Business Partners’ Three-Plot Dispute Goes To Arbitration As Karnataka HC Puts KIADB’s Plot-10 Share Withdrawal On Hold

The parties had entered into a Memorandum of Understanding and addendum concerning the dissolution and reconstitution of three partnership firms and the allocation and valuation of industrial Plots Nos. 10, 34 and 35 at Rayapur Industrial Area.

Under an earlier communication, KIADB recognised the partners of SRV Confil Systems as having shares in Plot No. 10 in a 51:49 ratio; following objections from the Kolhars, KIADB withdrew that communication.

In the connected petition, the Kolhars challenged HDMC’s refusal to change mutation entries.

The parties’ MOU and reconstitution deeds contained arbitration clauses.

At the hearing, the parties agreed to refer their dispute to arbitration and jointly proposed a former High Court judge as arbitrator.

The Court relied on Clause 11 of the MOU, which provided for arbitration of disputes arising out of or related to it, and Clause 20 of the reconstitution deed, which provided for arbitration of disputes or differences between partners.

The Court applied the parties’ agreement and their joint submission to refer the dispute to the mutually nominated arbitrator.

No statute or judicial precedent was cited as a basis for the order.

The Court viewed the competing claims to the plots and the challenged administrative actions as arising from the parties’ MOU and the subsequent reconstitution of their firms.

Because the governing documents contained arbitration clauses and counsel jointly submitted that the dispute be arbitrated, the Court directed the proposed arbitrator to take up and determine the dispute, with the Kolhars as claimants and SRV Confil Systems’ partners as respondents, who could raise a counterclaim.

To preserve the subject matter pending that determination, the Court directed that neither side create third-party interests or encumbrances over its respective plots and that KIADB defer action on competing entitlement requests until arbitration was resolved.

KIADB’s 4 May 2026 communication withdrawing its earlier recognition of the partners’ shares in Plot No. 10 was kept in abeyance pending arbitration.

The parties were restrained from creating third-party interests or encumbrances over Plots Nos. 10, 34 and 35; the Kolhars could have their names entered in KIADB records for Plots Nos. 34 and 35, subject to the arbitration outcome.

KIADB was directed to act on requests concerning the plots only after arbitration, while any amounts demanded by KIADB remained payable without prejudice to the parties’ claims.

The Court left all contentions, including rights to seek interim relief, open.

It did not expressly quash the HDMC endorsement.