THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.182 of 2010 Date:07th July, 2011 Between: M/s.Pantaloon Retail (India) Limited rep. by its Manager-Legal Mr.N.N.Rajesh Kumar Gupta …Applicant And M/s.Sri Srinivasa Homes rep. by its Prop: Ms.B.Revathi …Respondent *** THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.182 of 2010 ORDER: This Arbitration Application has been taken out by the applicant under Section 11(6) of the Arbitration and Conciliation Act, 1996, (for short, ‘the Act’), seeking appointment of an arbitrator for resolution of the disputes between the applicant and the respondent relatable to the lease agreement, dated 20.12.2004 and addendum agreement, dated 12.08.2008. 2. The applicant is a company incorporated under the provisions of the Companies Act, 1956. The applicant is carrying on business inter alia of setting up and operating various formats of retail stores at various locations in India in the name of Pantaloons, Central, Brand Factory, Big Bazaar, Food Bazaar etc. The respondent is the owner of premises known as ‘G.V.Manor’ consisting of ground plus four upper floors, comprising of aggregate chargeable area of 66,275 sq. feet apart from 2800 sq. ft. of permanent structure in the 5th floor(terrace) situated at G.V.Manor, beside Sangam Theatres, Station Road, Dwaraka Nagar, Visakhapatnam. The respondent entered into a lease agreement and a memorandum of understanding, dated 21.09.2004 and agreement of lease, dated 20.12.2004. As per the terms of the lease deed, the applicant has paid a refundable security deposit of Rs.52,00,000/- in addition to Rs.51,57,051/- towards adjustable security deposit to the respondent at the time of taking the premises on lease. Subsequently, an addendum agreement, dated 12.08.2008, for leasing the built up area of 2800 sq. feet on the 5th floor of the building styled as ‘Addendum agreement to the lease deed, dated 28.03.2006, also came to be executed. A tripartite agreement came to be executed between the applicant, the respondent and her Banker i.e. Punjab National Bank, Visakhapatnam. Under the Tripartite agreement, the applicant’s responsibility was limited only to the extent of remitting lease rentals directly into the specified loan account of the respondent maintained by the said Bank. The initial period of lease is 15 years i.e. upto 04.10.2020. During the subsistence of the lease agreement, the respondent has no right to terminate the lease deed and/or Addendum Agreement and to evict the applicant from the subject premises as long as monthly lease rentals are paid by the applicant without any default. Whileso, the applicant received a letter, dated 25.05.2010, from the respondent terminating the lease deed with effect from 04.10.2010 on the ground that its banker increased the rate of interest on the term loan availed by the respondent by hypothecating the lease rentals of the subject premises. According to the applicant, the applicant is no way concerned with the charging of rate of interest on the term loan availed by the respondent from its banker. Disputes arose between the parties with regard to termination of the lease agreement. As per the terms of the lease agreement, disputes between the parties are required to be resolved by taking recourse to the provisions of the Act. The procedure for invoking the arbitration clause has also been indicated in Clause 5(xxiv) of the lease agreement. The relevant clause reads as hereunder: “The parties agree that in case of any dispute arising in respect of this Agreement to Lease, the matter shall be referred to arbitration of two Arbitrators – one to be appointed by the Lessor and the other to be appointed by the Lessee. The arbitrator so appointed shall appoint the third arbitrator to constitute an arbitral forum. This the Arbitrators shall do in consonance with the provisions of the Indian Arbitration and Conciliation Act, 1996, as may be amended from time to time. The decision of the Arbitrators so appointed shall be binding upon the Lessor and the Lessee. The arbitration proceedings shall be held at Andhra Pradesh and conducted in the English language. The courts in Andhra Pradesh shall alone have jurisdiction with regard to this Agreement to Lease. Indian Law would be applicable.” The respondent issued a notice, dated 25.05.2010, determining the lease. Thereupon, the applicant issued a reply, dated 28.08.2010, invoking the arbitration clause and proposing Sri Justice Vaman Rao, Retd. Judge of this High Court as its arbitrator. The respondent having received the notice neither consented nor issued reply. Hence, this Arbitration Application. 3. Notice to the respondent came to be ordered on 01.12.2010. Though the respondent entered appearance, she did not choose to file counter affidavit. The respondent called absent and consequently, she came to be set ex parte on this day. 4. Heard learned counsel appearing for the applicant and perused the material brought on record. 5. Learned counsel appearing for the applicant submits that the applicant is no way concerned with the rate of interest charged on the term loan availed by the respondent with her banker. A further submission has been made that any dispute between the parties in respect of the loan agreement is required to be settled by taking recourse to the provisions of the Act. The procedure for invoking of arbitration clause is contemplated under Clause 5(xxiv) of the agreement of lease. 6. The applicant issued notice, dated 28.08.2010, to the respondent invoking the arbitration clause and proposing the name of Sri Justice Vaman Rao, Retd. Judge of this High Court. The respondent having received the notice failed to issue any reply nor consented for the name proposed by the applicant. In that view of the matter, I find that the applicant made out a valid ground for appointment of arbitrator for resolution of the disputes that have arisen between the parties relatable to the lease agreement, dated 20.12.2004 and addendum agreement, dated 12.08.2008. 7. Accordingly, the Arbitration Application is allowed. Sri Justice Vaman Rao, Retd. Judge of this High Court, is appointed as sole arbitrator, for resolution of the disputes between the parties, relatable to the lease agreement, dated 20.12.2004 and addendum agreement, dated 12.08.2008. He shall fix his own fee. No order as to costs. ______________________ B.SESHASAYANA REDDY, J. Date:07th July, 2011. cs THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.182 of 2010 Date:07th July, 2011