MR. DINSHAW CAWASJI vs MR T PRASANNAGOWDA

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HC-KAR
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CMP No. 406 of 2025


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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

TH
DATED THIS THE 15 DAY OF OCTOBER, 2026


BEFORE

THE HON'BLE MR. JUSTICE H.T. NARENDRA PRASAD

CIVIL MISC. PETITION NO. 406 OF 2025

BETWEEN:
MR. DINSHAW CAWASJI
S/O KALI. D. CAWASJI
AGED ABOUT 61 YEARS
12/1 RHENIUS STREET
RICHMOND TOWN
BANGALORE 560025.
…PETITIONER
(BY SRI. SHARATH S GOGI., ADVOCATE)







AND:
MR T PRASANNAGOWDA
S/O MR. THIMMEGOWDA
AGED ABOUT 49 YEARS
R/AT SKY GARDENS
12/1 RHENIUS STREET
RICHMOND TOWN
BANGALORE 560025.
…RESPONDENT
(BY SRI. PAVAN SAGAR., ADVOCATE)





THIS CIVIL MISC. PETITION IS FILED UNDER SECTION
11(5) OF ARBITRATION AND CONCILIATION ACT., PRAYING TO
APPOINT THE PROPOSED SOLE ARBITRATOR BY THE PETITION
OR ANY OTHER ARBITRATOR AS PER CLAUSE 32 OF THE LEASE
DEED DATED 16.03.2023 VIDE ANNEXURE A.
THIS PETITION, COMING ON FOR ADMISSION, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE H.T. NARENDRA PRASAD

Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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ORAL ORDER

1. This petition is filed under Section 11(5) of the
Arbitration and Conciliation Act, 1996 (for short, “the
Act”), seeking appointment of a sole Arbitrator for
adjudication of the disputes that have arisen between the
parties under the Lease Deed dated 16.03.2023,
particularly in terms of Clause 32 thereof, produced at
Annexure-A.


2. The brief facts of the case are that the petitioner is
the absolute owner of the residential apartment bearing
No.02A, Sky Gardens, 12/1, Rhenius Street, Richmond
Town, Bengaluru. The respondent approached the
petitioner seeking to lease the said property. Accordingly,
the parties entered into a Lease Deed dated 16.03.2023
(Annexure-A) for a period of 11 months commencing from
01.04.2023 and ending on 28.02.2024. Subsequently, the
parties entered into a Memorandum of Understanding (for
short, “MOU”) dated 24.01.2024 (Annexure-B), extending
the lease period until 30.06.2024. According to the
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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petitioner, despite the expiry of the extended lease period,
the respondent neither handed over vacant possession of
the premises nor paid the damages stipulated under the
Lease Deed and the MOU. The petitioner has also referred
to an unsigned MOU concerning a further extension of the
lease period by two months i.e., from 01.07.2024 to
31.08.2024. Despite the said extension, respondent has
failed to pay the rent and deliver the peaceful possession
of the schedule property. In view of the disputes that
arose between the parties, the petitioner issued a legal
notice dated 06.03.2025 (Annexure-C), calling upon the
respondent to quit and deliver vacant possession of the
premises and pay the damages due. Though the said
notice was served on the respondent, no reply was
furnished. Thereafter, invoking the arbitration clause
contained in the Lease Deed, the petitioner issued a notice
dated 05.06.2025 (Annexure-D) under Section 21 of the
Act. Despite service of the said notice, the respondent did
not respond. Hence, the present petition.
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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3. Learned counsel for the respondent contended that
the claims raised in the notice issued under Section 21 of
the Act relate to the unsigned MOU which is the period
subsequent to 30.06.2024, on which date the extended
lease period expired. Therefore, according to the
respondent, such claims cannot be referred to arbitration
under the Lease Deed, which ceased to operate upon
expiry of the lease period. It was further contended that
the MOU dated 24.01.2024 does not contain an arbitration
clause and constitutes an independent agreement between
the parties. In the absence of a specific arbitration clause
in the MOU, the arbitration clause contained in the Lease
Deed cannot be invoked to resolve disputes arising under
the MOU. In support of his contentions, learned counsel
relied upon the judgments of the Apex Court in M.R.
Engineers and Contractors Private Limited v. Som
Datt Builders Limited , reported in (2009) 7 SCC 696. He
further contended that the petitioner cannot claim
amounts under the notice issued under Section 21 of the
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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Act insofar as such claims arise out of the unsigned MOU
relating to the further extension of the lease period.


4. Per contra, learned counsel for the petitioner
contended that the claims raised in the notice issued
under Section 21 of the Act are not confined to monthly
rent but also include damages payable for failure to deliver
vacant possession of the premises after expiry of the lease
period. It was submitted that the Lease Deed and the MOU
provide for payment of damages in such circumstances.
Further, Clause 6 of the MOU specifically provides that all
other terms of the lease shall be as per the lease deed
dated 16.03.2023. Therefore, the arbitration clause
contained in the Lease Deed continues to govern disputes
arising out of the MOU, including claims for damages
following expiry of the extended lease period. Accordingly,
learned counsel submitted that the petitioner was justified
in invoking the arbitration clause.

Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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5. Heard the learned counsel for the parties and

perused the petition papers.


6. It is not in dispute that the petitioner is the owner of
the schedule property and that the parties entered into the
Lease Deed dated 16.03.2023 (Annexure-A) for a period of
11 months commencing from 01.04.2023 and ending on
28.02.2024. Clause 32 of the Lease Deed provides for
resolution of disputes between the lessor and the lessee
through arbitration under the Act. The relevant portion of
the said clause reads as follows:
“32. In the event of dispute between the Lessor and
the Lessee, the parties shall resolve the dispute by way of
arbitration under the Arbitration and Conciliation Act,
1996, as to the construction, meaning or effect of this
Agreement or any clause or thing contained herein or the
rights, duties, liabilities and obligations of the Parties
hereto in relation to the premises the same shall be
referred to a single arbitrator, in case the Parties can
agree upon one (1), within a period of thirty days upon
being called by a party to do so and failing such
agreement to three (3) arbitrators one (1) each to be
appointed by Lessor and the Lessee and the third to be
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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appointed by the two arbitrators so appointed. The
language of arbitration shall be English. The venue of
arbitration shall be Bangalore, Karnataka. The Lessor and
the Lessee hereby agree that the award that may be
passed in the Arbitration proceedings between the Lessor
and the Lessee may be enforced by the Lessor or the
Lessee in the Law Courts situated in Bangalore under the
Indian Laws to the exclusion of all other Law Courts.”


7. A perusal of the Lease Deed also indicates that
Clause 3 as well as Clause 3.2 contemplates reference of
disputes to arbitration even after expiry or earlier
termination of the lease period. Therefore, the mere expiry
of the lease period would not, by itself, preclude the
parties from invoking the arbitration clause in respect of
disputes arising out of their contractual relationship.


8. Admittedly, the parties entered into the MOU dated
24.01.2024 (Annexure-B), extending the lease period until
30.06.2024. Clause 5 of the MOU provides as follows:
5. “The second party agrees and undertake to pay a
damage of Rs.5,00,000/- (Rupees Five Lakhs only)
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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per month, or part thereof, if second party fails to
quit and deliver the vacant possession of the
schedule property to the second party”


9. The said clause stipulates payment of damages in the
event of failure to deliver vacant possession of the
premises upon expiry of the extended lease period. Thus,
the MOU expressly contemplates the liability of the
respondent to pay damages for continued occupation of
the premises beyond the agreed period.


10. A further perusal of Clause 6 of the MOU indicates
that all other terms of the lease shall be governed by the
Lease Deed dated 16.03.2023. The MOU was executed
between the same parties in continuation of their existing
lessor-lessee relationship and specifically extended the
period of lease while providing for damages in the event of
failure to deliver vacant possession. In this context, Clause
6 assumes significance, as it expressly refers to the terms
of the original Lease Deed. The question of incorporation
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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of an arbitration clause by reference must be considered in
the light of the terms of the MOU and the principles laid
down by the Apex Court in this regard. The absence of a
separate arbitration clause in the MOU would not, by itself,
be conclusive against arbitration if the requirements for
incorporation of the arbitration clause by reference are
otherwise satisfied.


11. The Apex Court, in Inox Wind Limited v.
Thermocables Limited , reported in (2018) 2 SCC 519,
while considering the incorporation of an arbitration clause
by reference under Section 7(5) of the Act, has explained
the principles governing incorporation of an arbitration
clause contained in another document. The relevant
observations in paragraph 17 read as follows:
“17. This Court in M.R. Engineers’ case, which is
discussed in detail supra, held the rule to be that an
arbitration clause in an earlier contract cannot be
incorporated by a general reference. The exception to
the rule is a reference to a standard form of contract
by a trade association or a professional institution in
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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which case a general reference would be sufficient for
incorporation of an arbitration clause. Reliance was
placed by this Court on Russell on Arbitration 23rd
Edition (2007). The development of law regarding
incorporation after the judgment in M.R. Engineers
requires careful consideration. It has been held in
Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v
Sometal SAL [2010] EWHC 29 (Comm) that a
standard form of one party is also recognized as a
‘single contract’ case. In the said case, it was also
held that in single contract cases general reference is
enough for incorporation of an arbitration clause
from a standard form of contract. There is no
distinction that is drawn between standard forms by
recognized trade associations or professional
institutions on one hand and standard terms of one
party on the other. Russell on Arbitration 24th
Edition (2015) also takes note of the Habas’s case.”


12. Applying the aforesaid principles to the facts of the
present case, it is evident that the MOU dated 24.01.2024
generally refers to the Lease Deed dated 16.03.2023 and
provides that all other terms of the lease shall continue to
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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be governed by the original Lease Deed. The MOU does
not constitute an entirely independent arrangement but
extends the existing lease and regulates the consequences
of failure to deliver vacant possession. Having regard to
the terms of the two documents, there is a prima facie
basis to hold that the arbitration clause contained in the
Lease Deed governs disputes arising out of the MOU,
including claims for damages following expiry of the
extended lease period. Consequently, the respondent's
objection that the arbitration clause cannot be invoked
merely because the extended lease period expired on
30.06.2024 cannot be accepted at this stage.


13. In respect of amount claimed by the petitioner under
Section 21 notice in relation to an unsigned lease
agreement, the petitioner cannot invoke the Arbitration
Clause in respect of an unsigned Agreement.


14. In view of the existence of the arbitration clause in
the Lease Deed and the prima facie applicability of the said
Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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clause to disputes arising under the MOU dated
24.01.2024, this Court is of the opinion that the disputes
between the parties are required to be referred to
arbitration. The petitioner has duly invoked the arbitration
clause by issuing a notice under Section 21 of the Act, and
the respondent has failed to respond to the same.
Accordingly, this Court considers it appropriate to appoint
a Sole Arbitrator for adjudication of the disputes between
the parties, leaving all other claims and contentions open
for consideration in the arbitral proceedings.


15. Accordingly, the following:
ORDER

a) Civil Miscellaneous Petition is allowed .


b) Sri.Gopala, retired District Judge, is appointed
as the Sole Arbitrator in the present case to
arbitrate the disputes between the parties at
the Arbitration and Conciliation Centre
(Domestic & International), Bengaluru, as per
the Rules governing the said Arbitration Centre.

Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

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c) All the claims and contentions of the parties are
left open.


d) Registry is directed to communicate this order
via e-mail to the Arbitration and Conciliation
Centre (Domestic & International), Khanija
Bhavan, Bengaluru, and also to the learned
Arbitrator.


e) Registry is directed to return all the original
documents produced by any of the parties after
obtaining Photostat copies of the same.


f) Parties are directed to appear before the
Director, Arbitration and Conciliation Centre,
Bengaluru, on 23.11.2026 at 11:30 a.m.


Digitally Signed by NARENDRA PRASAD
HAREKOPPA THIMMANNA GOWDA

(H.T. NARENDRA PRASAD)
JUDGE

DM
LIST NO.: 1 SL NO.: 12