THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.57 of 2011 5th August, 2011 BETWEEN:- Smt.P.Sunitha .. Applicant And M/s.Vijetha Foundations & Constructions Pvt.Ltd., 16-11-515/1, Vijetha Navaratan Trade Centre, Dilsukhnagar, Hyderabad Rep.by its Managing Director, Ch.Madan Mohan .. Respondent THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY Arbitration Application No.57 of 2011 ORDER:- This application has been taken out under sub-Sections (5) and (6) of Section 11 of the Arbitration and Conciliation Act, 1996 read with paras 2 and 3 of the Scheme for appointment of Arbitrators, 1996, seeking appointment of arbitrator for resolution of the disputes relatable to Memorandum of Understanding dated 29-12-2009. The applicant and the respondent entered into Memorandum of Understanding with regard to the investment of amount in the implementation of the venture namely “Vijetha Shyamala Prestige”. As per the terms of the Memorandum of Understanding, the applicant and the respondent agreed to invest @ 50:50 in the proposed venture. They also agreed to share the profits and losses in the business transaction of the proposed venture in the ratio of 67% : 33% i.e., 67% to the respondent and 33% to the applicant. The respondent commenced sale of the flats without intimation to the applicant. The applicant issued a notice dated 1-2-2011 directing them not to enter into any agreement of sale or execute any sale deed without the written consent. Para 7 of the notice needs to be noted and it is thus:- “That, at the present stage of construction in the ventured property is that 3rd roof is laid and the 4th and 5th roofs are about to be laid. That, till now you acted with kind and cooperative with my client and collected required investment for the development of Venture property. That, your investment in the Venture Property is less than 30% of my clients investment. The Venture Property is located facing the highway and a commercial hub of Hyderabad city, There is lot of demand from the purchases for Venture Property. My client reliably learnt that you along with your wife Smt.Vijaya Laxmi and with another women conspired and in collusion with each other, with a malafide intention trying to enter into agreement of sale and to execute sale deed of the ventured property without the knowledge and consent of my client and trying to put my client under loss. The act of yours is nothing but cheating my client with fraudulent means with an intention of duping my client. Further the acts of yours are against the provisions of Partnership Act and Principles of Partnership. That activities of yours attracts Penal action under Indian Penal Code and Civil proceedings. It is just and necessary that you shall obtain a written consent from my client and proceed further in regard to the venture property particularly in regard to entering into agreement of sale or executing the sale deeds in regard to the Ventured Property. I hereby call upon you, directing you, not to enter into any agreement of sale or execute any sale deed without the written consent of my client or otherwise I have instructions to take appropriate criminal and civil proceedings against you. For the cots and consequences you will be held responsible. Please remit the cost of this notice Rs.5,000/-.” The respondent issued a reply notice dated 14-2-2011 disputing the quantum of amount invested by the applicant. It is stated in the reply notice that the applicant spent only Rs.43,000/-. Thereupon the applicant invoked the arbitration clause in the Memorandum of Understanding and proposed the name of Justice Sri V.Bhasker Rao, a retired Judge of this Court as Arbitrator under notice dt.9-3-2011. The respondent despite receiving the notice did not choose to reply. Hence, this application. Notice to the respondent came to be ordered on 8-7-2011. The applicant has been permitted to take out notice to the respondent by Registered Post with Acknowledgement Due. Accordingly, the applicant took out notice to the respondent and filed proof of service. Despite service of notice on the respondent, the respondent did not choose to enter appearance either in person or through a Counsel. Heard the learned Counsel appearing for the applicant and perused the material placed on record. Learned Counsel appearing for the applicant submits that the applicant and the respondent agreed to invest in Vijetha Shyamala Prestige @ 50% : 50%. They also agreed to share the profits and losses in the business transactions in the proposed venture in the ratio of 33% : 67%. A further submission has been made that the applicant on coming to know that the respondent is selling the plots without the consent of the applicant, the applicant issued a notice directing the respondent not to enter into sale transaction without her consent. He would also submits that the respondent disputed the claims of the applicant in a reply notice and the said claims are required to be settled by taking recourse to the provisions of the Arbitration and Conciliation Act in view of clause 22 of the Memorandum of Understanding and it necessitated the applicant to approach this Court invoking the provisions of sub-Sections (5) and (6) of Section 11 of the Arbitration and Conciliation Act. The learned Counsel took me to the Memorandum of Understanding and notices exchanged between the parties. The notices exchanged between the parties indicate that there are disputes, which are required to be settled. The settlement of disputes as per clause 22 of the Memorandum of Understanding which reads as hereunder:- “In case of any dispute or disputes arise between the parties, touching upon any convenants of this Agreement, the same shall be referred to arbitration of a Sole Arbitrator chosen by the parties, whose decision shall be binding on the parties to this MOU.” In view of the above-referred clause, I find that the applicant made out a valid ground for appointment of an arbitrator for resolution of the disputes relatable to the MOU dated 29-12-2009. Accordingly, the application is allowed. No costs. Sri Justice V.Bhasker Rao, a retired Judge, High Court of Andhra Pradesh, is appointed as sole arbitrator. He shall fix his own fee. _________________________ B.Seshasayana Reddy, J 5th August, 2011 smr