M/s. R.K. Associates V. Channapa and Others

M/s. R.K. Associates V. Channapa and Others[1]

Facts

In this case, Clause 13 of the deed stated that the plaintiff was at liberty to sue for specific performance or for damages or for any other reliefs that may be available to them. Clause 14, however, allowed any disputes or differences, between the parties arising out of the agreement or covenants therein, to be referred to arbitration. The plaintiff had filed an arbitration suit under section 20 of the Arbitration and Conciliation Act, 1996 against the defendants claiming an order of temporary injunction pending disposal of the arbitration suit in order to restrain the defendants from alienating in any manner with the plaintiff and its employees, agents, contractors and all other persons authorised by it from having free ingress and egress to the schedule property and carrying out all developmental activities therein.

Contention(s):

Defendant: It was argued by the defendants that homogeneous reading of Clause 13 and 14 would lead to an irresistible conclusion that Clause 13 would prevail; and as such, for breach of contract the suit for specific performance was required to be filed and not arbitration proceedings as provided under Clause 14. It was further argued that there was no dispute formulated and raised and even though there was dispute with regard to the vendor not performing his part of the contract, the course open to the party was to approach the Court for specific performance. In support of his contention that Clause 13 would prevail over Clause 14, there being a conflict between these two clauses, he relied on the decision of the Supreme Court reported in Radha Sundar v. Mohd.Jahadur Rahim[2], which is discussed later in this summary. It was further argued by the defendants that there was no privity of contract between the plaintiff and the defendants, as such, the arbitration clause could not be enforced.

Held:

It is well laid principle of law when the question is entirely one of construction on a particular agreement, it can only be properly answered after consideration of (a) all the surrounding circumstances; (b) the position of the parties to the agreement; (c) its subject matter, and (d) the apparent purpose and object thereof, and in particular of the provisions to be construed. The Karnataka High Court observed that on proper reading of the Clauses 13 and 14 of the Agreement along with other clauses and the considering the intention of the parties to the agreement, there was no conflict between the two clauses and Clause 13 did not render Clause 14, i.e. arbitration clause, redundant or nugatory. It was further observed that the words occurring in Clause 13 that ‘any other relief that may be available’, if read with Clause 14 made it abundantly clear that plaintiff could take action for arbitration. The Court also cited the Apex Court’s decision in Radha Sundar’s case[3], to make a clear distinction between the two cases. In Radha Sundar’s case[4], the Hon’ble Supreme Court had observed-

“If, in fact, there is a conflict between the earlier clause and the later clauses and it is not possible to give effect to all of them, then the rule of construction is well established that it is the earlier clauses that must override the later clauses and not vice versa.”

In the present case, the Court, however, noted that there was no conflict between the Clauses 13 and 14 of the Agreement. The Clauses 13 and 14 in the Agreement were complementary and not conflicting. It was accordingly held that the Radha Sundar’s case[5], relied upon by defendant was of no assistance as the same could be distinguished on facts of the present case. Thus, it was held that Clauses 13 did not exclude Clause 14, as such, the proceedings initiated by the plaintiff under Section 20 of the Arbitration Act was maintainable.

Author: Sushmita Ravi

[1] AIR1993Kant247

[2] 1959 SCR 1309

[3] 1959 SCR 1309

[4] 1959 SCR 1309

[5] 1959 SCR 1309