THE HON’BLE Ms. JUSTICE G.ROHINI Arbitration Application No. 172 of 2010 Date: 23.03.2011 Between: P.Chandrasekhar Reddy, Hyderabad. …Applicant And M/s. Kalyan Constructions Hyderabad and 6 others. …Respondents THE HON’BLE Ms. JUSTICE G.ROHINI Arbitration Application No. 172 of 2010 O R D E R : This application is filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator for settlement of disputes between the applicant and the respondents herein arising out of the Development Agreement cum GPA dated 20.10.2006. The facts, in brief, are as under: The 1st respondent is a partnership firm. The respondents 2 and 3 are the father and mother of the applicant and the respondents 4 and 5 are his sisters, whereas 6th respondent is his brother and 7th respondent is the paternal uncle of the applicant. It is pleaded that the applicant and the respondents 2 to 7 constitute a joint family. The applicant filed O.S.No.178 of 2004 on the file of the Court of the III Additional Chief Judge, City Civil Court, Hyderabad against respondents 2 to 7 for partition of the joint family properties. The said suit ended in a compromise and accordingly, compromise decree was passed on 07.02.2006 under which the applicant was allotted Acs.1.20 guntas of land in Sy.Nos.122/A and 122/AA of the suit schedule properties. However, by the time of the said compromise decree, the respondents 2 to 7 have already executed a Development Agreement dated 19.03.1995 with the 1st respondent-firm. Subsequently, the respondents 2 and 4 to 7 executed Development Agreement cum GPA dated 20.10.2006 in favour of the 1st respondent- firm without the knowledge of the applicant. Though the said Development Agreement cum GPA was contrary to the compromise decree dated 07.02.2006 passed in O.S.No.178 of 2004, in view of the blood relationship with the respondents 2 to 7, the applicant agreed to take 5 constructed Villas in Sy.Nos.122/A and 122/AA. Accordingly, the applicant and respondents entered into a Memorandum of Understanding dated 23.02.2007, whereunder it was agreed that the terms and conditions laid down in the compromise decree dated 07.02.2006 in O.S.No.178 of 2004 are binding on all the parties. It is alleged by the applicant that the respondents failed to keep up the commitment under the Memorandum of Understanding dated 23.02.2007 and the independent duplex houses were not handed over to the applicant. The 1st respondent did not even start construction work of the independent duplex houses on the plots allotted to the applicant. Hence, the applicant got issued a legal notice dated 09.08.2010 thereby rescinding the Memorandum of Understanding and calling upon the 1st respondent-firm to handover the vacant plot No.21 along with other allotted site within 21 days. The applicant had also called upon the respondents to pay a sum of Rs.10 lakhs towards damages for the delay in construction of the buildings. Though the said notice was served on the respondents, there was no response from them. Hence, the applicant got issued a notice dated 15.09.2010 invoking the arbitration clause in the Development Agreement dated 20.10.2006 and nominating Sri Justice C.V.N.Sastry as sole Arbitrator for resolution of the disputes. The respondents were also called upon to communicate their consent. Having received the said notice, the respondent No.1 sent a reply dated 25.09.2010 contending that since the Memorandum of Understanding dated 23.02.2007 did not contain any arbitration clause, the petitioner cannot seek resolution by way of arbitration. It is also contended that since the applicant is neither a party to the initial Development Agreement dated 19.03.1995 or the subsequently entered registered Development Agreement cum GPA dated 20.10.2006, he cannot rely upon the arbitration clause in the agreement dated 20.10.2006. Thereafter, the present application came to be filed on 01.11.2010 invoking the remedy under Section 11 of the Act for appointment of an Arbitrator. I have heard the learned counsel for the applicant and perused the material available on record. Despite notice, the respondents did not choose to appear. It is not disputed by the learned counsel for the applicant that the Memorandum of Understanding dated 23.02.2007 to which the applicant and the respondents are parties, did not contain arbitration clause. However, while placing reliance upon clause 11 of the Memorandum of Understanding dated 23.02.2007 it is contended by the learned counsel for the applicant that terms and conditions laid down in the compromise decree dated 07.02.2006 in O.S.No.178 of 2004 are binding on all the parties and that as per clause 2 of the terms and conditions of the decree, the Development Agreement is also binding on the applicant herein. Thus, according to the learned counsel for the applicant, the applicant is entitled to invoke the arbitration clause contained in Development Agreement cum GPA dated 20.10.2006. At the out set it is necessary to refer to clause 11 of Memorandum of Understanding dated 23.02.2007 which reads as under: “THAT the remaining terms and conditions laid down in compromise decree (O.S.No.178/2004) are binding on all the parties.” It is also necessary to extract clause 2 of the Memorandum of compromise which was made part of the compromise decree in O.S.No.178 of 2004 : “The plaintiff is entitled to 3 acres of land i.e. 1.20 gts in survey No.122 A and AA and 1.10 gts in survey no.20A and AA, 21A and AA, 22A and AA, 70AA, 80AA, 77AA, 78AA, 79AA, 81AA and 10 gts in survey no.50 A and AA. The defendants 1 to 5 are entitled to receive equal shares in the balance land in sy.No.122A and AA, 20A and AA and sy.No.50A and AA and other survey nos detailed in “A” schedule of property hereunder. In respect of the lands described in ‘A’ schedule property hereunder the defendant No.1 to 6 have already entered into a development agreement with M/s. Kalyan Constructions and M/s Lakshmi Venkateshwara Estates (P) Ltd on 19.03.2005 and 16.07.2004 respectively, the terms of which are binding on the plaintiff also. The parties i.e. plaintiff and defendants 1 to 5 are entitled to receive the sale proceeds of or the developed land from the above builders in proportion to their share in the land mentioned above.” A reading of the above clause in the compromise decree dated 07.02.2006, shows that the terms of the Development Agreement dated 19.03.1995 and 16.07.2004 between the 1st respondent and the respondents 2 to 7 are binding on the applicant also. However, the arbitration clause relied upon by the applicant is a part of the subsequent Development Agreement dated 20.10.2006 executed between the 1st respondent on one part and the respondents 2 to 7 on the other part. Though there was a reference to the earlier agreement dated 19.03.1995, it is clear from the recitals in the agreement dated 20.10.2006 that certain further terms and conditions agreed between the parties were reduced to writing. Thus, the Development Agreement cum GPA dated 20.10.2006 is a new agreement, which came into existence subsequent to the compromise decree dated 07.02.2006. Hence, the applicant cannot rely upon the agreement dated 20.10.2006 which contained an arbitration clause for the purpose of resolution of disputes between the parties to the said agreement. Admittedly, the Memorandum of Understanding dated 23.02.2007 did not contain any arbitration clause. In the circumstances, it cannot be said that the disputes arising out the Memorandum of Understanding dated 23.02.2007 require resolution by way of arbitration. Hence, it is not open to the petitioner to invoke the jurisdiction of this Court under Section 11 of the Act. Accordingly, the Arbitration Application is dismissed as not maintainable. _______________ G. ROHINI, J Date: 23.03.2011 KLP