Pendency Of Proceedings Before Competent Authority Under Jharkhand Apartment Ownership Act Will Not Affect Application U/S 11 Of A&C Act: Jharkhand HC

Facts

The Applicant and the deceased Respondent No. 1 executed an agreement for sale of a property situated in District Ranchi on 27.09.2010. Clause 18 of the said agreement contained an arbitration clause. Disputes arose between the parties with regard to certain additional construction allegedly made by the Applicant at the request of the deceased Respondent No. 1 and also certain extra work allegedly done by the Applicant on his request. The present application has been filed under Section 11(6), A&C Act, 1996 for appointment of an arbitrator to resolve the dispute between the parties.

Contentions

The Applicant claimed that only some payment was made to it but a balance payment of Rs. 8,32,400 was not made though the Applicant handed over the possession of the property in April, 2011 to Respondent No. 1. The Applicant contended that it declined to execute the registered sale deed unless balance amount was paid by Respondent No. 1. The Applicant invoked Clause 18 of the agreement for sale and issued a notice on 10.10. 2023 to Respondent No. 1 for appointment of an arbitrator for adjudication of the dispute between the parties.

The Respondent sent a reply on 11. 11. 2023, stating that there was an order passed by the Chief Executive Officer, Ranchi Municipal Corporation under Section 21(2) &(3) of the Jharkhand Apartment (Flat) Ownership Act, 2011 (“2011 Act”) in Case No. 146 of 2014 which had been decided on 29.01.2018 asking the Respondent to make certain payments and the Respondent had filed an appeal against the said order which was pending. Therefore, the Applicant sought for appointment of an arbitrator on the ground that Respondent No. 1 had refused to appoint an arbitrator.

The Respondents contended that they had filed a case under Section 21(2) & (3) of the Jharkhand Apartment (Flat) Ownership Act, 2011 praying for execution and registration of the flat in question in their favour. Certain findings were recorded in the order dated 29.01.2018 passed in the said case by the Chief Executive Officer, Ranchi Municipal Corporation to which the Respondents objected and were challenged by them in appeal under Section 33 of the 2011 Act before the Commissioner.

The Respondents contended that to avoid a decision therein, the Applicant got the legal notice dated 11.08.2023 issued. It was contended that no appointment of arbitrator should be made which would invite parallel adjudication or would circumvent the adjudication already made or pending before another competent forum.

The Applicant further contended that in the application by the Respondent before the Appellate Authority, the relief sought is covered under Section 32 of the Jharkhand Apartment (Flat) Ownership Act, 2011 but the claim of the Applicant does not fall within the scope of the said law. The plea of the Applicant related to the alleged illegal occupation of the premises by the Respondents and the Applicant also sought damages, reliefs, which could not be granted by the authorities under the 2011 Act.

Observations

Referring to Section 8, A&C Act, 1996, the Court observed that the question which arises for consideration of the Court is whether the “competent authority” under the 2011 Act is a judicial authority.

The Court observed that Section 3(l) of the 2011 Act defined “competent authority” as an officer or authority who or which may be vested by the State Government by a notification in the official gazette with “executive powers” to perform duties and function of the competent authority and for implementing the provisions of the 2011 Act and the rules made there under for such areas as may be specified in the notification under general guidance, superintendence and control of the State Government. Thus, what power is conferred on the “competent authority” under 2011 Act is only an executive power and not a judicial power and therefore, he is not a judicial authority.

The Court noted that while Section 21 of the 2011 Act conferred certain powers on the competent authority to impose a penalty in some cases, but this power is not a judicial power as he is not required to adjudicate anything and he only exercises an executive power akin to that exercised under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The said provision was interpreted by the Supreme Court in the case of Balkrishna Rama Tarle v. Phoenix ARC (P) Limited (2023) 1 SCC 622 and NKGSB Cooperative Bank Limited v. Subir Chakravarty and others (2022) 10 SCC 286, to be simply a ministerial power and that it does not involve any element of quasi-judicial function or application of mind and a magistrate has to adjudicate and decide the correctness of the information given in the application and nothing more.

The Court observed that when the only power conferred under the 2011 Act on the competent authority is a mere executive power and not a quasi-judicial or judicial power (having regard to the language in section 3(l) of the 2011 Act), it is not open to the Respondents to contend that on account of pendency of some proceedings under the 2011 Act, an arbitrator cannot be appointed notwithstanding the existence of the arbitration clause between the parties in the agreement of sale in spite of a notice having been issued invoking the said clause.

Thus, the Court allowed the application and appointed Mr. Rajesh Kumar Vaish, retired Principal & Sessions judge as the sole arbitrator to preside over disputes between the parties.

Case Title – M/s Bodhraj Construction v. Snehanshu Sinha

LL Citation: 2025 LiveLaw (Jha) 27

Case No. – Arbitration Application No. 36 of 2023

Appearance-

For Petitioner - Mr. Prashant Pallav, Advocate, Mr. Parth Jalan, Advocate

For Respondent - Mr. Pandy Neeraj Roy, Advocate

Date – 04.04.2025

Click here to download Order/Judgement