THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY A.A.NO.119 OF 2010 ORDER This application has been taken out under Section 11 (5) of the Arbitration and Conciliation Act, 1996 read with Scheme for appointment of Arbitrators, 1996. The application averments in brief are: M/s. Maytas Properties Limited represented by its authorized representative Mr.Teja Pratap Raj seeks appointment of an Arbitrator to adjudicate the claims and disputes arising out of the agreement of construction dated 13-5-2009. The applicant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of construction and development of commercial and residential buildings and is presently engaged in the development of a venture at Bachupally under the name and style of “Maytas Hill county”. The respondents approached the applicant-company for purchasing an apartment bearing Apartment No.4A, 4th floor, Block Name: Ooty in the said Maytas Hill County project. The said apartment was initially allotted to one K.Vamsee Krishna and was subsequently transferred to the respondent pursuant to a request for transfer lodged with the applicant on 4-12-2007. Upon transfer of the semi-finished apartment to the respondent, the respondent entered into an Agreement dated 13-5-2009 for construction and completion the said apartment. The Maytas Hill County project was commenced and was being executed by the applicant as per schedule. However, on a wholly incorrect understanding of the applicant company’s perceived association with Mr.B.Ramalinga Raju and Satyam Computer Services Limited and on the back of misinformation disseminated by the electronic and press media, the private equity investors and financial institutions which had committed funding to the applicant company resiled and withdrew from the Hill County Project causing serious and acute shortage of funds which affected the completion of the Hill County project. Even before the unrelated and independent status of the applicant company could be established, various investigations and proceedings were incorrectly instituted against the applicant-company. Various attachments and Court orders have also delayed the project. The applicant company has been communicating with its customers as to the progress of the project and also intimated to them of the factors beyond the control of the applicant-company, which have caused delays in the implementation of the project. The respondent by notice dated 24-2-2010 has sought for the cancellation of the sale deed and refund of the monies paid. The respondent also invoked the arbitration clause and sought appointment of sole arbitrator to adjudicate upon the disputes and claims arise out of the construction agreement dated 13.5.2009. The applicant-company addressed a letter dated 30-3-2010 to the respondent and her counsel nominating Sri Justice V.Bhaskar Rao, a retired High Court Judge, as sole Arbitrator and sought consent of the respondent. The respondent vide letter dated 4-5-2010 declined to give her consent for appointment of Sri Justice V.Bhaskar Rao, a retired High Court Judge as an Arbitrator. Hence, this application by M/s. Maytas Properties Limited seeking the relief stated supra. Notice to the respondent came to be ordered on 23.08.2010. The applicant took out notice to the respondent and filed proof of service. Despite service of notice, the respondent did not resist the application. Heard learned counsel appearing on behalf of the applicant and perused the material brought on record. Learned counsel appearing on behalf of the applicant submits that the applicant company and respondent entered into Agreement for Construction on 13-5-2009 and in the event of any disputes arising out of the construction agreement, they are required to be resolved by taking recourse to the provisions of Arbitration and Conciliation Act, 1996. Learned counsel refers to Clause 6 of the Construction Agreement, which reads as hereunder: “In the event of any dispute between the parties in connection with the validity, interpretation, implementation or breach of any provisions of this agreement or any other disputes including the question of whether there is a proper termination of the agreement shall be resolved through arbitration. The decision of the Arbitrator shall be final and binding on both parties. The arbitration proceedings shall be in accordance with the provisions laid down in the Arbitration and Conciliation Act, 1996 and shall be governed by the laws in A.P. subject to the authorized arbitration clauses. The venue for the Arbitration proceedings shall be Hyderabad and the language shall be in English. All the proceedings are subject to the exclusive jurisdiction of the courts at Hyderabad limits.” Indeed the respondent issued notice dated 24-2- 2010 terminating the construction agreement and invoking the arbitration clause of the construction agreement. Paras 18 to 20 of the notice needs to be noted and they are thus: “My client does not foresee the first of you completing the construction in the near future. The first of you along with 2,3,4,5 and 7 are jointly and severally responsible for the tortious acts committed by you and the loss sustained by my client. The sixth of you has been appointed by the Government of India as Nominee Director of the said Company in view of the vast irregularities committed by the said company with the object of setting its affairs right. My client therefore calls upon you to forthwith and get the sale deed cancelled and refund the entire amounts received by you 60,43,247/- (Rupees sixty lakhs forty three thousand two hundred and forty seven only) along with incidental expenses, such as Stamp Duty, Registration Charges, service tax, and other incidental expenses together with interest on the same at 24% per annum along with damages of Rs.6,50,000/- Rupees six lakhs fifty thousand only), being the loss sustained by her by parting with her hard earned funds in a bogus project and towards mental agony. Had she invested this amount in a genuine construction company, she would have not only had a fully completed apartment but also enjoyed its rents. This amount should be refunded within one week of the receipt of this notice. In case you fail to do so Clause-7 of the Construction Agreement dated 13-05-2009 would come into play and the dispute should be resolved through Arbitration under the provisions of the Arbitration and Conciliation Act through a sole Arbitrator to be appointed by the first/seventh of you. My client hereby calls upon the first of you or the person acting as the Vice-Chairman of Maytas Properties Limited to nominate a sole arbitrator to adjudicate upon the above referred dispute within 30 days of the receipt of this request. If you fail to appoint an Arbitrator within the said period my client will be constrained to take steps for the appointment of an Arbitrator under the provisions of Section 11 (5) of the Arbitration and Conciliation Act, 1996.” The applicant company proposed the name of Sri Justice V.Bhaskar Rao retired Judge of the High Court as sole arbitrator. But the respondent vide notice dated 4-5- 2010 declined to give her consent for appointment of Sri Justice V.Bhaskar Rao retired Judge of this Court as arbitrator. Hence, this application has been filed. Clause 6 in the construction agreement indicates that the disputes between the parties are required to be settled by taking recourse to the provisions of the Arbitration and Conciliation Act, 1996. The respondent is the person who issued notice on 24-2-2010 terminating the construction agreement and requesting the applicant to appoint an arbitrator. When the applicant proposed the name of Sri Justice V.Bhaskar Rao, a retired High Court Judge as an arbitrator, the respondent issued notice declining to give her consent. Since the disputes between the parties are required to be resolved by taking recourse to the provisions of Arbitration and Conciliation Act, 1996, it is needless to say that appointment of arbitrator is essential. In that view of the matter, the applicant made out a valid ground for resolution of the disputes relatable to the Agreement for Construction dated 13-5-2009. Accordingly, the application is allowed appointing Sri A.Venkat Reddy, former Vice Chairman of Andhra Pradesh Administrative Tribunal, Hyderabad as an arbitrator for resolution of the disputes between the parties in respect of Agreement of Construction dated 13-5-2009. He shall fix his fees. ___________________________ B.SESHASAYANA REDDY,J rkk Dated: 9-6-2011