THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY ARBITRATION APPLICATION No.100 of 2010 27th June, 2011 Between :- M/s.CorporateDeposits and Investment Private Limited, Hyderabad Rep. By its Manager, Pradeep Joy .. Applicant And Boddu Manohar Reddy And others .. Respondents THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY ARBITRATION APPLICATION No.100 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 improvement of infrastructure and for the purchase of computers and science equipments of the School by name Vedam, situated at House No.11-1169/5/4, Plot Nol.4, Kiran Arcade, Loyola College Road, Old Alwal Road, Secunderabad. The 1st respondent is the Correspondent of the said school. The applicant sanctioned a loan of Rs.10,00,000/- on 2-6-2009 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.6,00,000/- on 2-6- 2009 vide cheque bearing No.327363 in favour of M/s.Hac Technologies and thereafter on 9-7-2009 disbursed an amount of Rs.3,50,000/- in favour of Cherry Wood Decors vide cheque bearing No.338258, and also Rs.50,000/- vide cheque No.338259 in favour o Chandikha Book Depot. In all, the applicant disbursed an amount of Rs.10,00,000/-. Respondents No.3 and 4 stood as guarantors to the said loan amount. The respondents failed to discharge their contractual obligations and defaulted in repayment of the loan amount and interest and other charges. The same was duly intimated to the respondents No.1 to 4 and demanded the respondents to repay the loan amount. The applicant also issued a legal notice 18-2-2010 demanding for repayment of loan amount along with interest and other charges. 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 2-6-2009, 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.10,00,000/- pursuant to the Loan Agreement dated 2-6-2009 executed by respondents No.1 and 2 and respondents No.3 and 4 stood as guarantors to the said loan amount and as the respondents No.1 and 2 faileld to pay the loan amount along with interest and other charges, 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 2-6-2009. 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 2-6-2009. He is at liberty to fix his own fee. _________________________ B.Seshasayana Reddy, J 27th June, 2011 smr