THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.15 of 2011 25th April, 2011 Between :- M/s.Goyal’s Timber Technicks Limited, Rep.by its Director V.P.Goyal .. Applicant And M/s.K.K.Infrastructures, A partnership firm rep. By Its Partner/Authorised representative Krishna Kant and another .. Respondents THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.15 of 2011 ORDER:- This application has been taken out by M/s.Goyal’s Timber Technicks Limited, a company incorporated under the Companies Act, under Section 11(5)(b) of the Arbitration and Conciliation Act, 1996, seeking appointment of Presiding Arbitrator for resolution of the dispute arising out of the Hire Purchase Agreement dated 25-2- 2010. 2. The background facts, in a nutshell, leading to filing of this application by M/s.Goyal’s Timber Technicks Limited are:- the applicant is the owner of certain FUVI Form works systems, shuttering and scaffolding materials intended for construction activity. The respondent company requested the applicant-company to give the said material and equipment for hire to enable the respondent to carry on the business of construction with an option to purchase the same. The applicant-company agreed to deliver the equipment to the respondent on hire and certain terms and conditions. The parties reduced the terms and conditions into writing. The agreement is styled as ‘Hire Purchase Agreement’. As per the terms of the Hire Purchase Agreement, the respondent agreed to take the material and equipment for hire purchase price inclusive of interest for total consideration of Rs.91,34,857/-. The respondent agreed to pay a sum of Rs.5,70,927/- towards earnest deposit to the applicant-company. The earnest money will be adjusted from the hire purchase price of materials and equipment when the respondent exercised option to purchase the material and equipment. The respondent having taken the material and equipment committed default in paying the instalments. Thereupon the applicant-company issued a notice dated 15-6- 2010 calling upon the respondent to pay EMI of Rs.1,90,309/- due as on 18-6-2010. Consequent on the bouncing of cheques issued by the respondent-company, a notice came to be issued to the respondent calling upon the respondent to make amounts good covered under the cheques which came to be bounced. Because of the failure of the respondent in making the instalments, the applicant-company terminated the Hire Purchase Agreement by issuing a notice dated 15- 7-2010. Subsequently, another notice came to be issued on 16-8- 2010 invoking the arbitration clause in the Hire Purchase Agreement for resolution of the dispute and proposing Sri Vijay Garg as sole arbitrator in terms of the Hire Purchase Agreement dated 25-2-2010. The respondent issued a reply nominating Dr.T.Narasimha Rao, Begumpet, as arbitrator on its behalf. Thereupon, the applicant- company issued letter dated 4-12-2010 requesting both the arbitrators to nominate Presiding Arbitrator to resolve the dispute pending between the parties. There being no response from the two arbitrators, the applicant-company approached this Court seeking appointment of Presiding Arbitrator. 3. Notice to respondent came to be ordered on 18-3-2011. The applicant has been permitted to take out notice to respondents by ‘Regd.Post with Ack.Due’. Accordingly, the applicant took out notice to the respondents and filed proof of service. Despite notice being served on the respondents, they did not choose to appear either in person or through Counsel. 4. Heard learned Counsel appearing for the applicant-company. 5. Learned Counsel appearing for the applicant-company submits that the dispute between the parties is required to be resolved by taking the recourse to the provisions of the Arbitration and Conciliation Act, 1996, and accordingly, the applicant-company proposed the name of the arbitrator on its behalf, but the respondent did not give consent for the name of the arbitrator proposed by the applicant-company and instead proposed the name of Dr.T.Narasimha Rao as arbitrator on its behalf. Thereupon, the applicant-company issued notice to the two arbitrators to propose the name of the Presiding Arbitrator. There being no response from the two arbitrators, the applicant-company is compelled to approach this Court seeking appointment of Presiding Arbitrator. Learned Counsel took me to clause 30 of the Hire Purchase Agreement. 6. Clause 30 of the Hire Purchase Agreement reads as hereunder:- “If any dispute arises between the parties out of or in connection with the agreement whether in the nature of interpretation or meaning of any term hereof or as to any claim by one against the other, or otherwise the same shall be referred to arbitration of a common arbitrator if agreed upon. Otherwise to two arbitrators one to be appointed by each party hereto and the arbitration shall be governed by the Arbitration Act, 1940.” 7. Indisputably, the Hire Purchase Agreement came to be terminated by the applicant-company by issuing notice dated 15-7- 2010. Disputes between the parties as per clause 30 of the Hire Purchase Agreement are required to be resolved by taking recourse to the Arbitration Act. Indeed, the applicant-company nominated Mr.Vijay Garg as arbitrator on its behalf whereas the respondent nominated Dr.T.Narasimha Rao as arbitrator on its behalf. There being no response from the two arbitrators with regard to appointment of Presiding Arbitrator, the applicant-company has approached this Court. In view of the above discussion, I find that the applicant- company made out a valid ground for appointment of Presiding Arbitrator. 8. Accordingly, the Arbitration Application is allowed. Sri Justice Tamada Gopala Krishna, a retired Judge of this Court, is appointed as Presiding Arbitrator. He is at liberty to fix his own fee. No order as to costs. ________________________ B.Seshasayana Reddy, J 25th April, 2011 smr