THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.88 of 2009 Date:20th July, 2011 Between: M/s.Shree Builders, having Regd. Office at 3-6-690, Himayathnagar, Hyderabad, rep. by its Partner Sri Lalit Kumar Sarda …Applicant And 1. Smt.D.K.Sarojini W/o.D.Krishna Rao, age 62 years, Occu: Business, R/o.1-1-523/40/4, Gandhi Nagar, Golconda ‘X’ Roads, Hyderabad – 500 020. …Respondent *** THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.88 of 2009 ORDER: This Arbitration Application has been taken out by M/s.Shree Builders rep. by its Partner Lalit Kumar Sarda under sub-section (6) of Section 11 of the Arbitration and Conciliation Act, 1996, (for short, ‘the Act’) r/w. Rule 2(b) of the Scheme for Appointment of Arbitrators, 1996, seeking appointment of an arbitrator for resolution of the disputes between the applicant and the respondent relatable to the development agreement, dated 16.10.1996. 2. Smt. D.K.Sarojini-the respondent is the absolute owner of the property bearing No.4-1-617 to 4-1-621 admeasuring about 480 sq. yards situated at Troop Bazaar, Hyderabad. She offered to give the same on development to the applicant firm. A development agreement came to be executed between the applicant firm and the respondent on 16.10.1996. As per the development agreement, a sum of Rs.10,00,000/- was to be paid to the respondent out of which, Rs.5,00,000/- was to be paid on the date of agreement and the balance of Rs.5,00,000/- within two months. It was also agreed that except mulgies on the road side, which will be shared in the ratio of 50:50, the respondent will be entitled to 45% of the sale proceeds of constructed area, after deducting Rs.10,00,000/- paid as advance and the balance of 55% of the sale proceeds of the constructed area was to be retained by the applicant firm. The applicant firm through the respondent obtained necessary permission from the Greater Hyderabad Municipal Corporation and constructed ground + three floors consisting of nearly 52 shops. The Greater Hyderabad Municipal Corporation issued a notice for demolition of structures in the premises. Thereupon, a suit being O.S.No.6762 of 2000 on the file III Junior Civil Judge, City Civil Court, Hyderabad came to be filed. The suit ended in dismissal on 08.04.2003. The judgment and decree passed in O.S.No.6762 of 2000 came to be challenged by filing an appeal-A.S.No.215 of 2003 on the file of XIV Additional Chief Judge (FTC), City Civil Court, Hyderabad. The appeal also ended in dismissal with certain directions to the Greater Hyderabad Municipal Corporation to consider the explanation given by the respondent for regularization. Some disputes cropped up between the applicant firm and the respondent with regard to the sharing of constructed area and other allied issues. The applicant firm issued a notice, dated 12.01.2009 invoking arbitration clause in the development agreement. The notice sent to the respondent returned un-served with an endorsement ‘not claimed’. Hence, the Arbitration Application seeking the prayer stated supra. 3. Notice before admission came to be ordered on 19.11.2009. Initially, an ex parte order came to be passed on 11.03.2010. Subsequently, the respondent filed an application being Application No.319 of 2010 to set aside the ex parte order. The said application came to be allowed on 10.08.2010 setting aside the ex parte order. 4. The respondent filed counter affidavit disputing the claim of the applicant. The respondent raised objection with regard to the very maintainability of the application on the ground that the applicant firm is an unregistered firm as on the date of the development agreement. The respondent also raised an objection that the development agreement is not a registered one and therefore, any clause in the development agreement cannot be looked into. It is also stated in the counter affidavit that the development agreement came to be terminated in the year 2001 and therefore, the application filed by the applicant in the year 2009 is barred by limitation. The last objection is that the invocation of the arbitration clause is not in accordance with the procedure contemplated in the development agreement. 5. Heard learned counsel appearing for the applicant and the learned counsel appearing for the respondent. 6. After hearing the learned counsel appearing for the parties on substantial issues, learned counsel appearing for the applicant seeks leave of the court to withdraw the application reserving liberty to the applicant to invoke the arbitration clause in accordance with the procedure contemplated in Clause 24 of the development agreement. 7. Clause 24 of the development agreement reads as hereunder: “IN CASE of any disputes arising between the parties hereto at a later date the arbitrator one from each side of representative shall have the right to decide. And in such case neither of the parties shall have the right to stop the construction work which shall be in progress at the site. All the disputes arising out of this agreement shall be subject to the jurisdiction of courts Hyderabad only.” 8. The notice issued by the applicant on 12.01.2009 does not indicate the name of the arbitrator. As per the procedure contemplated under Clause 24, the applicant has to nominate its arbitrator and then call upon the respondent to nominate the arbitrator on her behalf. Since the notice, dated 12.01.2009, is not in accordance with the procedure contemplated under Clause 24, I deem it appropriate to consider the request made by the learned counsel appearing for the applicant and grant leave to the applicant. 9. Accordingly, the Arbitration Application is dismissed reserving liberty to the applicant to invoke the arbitration clause in accordance with the procedure stipulated in Clause 24 of the development agreement. In the event of the applicant invoking the arbitration clause and sent for consent, the respondent is at liberty to raise all the pleas such as limitation, maintainability etc. No order as to costs. ______________________ B.SESHASAYANA REDDY, J. Date:20th July, 2011. cs THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.88 of 2009 Date:20th July, 2011