THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.43 of 2011 Date:09th September, 2011 Between: Purnima R.Jhaveni W/o.Sri Rajender Jhaveri …Applicant And M/s.Dakshin Shelters Private Ltd., Rep. by its Director Mr.P.K.Agarwal S/o.Mr.M.P.Agarwal …Respondent *** THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.43 of 2011 ORDER: This application has been taken out by Purnima R.Jhaveri under Section 11(5) of the Arbitration and Conciliation Act, 1996, (for short, ‘the Act’) seeking appointment of an arbitrator for adjudication of disputes relatable to Development Agreement-cum-General Power of Attorney, dated 07.02.2006. 2. Purnima R.Jhaveri-the applicant is the owner and possessor of Ac.3.00 comprising Survey No.169 (P) at Vattinagulapalli Village, Rajendranagar Mandal, Ranga Reddy District. She executed a Development Agreement-cum-General Power of Attorney, dated 07.02.2006, in favour of M/s.Dakshin Shelters Pvt. Ltd.-the respondent. The time stipulated for development of the land in the agreement was six months, extendable by another six months. The respondent has to obtain exemption from the purview of G.O.No.111 from the Government. The applicant finding no possibility of the respondent getting exemption of the land from the purview of G.O.No.111, cancelled the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, under a registered cancellation deed, bearing No.2851/09, dated 25.11.2009. The disputes between the parties in respect of the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, are required to be settled by way of arbitration. The applicant issued a notice, dated 10.12.2010, invoking the arbitration clause and nominating Sri Justice P.L.N.Sarma, a Retd. Judge of High Court of A.P., on her behalf and calling upon the respondent to nominate an arbitrator on its behalf. The respondent issued reply, dated 10.01.2011, contending that in view of cancellation of the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, by the applicant herself, question of invoking the arbitration clause in the said agreement does not arise. For better appreciation, I may refer relevant portion of the reply notice, which reads as hereunder: “We emphatically deny your statement in the paragraph No.3 of the notice under reply wherein it is stated by you that you have intimated us about the cancellation of the Registered Development Agreement Cum GPA. We state that there is no communication from you either before or after the alleged unilateral cancellation deed was executed by you. You are put to strict proof of the same. Hence, we state that we came to know about the execution of unilateral cancellation deed bearing Document No.2851 of 2009 for the first time through the notice under reply. You cannot blow hot and cold at the same time, as on one hand it is stated in the notice that the Development Agreement Cum GPA was cancelled, but on the other hand you want to invoke the Arbitration Clause of the same document. According to you, by executing the cancellation deed, the entire document was cancelled, as such you cannot select one of the clauses in the said document to suit your convenience. As far as we are concerned, the said cancellation deed shall be challenged by us before the competent Court of Law, as we came to know about the cancellation deed only through the notice under reply. We are also advised that unilateral cancellation of the duly registered document is not permissible under the provisions and rules of the Registration Act. Hence, the cancellation deed is a void document and does not bind us.” Hence, this application by the applicant seeking the relief stated supra. 3. Notice to the respondent came to be issued on 30.04.2011. The respondent entered appearance through a counsel and filed counter- affidavit. 4. The execution of the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, between the parties is not disputed. The action of the applicant in cancelling the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, by a deed of cancellation, dated 25.11.2009, is assailed by the respondent by filing a civil suit being O.S.No.396 of 2011 on the file of VIII Additional Senior Civil Judge, Ranga Reddy District, at L.B.Nagar. Therefore, the deed of cancellation is now subject matter of the civil suit being O.S.No.396 of 2011. Unless the deed of cancellation is set aside or declared void, the applicant herein cannot claim that the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, is still in force and that she can invoke the arbitration clause in the said agreement. 5. Heard Sri Mohmood Ali, learned counsel appearing for the applicant and Sri Deepak Bhattacharjee, learned counsel appearing for the respondent. 6. Sri Mohmood Ali, learned counsel appearing for the applicant contends that the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, came to be cancelled because of the laches on the part of the respondent and the disputes between the parties consequent on cancellation of the Development Agreement- cum-General Power of Attorney, dated 07.02.2006, are required to be settled by way of arbitration as per Clause 25 of the Development Agreement-cum-General Power of Attorney, dated 07.02.2006. Learned counsel laid much emphasis on Clause 25 of the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, which reads as hereunder: “25.Arbitration : 25.1: Tribunal: Disputes relating to this Agreement or its interpretation shall be referred to the arbitration of an arbitral tribunal, consisting of three arbitrators (Tribunal), one each to be appointed by the Parties hereto and the third to be appointed by the two arbitrators so appointed. The award of the Tribunal shall be final and binding on the Parties. The arbitration proceedings will be held only in Secunderabad and the courts situated in the Ranga Reddy District alone shall have the territorial jurisdiction to entertain the dispute. The provisions of Arbitration and Conciliation Act shall comply to the arbitration procedures. 25.2: Powers of Tribunal: The Tribunal shall be at liberty to (1) proceed summarily (2) avoid all rules, procedures and/or evidences that can be lawfully avoided by the mutual consent and/or directions by the Parties and (3) award damages along with the final award against the Party not complying with any interim award or order passed by the Tribunal. The Tribunal shall: (a) Make the award in English and within four months from the date of appointment with the right to give extension of not more than one month at a time on emergent grounds but the total extensions shall not be more than four months. (b) Conduct the proceedings from day-to-day and for about 5 hours per day save for initial sittings. (c) Not grant to either of the Parties any extension of time and/or adjournment except on grounds beyond their control and only for such periods as be of the absolute minimum. (d) The Tribunal shall be entitled to pass interim award granting interim relief to the parties. 25.3 Mechanism And Procedure: The procedure to be followed shall be decided by the Tribunal. The directions/award of the Tribunal shall be final and binding on the Parties.” 7. Sri Deepak Bhattacharjee, learned counsel appearing for the respondent submits that it is the applicant who cancelled the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, by executing a cancellation deed and the said cancellation deed is the subject matter of the civil suit and as the civil Court is ceased of the matter, question of appointing the arbitrator does not arise. It is also contended by the learned counsel that the suit filed by the respondent to declare the deed of cancellation is pending on the file of VIII Additional Senior Civil Judge as O.S.No.396 of 2011, and unless and until the Development Agreement-cum-General Power of Attorney, dated 07.02.2006 is revived, no clause therein can be given effect. 8. Execution of the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, between the parties is not in dispute. It is the contention of the applicant that the said Development Agreement-cum-General Power of Attorney, dated 07.02.2006, came to be cancelled because of the laches on the part of the respondent. Be that as it may, disputes have arisen between the parties relatable to the Development Agreement-cum-General Power of Attorney, dated 07.02.2006. The said disputes are required to be resolved as per Clause 25 of the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, by way of arbitration. The composition of the Tribunal also has been indicated in the said Clause. The applicant nominated Sri Justice P.L.N.Sarma, a Retd. Judge of High Court of A.P., as an arbitrator on her behalf. Since the respondent failed to nominate its arbitrator, despite notice dated 10.12.2010, the applicant has moved this application. 9. It is well settled that merely because the contract has come to an end by its termination due to breach, the arbitration clause does not perish nor is rendered inoperative, rather it survives for resolution of disputes arising ‘in respect of’ or ‘with regard to’ or ‘under’ the contract - vide the decision of the Supreme Court in Branch Manager, Magma Finance and Leasing Limited and Ors. v. P. Madhavi Latha & Anr. [(2009) 10 SCC 103]. 10. Though the applicant is stated to have cancelled the Development Agreement-cum-General Power of Attorney, dated 07.02.2006, the arbitration clause therein still subsists to the extent of resolution of disputes between the parties. Hence, I find that the application deserves to be allowed. 11. Accordingly, the Arbitration Application is allowed. Sri D.V.Seetharama Murthy, Senior Advocate, R/o.8-2-693/PC/7, Mithila Nagar, Road No.12, Kaman, Banjara Hills, Hyderabad, is appointed as an arbitrator on behalf of the respondent for adjudication of disputes relatable to the Development Agreement-cum-General Power of Attorney, dated 07.02.2006. The arbitrator nominated by the applicant and the arbitrator appointed by this Court are required to appoint the third arbitrator before entering into reference. The arbitrator is at liberty to fix his own fee. No order as to costs. ______________________ B.SESHASAYANA REDDY, J. Date:09th September, 2011. cs THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.43 of 2011 Date:09th September, 2011