THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY ARBITRATION APPLICATION No.99 of 2010 27th June, 2011 Between :- M/s.CorporateDeposits and Investment Private Limited, Hyderabad Rep. By its Manager, Pradeep Joy .. Applicant And S.Ram Reddy and another .. Respondents THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY ARBITRATION APPLICATION No.99 of 2010 ORDER:- This application has been taken out under sub-section (6) of Section 11 of the Arbitration and Conciliation Act, 1996 read with para 3(i)(c) of the Scheme for appointment of Arbitrator, seeking appointment of Arbitrator for resolution of the disputes that have arisen between the parties in respect of Term Loan Agreement dated 6-4- 2009. The applicant is a Company registered under the Indian Companies Act as a Private Limited Company. Respondents No.1 and 2 approached the applicant for a loan for the purpose of construction and renovation of the School by name St.Johns High School, situated at House No.3-5-25/B, Bharatnagar, Ramanthapur, Hyderabad. The 1st respondent is the Correspondent of the said school. The applicant sanctioned a loan of Rs.25,00,000/- on 6-4- 2009 and the respondents No.1 and 2 entered into a Term Loan Agreement with the applicant on the said date. The applicant disbursed an amount of Rs.15,00,000/- on 6-4-2009 vide cheque bearing No.306999 in favour of Sri Ramanjaneya Steel Industries and thereafter on 15-4-2009 disbursed an amount of Rs.7,00,000/- in favour of Sri Bhavani Stone vide cheque bearing No.316484. In all, the applicant disbursed an amount of Rs.22,00,000/-. The applicant came to know that the respondents misutilized the loan amount and thereupon the applicant demanded the respondents to repay the loan amount. The applicant also issued a legal notice dated 12-2-2010 demanding for repayment of loan amount. The respondents having received the notice, neither paid the amount nor issued any reply disputing the liability. As per the terms of the Loan Agreement, dated 6-4-2009 disputes between the parties are required to be resolved by taking recourse to the provisions of the Arbitration and Conciliation Act, 1996 and the place of arbitration shall be at Hyderabad. The applicant issued notice dated 7-6-2010 proposing the name of Sri N.Sanyasi Rao, retired District and Sessions Judge, as sole Arbitrator for resolution of the disputes that have arises between the parties relatable to Term Loan Agreement. The respondents despite receipt of notice, either consented or issued reply proposing any other person as Arbitrator. Hence, this application. Notice to respondents came to be ordered on 11-8-2010. Respondents entered appearance through a Counsel. Despite granting good number of adjournments, the respondents failed to file counter affidavit. Heard learned Counsel appearing for the applicant and perused the material brought on record. Learned Counsel appearing for the applicant submits that the applicant disbursed the loan of Rs.22,00,000/- pursuant to the Loan Agreement dated 6-4-2009 executed by respondents No.1 and 2 and as the applicant came to know that the respondents No.1 and 2 misutilized the loan amount, demanded the respondents to pay the loan amount. There being no response from the respondents, the applicant invoked the arbitration clause contained in the loan agreement. There being no response from the respondents to the notice dated 7-6-2010, the applicant approached this Court seeking intervention in appointment of Arbitrator. I have gone through the Term Loan Agreement. The disputes between the parties are required to be resolved by taking recourse to the provisions of the Arbitration and Conciliation Act. For better appreciation, I may refer para 12.4 of the Term Loan Agreement, which reads as hereunder:- “Dispute Resolution Any dispute relating to the Term Loan hereunder or in respect of any rights, liabilities and obligations arising out of this Agreement shall be resolved by arbitration by a sole Arbitrator appointed by a sole arbitrator appointed by both parties if the parties are unable to decide on a sole arbitrator, then each of the parties shall appoint one arbitrator, and the two arbitrators shall in conjunction appoint a third arbitrator, who shall preside over the arbitration. The arbitration proceedings shall be carried out in accordance with the provisions laid down by the Arbitration and Conciliation Act, 1996, and the place of arbitration shall be Hyderabad. The arbitration proceedings shall be conducted in the English language. The parties shall equally share the costs of the arbitrator’s fee, but shall bear the costs of their own legal Counsel engaged for the purpose of the arbitration.” The applicant issued notice dated 7-6-2010 proposing the name of the Arbitrator. The respondents did not choose to issue any reply. Having considered the facts and circumstances, I find that the applicant made out a valid ground for appointment of Arbitrator for resolution of the disputes that have arisen between the parties relatable to Term Loan Agreement dated 6-4-2009. Accordingly, the application is allowed. No order as to costs. Sri N.Sanyasi Rao, retired District Judge, H.No.11-5-413, Bhavya’s Krishna Residency (Opposite to RBI Quarters), Flat No.304, Red Hills, Hyderabad, is appointed as sole Arbitrator for resolving the disputes between the parties that have arisen relatable to Term Loan Agreement, dated 6-4-2009. He is at liberty to fix his own fee. No order as to costs. _________________________ B.Seshasayana Reddy, J 27th June, 2011 smr