicial authority must refer the parties to arbitration unless it finds that no valid arbitration agreement exists. The phrase "claiming through or under" has been judicially interpreted to include successors-in-interest, assignees, and purchasers, thereby encompassing a subsequent purchaser of a property burdened with an arbitration clause. 9. Applying this legal principle to the present case, it is evident that Respondent No.2, as a subsequent purchaser, derives title and interest in the property from the original vendor, who was a party to the arbitration agreement. By virtue of this transaction, Respondent No.2 is bound by the arbitration clause incorporated in the agreement of sale. Consequently, it is not open for Respondent No.2 to contend that he is not a party to the - 7 - arbitration agreement and, therefore, cannot be subjected to arbitral proceedings. The Division Bench has unequivocally negated such a contention, holding that the arbitration clause extends to subsequent purchasers through the principle of privity of estate and statutory recognition under Section 8 of the Act. Therefore, in light of the settled legal position, Respondent No.2’s plea challenging the applicability of the arbitration agreement is wholly untenable and devoid of merit. The judgment cited by the learned Senior Counsel is not applicable to the present case on hand. 10. On closer scrutiny of the documents furnished by the petitioner, this Court is satisfied that the petitioner has fulfilled the requirements outlined under Section 11(4) of the Act. 11. In the light of the aforesaid clause of arbitration and the contentions advanced by the petitioner and the respondents, this Court proceeds to pass the following: - 8 - ORDER (i) Civil Miscellaneous Petition is allowed appointing Sri. Justice H.N.Nagamohan Das, Former Judge, High Court of Karnataka as the sole Arbitrator to enter reference of the disputes between the petitioner and the respondent 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 H.N.Nagamohan Das, Former Judge, High Court of Karnataka as required under the Arbitration and Conciliation Centre Rules, 2012. SD/- (SACHIN SHANKAR MAGADUM) JUDGE CA