THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.31 of 2011 (Dated : 21-07-2011) Between: M/s. Sai Jitesh Construction (P) Ltd. Rep. by its Managing Director P.Sridhar …Applicant A n d Y.Vijaya Lakshmi W/o late Suryakanth Reddy and others …Respondents THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.31 of 2011 ORDER: This arbitration application has been filed by M/s. Sai Jithesh Construction (P) Ltd., under sub-section (6) of Section 11 of the Arbitration & Conciliation Act, 1996 read with Clause 3(i)(d) of the Scheme for appointment of Arbitrators, 1996 for resolution of disputes between the parties relatable to Development Agreement dated 15.4.2006. 2. This is the second journey of the applicant to this Court. Earlier, the applicant filed Arbitration Application No.150 of 2010 seeking appointment of an arbitrator to adjudicate its’ claim against the respondents. The said application came to be dismissed on the ground that the applicant has not complied the procedure for appointment of arbitrator as agreed to. For better appreciation, I may refer the relevant portion of the order dated 5.2.2011 passed in A.A.No.5.2.2010, which reads as hereunder:- “ As could be seen from the arbitration clause extracted above, there is no provision for appointment of sole arbitrator for resolution of the disputes. The said clause enables each party to choose one arbitrator and the dispute shall be referred to the two arbitrators so nominated. In case of any difference of opinion between the said two arbitrators, a common umpire has to be nominated whose award should be final. Since the applicant had completely deviated from the procedure prescribed in the arbitration clause and called upon the respondents to appoint a sole arbitrator, as rightly contended by the respondents, the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 cannot be maintained. This view of mine is fortified by the decisions of the Supreme Court in INDIA HOUSEHOLD AND HEALTH CARE LTD. V. LG HOUSEHOLD AND HEALTH CARE LTD [ AIR 2007 SC 1376] and STANDARD CORROSION CONTROLS PVT. LTD. V. S.E.SERVICES SDN BHD[ AIR 2009 SC 1138] wherein it was held that an application for appointment of an arbitrator was not maintainable unless the procedure and mechanism agreed to by and between the parties was complied with. It was also held in NATIONAL HIGHWAYS AUTHORITY OF INDIA & ANR. V. BUMIHIWAY DDB LTD. (JV) & ORS{ 2006(9) SCALE 564] that the parties are required to comply with the procedure of appointment of arbitrator as agreed to and the defaulting party cannot be allowed to take advantage of its own wrong. For the aforesaid reasons, the Arbitration Application is dismissed. No costs” 3. Consequent on the dismissal of the earlier application, the applicant issued notice dated 10.3.2011 to respondents 1 to 3 naming his arbitrator and calling upon the respondents to nominate their arbitrator within ten days from the date of receipt of the notice. There being no response from the respondents, the applicant filed this instant application seeking the prayer stated supra. 4. Background facts, in a nutshell, leading to filing of this application are:- The respondents are owners of property bearing No. 5-2-210 to 212 situated at No.8, Distillery Road, Hyderbasti, R.P.Road, Secunderabad admeasuring 1675 Sq. yards. The applicant and the respondent entered into a development agreement on 15.4.2006. As per the development agreement, the applicant deposited Rs.20,00,000/- with the respondents as refundable (without interest) advance to be returned at the time of handing over possession of their share in the constructed area. A formal agreement came to be executed between the parties on 8th February 2008. The supplemental agreement was between the respondents herein and Y. Gyaneswara Reddy on the one hand and the applicant on the other hand. In the supplemental agreement, flats allotted to the parties to the development agreement have been detailed. It is the grievance of the applicant that on the instructions of the respondents, he got constructed additional area and he has to get Rs.3,500/- per sft for the additional constructed area. In the notice issued to the respondents, he claimed Rs.18,83,500/- from the 1st respondent and Rs.19,40,000/- from the 2nd respondent and Rs.15,43,500/- from the 3rd respondent. However, in the application, he claimed Rs.6,28,000/- from the 1st respondent and Rs.3,40,000/- from the 2nd respondent. No specific amount has been claimed from the 3rd respondent. For better appreciation, I may refer paras 5 to 7 of the affidavit filed in support of the application, which read as hereunder:- “5. The applicant submits that the as per the allotments made among the parties, the 1st respondent is entitled for 2604 Sq. ft of the constructed area. But she was allotted with flats bearing Nos.205, 206 and 306 of the total constructed area of 2935 Sq. for the and an excess area of 331 sft was got to her share for which the 1st respondent has agreed to pay Rs.3500/- per sft amounting to Rs.11,50,000/- . In addition to that, the 1st respondent demand the applicant to construct and provide two bathrooms by incurring additional expenditure of Rs.1,00,000/- and she has promised the applicant to reimburse the expenditure incurred by the applicant. 6. The applicant has also paid to the 1st respondent an amount of Rs.6,28,000/- as refundable deposit. 7. The applicant submits that the 2nd respondent is also liable to pay Rs.2,48,500/- towards differential amount for the excess constructed are of 71 sft for the flats allotted to him, i.e., flat Nos.204 and 401. The applicant has also paid to the 2nd respondent and amount of Rs.5,00,000/- towards refundable advance amount of the lessee of the 2nd respondent at the time of vacating the godown on behalf of the 2nd respondent apart from that the 2nd respondent is liable to return the advance amount of Rs.3,40,000/- at the time of taking delivery of the possession of the flats. The applicant submits that the respondent herein had taken possession of the respective flats without any consent of acceptance by the applicant and they had also let out the premises”. 5. Particulars of amount claimed against the other respondents have not been stated in the application. 6. The 3rd respondent filed counter. It is stated in the counter that the applicant even before expiry of thirty days time from the date of receipt of the notice as contemplated under Section 11(4) of the Arbitration and Conciliation Act, 1996 and therefore, the application is premature. It is also stated in the counter that so far as this respondent is concerned, there is no dispute which is required to be referred to arbitration as no specific amount has been claimed in the application against him. 7. Heard learned counsel appearing for the parties and perused the material brought on record. 8. With regard to the maintainability of the application even before expiry of thirty days, this issue has been dealt with earlier between the same parties in A.A.No.150 of 2010. The relevant portion of the order reads as hereunder:- “ Admittedly, the notice dated 21.8.2010 was issued by the applicant calling upon the respondents to respond within 10 days. The said notice was received by the respondents on 27.8.2010. Since there was no response from them within 10 days from 27.8.2010, the present application was filed before this Court on 7.9.2010. Hence the failure to wait for 30 days from the date of receipt of notice does not vitiate the proceedings. At any rate, as held by the Supreme Court in M/s. Konkan Rly. Corpn. Ltd. Vs. Rani Construction P. Ltd [ AIR 2002 SC 778] there is no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted although the period of 30 days had not expired and therefore it had no jurisdiction. Hence on the ground of non –compliance of the provisions of Section 11 of the Act, the applicant cannot be rejected as not maintainable”. In view of the observations made in the earlier round of litigation, it is impermissible for the respondents to contend that the application is not maintainable even before the expiry of thirty days from the date of receipt of the notice. 9. It is nextly contended by the learned counsel appearing for the applicant that the applicant has narrated the claim in the legal notice and even if some claims are absent in the brief statement of the applicant, it is not a ground to reject the claim against the respondent No.3. 10. Per contra; learned counsel appearing for the 3rd respondent submits that the brief statement annexed to the application is silent with regard to the claim made against the 3rd respondent. 11. The applicant having made specific claims against the respondents 1 and 2 omitted to make such claims against the 3rd respondent and it indicates that the applicant has no specific claim against the 3rd respondent. I have read and re-read the brief statement annexed to the application. The brief statement is silent as to the particulars of claim against the 3rd respondent. It is not indicated in the brief statement as to the quantum of the amount claimed against the 3rd respondent. Therefore, so far as claim against the 3rd respondent is concerned, it is to be inferred that the applicant is not claiming any amount from him. The dispute is only between the applicant on one hand and respondents 1, 2 and 4 and 5 on the other hand. 12. Accordingly, the Arbitration Application is allowed in part appointing Sri V.V.Raghavan, a retired District Judge, R/o No.302, Legends Residency, Street No.2, Shantinagar, Masab Tank, Hyderabad-28, as arbitrator to consider the claim of the applicant against respondents 1, 2 and 4 and 5 relatable to development agreement dated 15.4.2006 and supplemental agreement dated 15.4.2006. He shall fix his own fees. _____________________ B.SESHASAYANA REDDY, J Dt.21-07-2011 *RAR