HON’BLE SRI JUSTICE B. SESHASAYANA REDDY ARBITRATIOIN APPLICATION No.168 of 2010 Date: June 16, 2011 Between: 1. Gopi Suri & 3 others … Applicants and 1. M/s. Laxmi Vani Constructions, Hyderabad & 2 others. … Respondents * * * HON’BLE SRI JUSTICE B. SESHASAYANA REDDY ARBITRATIOIN APPLICATION No.168 of 2010 O R D E R: This application has been taken out under Section 11 (6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to adjudicate and decide the disputes that have arisen out of the Development Agreement-cum-General Power of Attorney bearing document No.3212/2008. 2. Applicants 1 and 2 are the owners of plot Nos.67 and 68 of Pleasant Park, situated in Survey No.187 of Upparpalli village, Rajendernagar Mandal, RR District, admeasuring 506 square yards. Applicant No.3 is the owner of plot No.66 of Pleasant Park, situated in Survey No.187 of Upparpalli village, Rajendernagar Mandal, admeasuring 253 square yards and another plot admeasuring 36 square yards and plot No.81/P admeasuring 183.75 square yards. Applicant No.4 is the owner of a plot in Survey No.187 admeasuring 173.20 square yards, situated at Upparpalli village, Rajendernagar Mandal. She is also the owner of another plot Nos.79/P, 80 and 81/P comprising Survey Nos.450, 451, 452, 461 and 463 to 468 of Attapur village, Rajendernagar Mandal, R.R. District, admeasuring 251.10 square yards. The total extent owned by applicants 1 and 2 is 506 square yards, applicant No.3 is 472.75 square yards and applicant No.4 is 424.30 square yards. 3. The applicants entered into developmental agreement with the respondents on 07.6.2008. The respondents have to complete the project within 21 months with three months grace period. Since the respondents committed breach of the conditions of the development agreement, the applicants invoked arbitration clause in the Development Agreement and issued notice dated 25.8.2010 calling upon the respondents for settlement of disputes by taking recourse to arbitration as provided under clause 22 of the Development Agreement. Though the respondents received the notice, they neither complied with the request of the applicants nor issued reply. Hence, this application by the applicants seeking the relief stated supra. 4. The respondents filed counter-affidavit. It is stated in the counter- affidavit that a litigation in O.S. No.997 of 1997 is pending in respect of the lands covered by the Development Agreement. It is also stated in the counter-affidavit that the applicants have not followed the procedure contemplated under clause 22 of the Development Agreement and therefore the application filed by the applicants is liable to be dismissed. 5. For better appreciation, I may refer paragraph 5 of the counter- affidavit, which reads as hereunder: “These respondents respectfully submits that a perusal of notice dated 25.8.2010 based upon which the present arbitration application has been filed, at once does not raise any dispute so as to file the present application and the notice dated 25.8.2010 is premature on the face of it. The issuance of notice dated 25.8.2010 at once shows that there are differences between the parties but there are no disputes. Moreover, the said notice also does not call upon these respondents for appointment of an arbitrator within a prescribed period and further that they have appointed an arbitrator as contemplated under clause 22 of the said Developmental Agreement-cum-GPA. Clause 22 of the said Developmental Agreement reads as under: “In the event of any dispute arises between the parties herein in relation to interpretation of clauses, quality of work, delay in handing over the possession, the matter shall be referred to the arbitrators one chosen by each party and award shall be final and binding on both the parties and the relevant provisions of the Arbitration and Conciliation Act, 1996 shall apply.” 6. Heard the learned counsel appearing for the applicants and the learned counsel appearing for the respondents. 7. Learned counsel appearing for the applicants submits that the disputes between the applicants and the respondents are required to be resolved by taking recourse to clause 22 of the Development Agreement and accordingly the applicants called upon the respondents by issuing notice dated 25.8.2010 for resolution of the disputes through an arbitrator and the said notice is in accordance with the procedure laid down under clause 22, in which case the application deserves to be allowed. 8. In support of his submission, the learned counsel for the applicants placed reliance on the judgment of the Supreme Court in Geo-Group Communications INC. v. IOL Broadband Limited[1]. In the referred decision, the Supreme Court in the facts and circumstances stated therein came to the conclusion that the procedure contemplated in clause 11.7 of SHA dated 01.12.2005 seeking appointment of arbitrator has been complied with. 9. Learned counsel appearing for the respondents submits that specific procedure has been prescribed under clause 22 of the Development Agreement for appointment of an arbitrator and since the said procedure had not been followed, the application filed by the applicants is liable to be dismissed. 10. Since both the parties laid much emphasis on clause 22 of the Development Agreement, I deem it appropriate to refer the same and it reads as hereunder: “In the event of any dispute arises between the parties herein in relation to interpretation of clauses, quality of work, delay in handing over the possession, the matter shall be referred to the arbitrators one chosen by each party and award shall be final and binding on both the parties and relevant provisions of the Arbitration and Conciliation Act, 1996 shall apply.” 11. As per sub-section (2) of Section 11 of the Arbitration and Conciliation Act, 1996, the parties are free to agree on a procedure for appointing arbitrator or arbitrators. The parties herein have contemplated a procedure for appointment of arbitrators. The party invoking arbitration clause has to nominate arbitrator and make a request to the opposite party to make arbitrator on his behalf. The notice dated 25.8.2010 does not indicate that the applicants have proposed the name of the arbitrator. What all stated by him in the notice is that he is invoking clause 22 of the Development Agreement- cum-General Power of Attorney. The notice cannot be said to be in accordance with the procedure contemplated under clause 22 of the Development Agreement in which case this application is liable to be dismissed. 12. The arbitration application is accordingly dismissed. No order as to costs. _____________________________ B. SESHASAYANA REDDY, J Date: June 16, 2011. BSB [1] (2010) 1 Supreme Court Cases 562