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Arbitration - Simulation Exercise problem

(ADR Systems - Clinical Course)

Mohanraj …… Claimant

Vs.

Sunil …… Respondent

Mr. Mohanraj entered in to an Agreement of sale with Mr. Sunil for the
purpose of buying house property bearing No. 222, 4th Cross, VII Block,
Bangalore-560019, measuring 30 x 40 feet, and paid an advance amount of
Rs. 99,00,000/-( Rupees Ninety Nine lakhs only). The sale consideration
amount fixed for the said sale was Rs.5,00,00,000/- (Rupees Five Crores only)
only. It was further agreed between the parties that in case of any dispute,
the dispute shall be referred to an Arbitral Tribunal consisting of a Sole
Arbitrator or Arbitral Tribunal consisting of 3 Arbitrators and the provisions
of the Arbitration and Conciliation Act. 1996, shall apply to the arbitration
proceedings. Jayanagar is a beautiful commercial and residential area and it
is known for its cool and pollution free atmosphere. Mr. Mohanraj
(purchaser) further agreed to pay the remaining balance amount of
Rs.4,01,00,000 (Rs. Four Crores and One lakh only) towards the sale
consideration amount to Mr. Sunil (seller) within 3 months. Mr. Sunil
handed over all the original documents pertaining to title in respect of the
aforesaid property to the purchaser Mr. Mohanraj. Meanwhile in a month’s
time the property prices in the said locality increased by 50% due to rise in
demand for house properties and for other reasons which usually govern
the real estate market.

2. After the expiry of 45 days from the date of the agreement of sale
Mr. Mohanraj approached the seller Mr. Sunil and informed him that he is
ready and willing to perform his part of the contract by paying the remaining
balance amount and accordingly requested him to fix a date for completion
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of sale transaction and also for registration of Absolute Sale Deed in respect
of the aforesaid site property in favour of Mr. Mohanraj. At this juncture,
the seller Mr. Sunil informed Mr. Mohanraj that he would not be able to
complete the sale transaction as his family members consisting of his wife,
Two sons and a daughter have clearly instructed him to cancel the said sale
agreement.

3. According to clause 10 of the Sale Agreement, if seller is unable

to perform his part of the contract, he shall refund the advance amount paid
along with interest to be calculated at 18 % p.a. and also penalty amount of
Rs. 1,00,00,000/- only. The purchaser wanted to buy a site in Jayanagar only.
Aggrieved by the negative attitude of the Seller to sell the site, Mr. Mohanraj
caused a legal notice demanding the seller to execute an absolute sale deed
in respect of aforesaid property by receiving the remaining amount of sale
consideration. He also cautioned the seller that if he fails to comply with his
demands within 15 days he would initiate Arbitration proceedings and
accordingly named his Arbitrator in the Legal Notice. The seller failed to
comply with the demands raised by the purchaser and subsequently an
Arbitral Tribunal came to be constituted. Accordingly, the dispute is now
pending before the Arbitral Tribunal.

4. Arbitrate the said dispute through Simulation exercise and

submit the Final Report consisting of Claim statement, Defence Statement,
and any other connected documents and the Final Award passed in the
Arbitration proceedings.

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