THE HON’BLE Ms. JUSTICE G.ROHINI ARBITRATION APPLICATION No.154 OF 2010 Dated: 23.03.2011 Between Hypercube Design Centre Pvt. Limited, Rep. by its Managing Director Mr. M. Gouri Shankar. … Applicant And Mr. Pulla Reddy Veera Reddy and others. … Respondents THE HON’BLE Ms. JUSTICE G.ROHINI ARBITRATION APPLICATION No.154 OF 2010 ORDER : 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 resolution of the disputes between the applicant and the respondents arising out of the contract dated 20.12.2007. The applicant is a private limited company. The 1st respondent claims to be the absolute owner and possessor of the land admeasuring Ac.11-16 guntas situated at Pudoor Village, Medchal Mandal, Rangareddy District. The 2nd respondent is his wife and the respondents 3 to 5 are his sons. It is not in dispute that the 1st respondent entered into a Development Agreement-cum-General Power of Attorney, dated 20.12.2007 with the applicant company for development of the aforesaid Ac.11-16 guntas of land by constructing residential villas in a gated community. Accordingly the applicant company paid a sum of Rs.70 Lakhs to the 1st respondent and the possession of the property was handed over to it. The applicant company claims to have spent a further sum of Rs.25 Lakhs for sanction of the project loan. It is alleged by the applicant that due to the non- cooperation of the respondents and non-submission of the documents in proof of their right, title and interest in the property in question, the project loan was not released. It is also alleged that the respondents made false claims in respect of the property in question and submitted false documents and thus played fraud on the applicant company and dishonestly induced the applicant company to pay a huge sum of Rs.70 Lakhs. Alleging that because of the misrepresentation of the respondents, the applicant was unable to proceed with the developmental activities and suffered loss, the applicant company got issued notice dated 28.06.2010 invoking the arbitration clause under the Agreement dated 20.12.2007 and proposing the name of Mr. Venkata Reddy as an Arbitrator apart from one of the Directors of the applicant company and calling upon the respondents to appoint an arbitrator of their choice within a period of 30 days. The said notice was returned with postal endorsement ‘refused’. Hence the present application under Section 11 (6) of the Act seeking appointment of an Arbitrator for resolution of the disputes. In the counter-affidavit filed on behalf of the respondents, while denying the allegations of inaction made by the applicant, it is pleaded that in fact the possession of the land was handed over to the applicant though the balance sale consideration of Rs.30 Lakhs had not been paid. It is further alleged that the applicant company itself was prolonging the execution of works agreed under the Agreement on one pretext or the other and therefore there was no cause of action at all for invoking the arbitration clause. It is also contended that since there is no arbitrable dispute, the application for appointment of arbitrator cannot be maintained. In the Reply affidavit filed by the applicant, the allegations made by the respondents have been denied. I have heard the learned counsel for both the parties. As noticed above, the execution of the Development Agreement, dated 20.12.2007 is not in dispute. The said agreement contains an arbitration clause which reads as under: “Clause 19. In case of any disputes of settlements arising between the parties the same shall be referred to arbitration and the decision of the arbitrator(s) shall be final and binding on both the parties.” However the contention of the respondents is that there are no arbitrable disputes which can be referred for arbitration. It is true that whether there is a live claim which requires arbitration is also an issue which requires consideration by the Chief Justice or his designate while considering an application made under Section 11 of the Arbitration and Conciliation Act. However as held by the Supreme Court in NATIONAL INSURANCE CO. LTD. v. BOGHARA POLYFAB (P) LIMITED[1] the preliminary issues which the Chief Justice or his designate is bound to decide are whether the Court has territorial jurisdiction and whether there is an arbitration agreement to which the applicant is a party. So far as the issue relating to existence of a live claim, the Chief Justice / his designate may choose to decide or such issue can be left to the decision of the arbitral tribunal if it is found that such issue requires consideration on evidence. In the instant case, it is clear from the pleadings of the parties that there are various disputes between the parties arising out of the Development Agreement, dated 20.12.2007. Since the said disputes require consideration on evidence, it is appropriate to leave it to the decision of the arbitrator and there is no need to go into the said disputes at this stage. Hence the applicant is justified in seeking appointment of an arbitrator under Section 11 (6) of the Arbitration and Conciliation Act, 1996. Accordingly, Sri Justice P. Ramakrishnam Raju, a former Judge of this Court is hereby appointed as Arbitrator to resolve the disputes between the parties arising out of the Development Agreement, dated 20.12.2007. It is open to the learned arbitrator to fix his fee, which shall be borne by both the parties equally. Arbitration Application is accordingly allowed. No costs. ______________ G. ROHINI, J. Dt. 23.03.2011 gbs [1] (2009) 1 SCC 267