- 1 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ CIVIL MISC. PETITION NO. 553 OF 2024 BETWEEN: 1. M/S SCENIC BEAUTY HOMES PRIVATE LIMITED, REGISTERED OFFICE AT 552, 7TH MAIN ROAD, AGS LAYOUT DOLLARS COLONY, RMV 2ND STAGE BENGALURU - 560 094 REPRESENTED BY ITS AUTHORIZED SIGNATORY RAJKUMAR S. …PETITIONER (BY SRI. VYSHAK MANIKANTA S., ADVOCATE) AND: 1. MR. NAG KIRAN KEMPANOOL S/O LATE SHAMBULINGAPPA K G AGED MAJOR RESIDING AT NO. 385, 14TH CROSS, 19TH MAIN, 1ST BLOCK, RAJAJINAGAR BENGALURU - 560 010 …RESPONDENT (BY SRI. N. RAVISHANKAR, ADVOCATE) THIS CIVIL MISC. PETITION FILED UNDER SEC.11(6) OF ARBITRATION AND CONCILIATION ACT., PRAYING THAT THIS HONBLE COURT BE PLEASED TO a. APPOINT A FIT AND Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 PROPER PERSON AS THE SOLE ARBITRATOR TO ADJUDICATE UPON THE DISPUTE AND DIFFERENCES THAT HAVE ARISEN BETWEEN THE PETITIONER AND THE RESPONDENT OUT OF OR IN CONNECTION WITH THE AGREEMENT FOR CONSTRUCTION DATED 16.09.2021 EXECUTED BETWEEN BOTH THE AFORESAID PARTIES AT ANNEXURE A IN ACCORDANCE WITH CLAUSE 31 OF THE AGREEMENT. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ ORAL ORDER 1. The petitioner is before this Court seeking for the following reliefs: "a) Appoint a fit and proper person as the sole Arbitrator to adjudicate upon the disputes and differences that have arisen between the Petitioner and the Respondent out of or in connection with the Agreement for Construction dated 16.09.2021 executed between both the aforesaid parties in accordance with clause 31 of the agreement at Annexure - A; b) Order cost of or incident to this petition be borne by the Respondent; c) Pass any such further order(s) as this Hon'ble Court may deem fit, just and proper in the facts and circumstances of the case." - 3 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 2. An agreement of construction dated 16.09.2021 was entered into between the petitioner and the respondent, the petitioner being required to provide architectural, structural and other design services including civil construction and construction of residential buildings to the respondent. Alleging that the services provided by the petitioner are not proper, the respondent had issued a notice on 29.07.2024 and has also filed a proceeding before the Consumer Court as regard to said deficiency of service. The petitioner in turn issued a notice on 26.08.2024 alleging that there are outstanding payments to be made by the respondent and as such invoked the arbitration clause. The nominated Arbitrator not having been accepted by the respondent, the petitioner is before this Court seeking for the aforesaid relief. 3. The execution of the construction agreement and the existence of the arbitral clause is not in dispute. The dispute raised by the respondent is that the respondent has filed a proceeding before the consumer forum and as such, a parallel proceedings cannot be maintained by the petitioner before an Arbitrator. In this regard reliance has - 4 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 been placed by the learned counsel for the respondent on the decision of the Hon'ble Apex Court in Civil Appeal No. 6500-6501/2023 in the case of SMT. M. HEMALATHA DEVI & ORS. Vs. B. UDAYASRI, more particularly at paragraphs No.5 and para 19 thereon, which are reproduced hereunder. "5. The validity of the two orders impugned before us, therefore, have to be examined in light of sub- section 6A to Section 11 and Section 8 of the Arbitration Act, 1996. We will thus also be examining whether the dispute between the parties is arbitrable, and once a party has availed the remedy before a public forum under a special beneficial legislation, can it be compelled to go for arbitration? In order to arrive at a conclusion, we will first have to refer to the nature of the dispute between the parties. The respondent before this Court is a home buyer who had entered into an Agreement for Sale with the present appellants on 27.08.2013. The present appellants will hereinafter be referred to as the builders/owners and the respondents as buyer/consumer. The builders/owners are three in number. They are: (a) M/s R.G. Prime Spaces Private Limited (b) Smt. M. Hemalatha Devi (c) M/s Legend Estates Private Limited They are the joint owners of the land on which they had agreed to construct a residential house/villa for the buyer/consumer Smt. B. Udayasri. The terms of agreement dated - 5 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 27.08.2013 stipulate that the project will be developed by M/s Legend Estates Private Limited who is one of the owners of the property. The total area of the land on which the residential house/villa was to be constructed was 357 sq. yards in Kokapet Village, Rajendra Nagar Mandal. Ranga Reddy District. Telangana, and the total construction was 4,000 sq. feet for a total sale consideration of Rs.49,42,000/- (Rupees Forty Nine Lakhs and Forty Two Thousand Only). 19. What were then the factors which necessitated an amendment, inter alia, in Sections 8 and 11 of the Arbitration Act. 1996 and what was the purpose behind these amendments? This aspect again has been examined in detail in Emaar III (supra). Such amendments were recommended by the Law Commission in its 246th Report, paragraph 33 of the 246th Report of the Law Commission stated as under: "33. It is in this context, the Commission has recommended amendments to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. The scope of the judicial intervention is only restricted to situations where the court/judicial authority finds that the arbitration agreement does not exist or is null and void. as Insofar the nature of is intervention is concerned, it recommended that in the event the the argument court/judicial authority is prima facie satisfied against challenging the arbitration agreement, it shall appoint the arbitrator and/or refer the parties to arbitration, as the The amendment case may be. envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to - 6 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 be finally determined by the Arbitral Tribunal. However, if the judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie." The Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Bill 2015 reads as under: "2. The Act was enacted to provide for speedy disposal of cases relating to arbitration with least court intervention. With the passage of time, some difficulties in the applicability of the Act have been noticed. Interpretation of the provisions of the Act by courts in some cases have resulted in delay of disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tend to defeat the object of the Act. 6. (iv) to provide that while considering any application for appointment of arbitrator, the High Court ог the Supreme Court shall examine the existence of a prima facie arbitration agreement and not other issues; Notes on the Clauses on amendment in Section 8 read as follows: "Clause 4 of the Bill seeks to amend Section 8 of the principal Act to specify that the judicial authority shall refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. A proviso below sub-section (2) is inserted to provide that the original arbitration agreement or certified copy thereof is not available with the party who apply under sub-section (1), and is retained by the other party, such party shall file a copy of the arbitration agreement along with application under - 7 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 sub-section (1) praying to the court to call upon the other party to produce the original arbitration agreement or its duly certified copy before the court. On amendment to Section 11 by inserting sub-section (6-A), the following was stated: "Clause 6 of the Bill seeks to amend Section 11 of the principal Act to provide that appointment of arbitrator shall be made by the Supreme Court or the High Court, as the case may be. instead of the Chief Justice of India or the Chief Justice of the High Court. Sub-section (6-A) is inserted to provide that the Supreme Court or the High Court while considering application under sub-sections (4) to (6) shall confine to the examination of an arbitration agreement." 4. The submission of learned counsel for the respondent is that once there is a dispute between the parties, a consumer cannot be forced to avail arbitral remedies when there is a beneficial legislation, namely the Consumer Protection Act and as such, he submits that proceedings having already been filed before the Consumer Forum, the petitioner cannot initiate arbitral proceedings. 5. Heard Shri Vyshal Manikanta S, learned counsel appearing for the petitioner and Shri N. Ravishankar, - 8 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 learned counsel appearing for the respondent and have perused the material available on record. 6. The point that would arise for consideration is: Whether once a consumer were to approach the Consumer Protection Forum, would the other party be precluded from raising any dispute as regards non-payment by way of civil proceedings or arbitral proceedings? 7. There can be no dispute as regards the decision in SMT. M. HEMALATHA DEVI (supra) case inasmuch as that was one where the consumer had approached the District Consumer Dispute Redressal Forum, where an application had been filed by the opposite party contending that the agreement had an arbitration clause requiring the parties to approach the arbitral forum under Section 8 of the Arbitration and Conciliation Act, 1996. The said application was rejected on the ground that the Consumer Protection Act being a beneficial enactment, it is left to the discretion of the consumer to avail of the remedy under the Consumer Forum or the arbitral remedy before the arbitral tribunal. - 9 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 8. In the present case, the respondent has already filed a complaint before the District Consumer Redressal Forum, which is pending. This is not a case where the petitioner has filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 in the said forum, but in the present case, the petitioner has agitated independent grievance as regards the alleged non-payment by the respondent to the petitioner, which the petitioner intends to claim before the arbitral tribunal. Admittedly, the petitioner cannot claim such amount before the District Forum where the complaint of the respondent is pending. The petitioner can only defend those proceedings before the District Forum. Neither can a claim nor a counter claim be made by the petitioner in the District Forum as regard the amounts which are already due to the petitioner. The proceedings before the District Consumer Forum would continue insofar as the deficiencies complained of by the respondent is concerned. The filing of such a proceedings cannot result in a situation where the petitioner is deprived of agitating his claims for recovery before the appropriate forum. - 10 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 9. In the present case, the agreement is governed by an arbitration clause, which is not in dispute. In that view of the matter, I answer the point raised by holding that merely because one of the parties has filed a proceedings under the Consumer Protection Act, the same would not deprive the other party from agitating any rights that party may have before the appropriate forum including arbitration. 10. At this stage, both the counsel submit that the matter could be initially referred to mediation and if mediation fails then the matter could be adjudicated by the arbitrator, who are appointed by this Court. 11. In that view of the matter, I pass the following order: ORDER (i) Civil Miscellaneous Petition is allowed. (ii) The matter is referred to Bangalore Mediation Centre. The Director, Mediation Centre is requested to depute a Mediator to resolve the dispute between the parties amicably. (iii) Since the order is passed in the presence of both the counsel, the parties shall appear - 11 - HC-KAR NC: 2025:KHC:52853 CMP No. 553 of 2024 at 2.30 p.m. on 12.01.2026 before the Director, Bengaluru Mediation Center. (iv) In the event of mediation not being successful, the matter is referred to Arbitration. (v) Shri Tejas S.R., Dua Associates, 130/1, 2nd floor, Ulsoor Road, Bangalore - 560042, tejas@duaassociates.com, 988612144 is appointed as a sole Arbitrator to arbitrate the dispute between the parties under the aegis of the Arbitration Centre attached to this Court. (vi) All contentions are left open. (vii) Registry is directed to return the original and/or certified copies, if produced, to the respective parties who have produced it/them by following due procedure. SD/- (SURAJ GOVINDARAJ) JUDGE JY List No.: 1 Sl No.: 39 CT:SG