THE HON’BLE Ms. JUSTICE G.ROHINI Arbitration Application No. 175 of 2010 Date: 07.04.2011 Between: M/s. Chandra House Constructions, Hyderabad. …Applicant And Smt. Ramani Subramanian, Secunderabad. …Respondent THE HON’BLE Ms. JUSTICE G.ROHINI Arbitration Application No. 175 of 2010 O R D E R : This application is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) seeking appointment of an Arbitrator for settlement of the disputes between the parties arising out of the development agreement 20.06.2002. The applicant claims to be a builder/developer, whereas the respondent is the owner of the premises bearing house No. 10-3-56/3, plot No.7, East Maredpalli, Secunderabad. The applicant and the respondent entered into a development agreement dated 20.06.2002 for developing the above said property belonging to the respondent. The applicant claims that as per the terms and conditions of the said development agreement, the applicant and the respondent are entitled to 50% of the constructed areas, common areas and parking areas. Even according to the applicant the construction of the building was completed in October, 2003. However, it is alleged that the respondent did not allow the applicant to take the 50% of share to which the applicant is entitled to and did not evince any interest to settle the accounts in spite of several requests made by the applicant. In the circumstances, the applicant filed O.S.No.130 of 2006 in the Court of the I Additional Chief Judge, City Civil Court, Secunderabad against the respondent herein seeking partition and delivery of the applicant’s share in the building complex. The applicant also sought further reliefs of declaration that it is entitled to recover a sum of Rs.26,07,040/- from the defendant and mandatory injunction to the defendant herein to deliver one more flat and etc., Pending the suit, by order dated 20.07.2006 in I.A.No.2463 of 2006 ad- interim injunction was granted restraining the defendant/respondent herein from alienating the plaint schedule property. That apart, the applicant herein filed I.A.No.3513 of 2006 under Section 8 (1) of the Act with a prayer to refer the parties to arbitration on the basis of the arbitration clause contained in the development agreement dated 20.06.2002. After hearing both the parties, the learned I Additional Chief Judge, City Civil Court, by order dated 20.12.2006 allowed I.A.No.3513 of 2006. Subsequently, the plaintiff moved another application being I.A.No.698 of 2007 with a prayer to appoint an Arbitrator. The said application was dismissed by the learned I Additional Chief Judge, City Civil Court by order dated 04.02.2008 on the ground that the Civil Court has no jurisdiction to appoint an Arbitrator. Aggrieved by the same, the applicant herein preferred C.R.P.No.5933 of 2008. A Division Bench of this Court by order dated 02.02.2009 dismissed the revision petition relying upon the decisions of the Apex Court in Oil and Natural Gas Corporation Limited v. SAW Pipes Limited[1] and M/s. SBP and Company v. M/s. Patel Engineering Limited[2]. Thereafter, on 08.11.2010 the applicant filed the present application invoking the jurisdiction of this Court under Section 11(6) of the Act for appointment of an Arbitrator for the purpose of settlement of the disputes arising out of the development agreement dated 20.06.2002 and recovery of a sum of Rs.64,93,200/- allegedly due from the respondent as on the date of the application. The respondent filed a counter affidavit contending that the application is barred by limitation since even according to the applicant the work under the agreement dated 20.06.2002 was completed in June, 2003, whereas the present application was filed in November, 2010. It is also contended that the applicant had not issued any notice to the respondent for the purpose of appointment of Arbitrator before approaching this Court under Section 11 of the Act. While denying the allegations that the respondent had acted contrary to the terms and conditions of the agreement and that she was liable to pay the amount claimed in the application, it is contended by the respondent that in fact the applicant is liable to pay a sum of Rs.35,43,000/- to the respondent. I have heard the learned counsel for both the parties. The law is well settled that the Chief Justice or his designate when approached with an application under Section 11 of the Act has to consider whether he has jurisdiction in relation to the contract, whether there is an arbitration agreement, whether the applicant is a party to the agreement and whether an arbitrable dispute subsists (vide SBP & Company v. Patel Engineering Limited). In the instant case, it is not disputed before this Court that the applicant and respondent had entered into a development agreement dated 20.06.2002 which contained a specific clause for settlement of disputes arising out of the said agreement by arbitration. It is also apparent that certain disputes arose between the parties out of the said agreement. However, having regard to the preliminary objection raised on behalf of the respondent that the application is barred by limitation, the first question that requires consideration is whether the said objection is tenable? By virtue of Section 43 of the Act, the Limitation Act, 1963 is made applicable to arbitrations. Article 137 of the Limitation Act, 1963 applies to an application under Section 11 of the Act and therefore, an application for appointment of an Arbitrator shall be filed in the Court within a period of three years when the right to apply accrues. It is a well settled principle of law that the right to apply accrues for seeking reference to arbitration when the differences or disputes arise between the parties i.e. when the claim made by one party is denied by the other party. In the present case, the construction work under the development agreement dated 20.06.2002 was completed in June, 2003 itself. The grievance of the applicant is that the respondent had acted contrary to the terms and conditions agreed upon and did not handover his share of constructed areas. It is also alleged that the respondent failed to refund the security deposit apart from committing default in payment of certain amounts to which the applicant was entitled to receive as per the terms and conditions of the agreement dated 20.06.2002. As could be seen from the averments in the plaint in O.S.No.130 of 2006 filed by the applicant in the Court of the I Additional Chief Judge, City Civil Court, Secunderabad, though the applicant raised a dispute and called upon the respondent herein to execute the sale deed in respect of the applicant’s share in the building complex and to return the amounts to which the applicant is entitled to under the agreement dated 20.06.2002, the respondent failed to comply with the same and on the other hand, threatened the applicant with dire consequences. Thus, it is clear that the disputes and differences between the parties arose in the year 2003 itself when the claim made by the applicant was not acceded to by the respondent. Therefore, the right to apply for reference to arbitration accrued to the applicant in the year 2003 itself and the period of limitation of three years started running from 2003. That being so, the present application filed under Section 11 in the year 2010 is clearly barred by limitation. It is also relevant to note that , the applicant himself filed I.A.No.3513 of 2006 under Section 8(1) of the Act in O.S.No.130 of 2006 to refer the suit proceedings to arbitration on the ground that the development agreement dated 20.06.2002 contained an arbitration clause. Having accepted the plea of the applicant the civil Court allowed I.A.No.3513 of 2006 by order dated 20.12.2006 and accordingly referred the dispute to arbitration. Even assuming that the right to apply for arbitration did not accrue to the applicant in the year 2003 in view of the pendency of O.S.No.130 of 2006, undoubtedly, such a right accrued to the applicant on 20.12.2006 on which date, the learned I Additional Chief Judge, City Civil Court, Secunderabad referred the matter for arbitration in exercise of powers conferred under Section 8 of the Act. The fact that the applicant had subsequently moved I.A.No.698 of 2007 before the learned I Additional Chief Judge, City Civil Court, Secunderabad for appointment of an Arbitrator and the revision petition preferred by the applicant against the dismissal of I.A.No.698 of 2007 was pending before this Court till 02.02.2009 is of no consequence and the time spent in the said proceedings cannot be excluded in computing the period of limitation as sought to be contended by the learned counsel for the applicant. For the aforesaid reasons even if the period of limitation is taken to have commenced on 20.12.2006, the present application filed on 08.11.2010 is clearly barred by limitation. Hence, the present application is liable to be dismissed on that ground alone and it is not necessary to go into the other contentions advanced by the parties. Accordingly, the Arbitration application is dismissed. No costs. _______________ G. ROHINI, J Date: 07.04.2011 KLP [1]AIR 2003 SC 2629 [2] (2005)8 SCC 618