THE HONOURABLE SRI JUSTICE N.V. RAMANA WRIT PETITION No.247 of 2010 DATED: 03.08.2010 Between: M/s. Sri Sai Mourya Infra Private Limited, a Company (Special Purpose Vehicle/ Project Company), Registered under the Companies Act, 1956, Having its Registered Office at No.1158, Plot No.346, MLA’s Colony, Road No.12, Banjara Hills, Hyderabad, rep. by its Director Sri S. Jaya Prakash .. Petitioner And The Government of Andhra Pradesh, rep. by its Principal Secretary, Municipal Administration Department, Hyderabad and others. .. Respondents ORDER: It appears, the petitioner herein and the 2nd respondent Corporation entered into a lease agreement as well as a development and management agreement, on 09.06.2008, with regard to development of a project called Urban Entertainment Center Project, comprising of a mega shopping mall with multiplex, food courts and family entertainment center along with business class hotel and convention center, at Kadapa, on Build, Operate and Transfer basis. Petitioner states that it has furnished a bank guarantee, dated 05.04.2008, in favour of the 2nd respondent, for a sum of Rs.91,12,500/-, valid for a period of 42 months, towards performance guarantee for development and construction, apart from other payments required. After possession of the site was handed over to it to ground the project and commence construction as per the agreements, it has submitted the proposals for approval, through the 2nd respondent, to the Director of Town and Country Planning (DTCP), A.P., Hyderabad, but the same were returned unapproved, with certain objections, on 01.07.2009. The petitioner states that two main grounds for rejection of approval are that the site is not in commercial use zone, but the same is in public and semi public use zone, where the proposed construction is not permitted as per the zoning regulations of Kadapa Town, and that the minimum width of approach road is required to be 18 meters (60 feet). Thereupon, the petitioner submitted several representations to the 2nd respondent, requesting to resolve the said issues and also consider waiver of lease rental for the delayed period and extension of date of payment of advance lease rentals. It is the grievance of the petitioner that, without considering its representations, the 2nd respondent Corporation is seeking to invoke the bank guarantee issued by it for a sum of Rs.91,12,500/-, towards performance guarantee for development and construction, and addressed a letter to the 3rd respondent bank, on 06.01.2010, seeking payment of the amount under the bank guarantee. Aggrieved by the same, the petitioner filed the present writ petition, seeking directions to respondents 2 and 3 not to encash the bank guarantee issued by it. Today, at the hearing, when it was pointed out by this Court that the petitioner has an effective remedy of arbitration, for resolution of the dispute in question, as provided under Article 12 of the lease agreement dated 09.06.2008, learned counsel for the petitioner admitted the same and requested to grant six weeks’ time for the petitioner to avail the said remedy, by moving an appropriate application before the authority concerned, which is not opposed by the learned counsel appearing for the respondents. Considering the facts and circumstances of the case and the request made by the learned counsel for the petitioner, the writ petition is disposed of as under: “The petitioner is at liberty to avail the remedy of arbitration, within six weeks from today. Till then, interim orders passed by this Court on 12.01.2010 shall continue. ” There shall be no order as to costs. __________________ JUSTICE N.V. RAMANA 3rd August, 2010 Note:- Issue CC in four days. B/o IBL