SAI JITESH CONSTRUCTION P LTD Vs. Y VIJAYALAKSHMI
LAWS(APH)-2011-2-40
HIGH COURT OF ANDHRA PRADESH
Decided on February 15,2011

SAI JITESH CONSTRUCTIONS (P) LTD. Appellant
VERSUS
Y. VIJAYALAKSHMI Respondents




JUDGEMENT

- (1.)THIS application is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an Arbitrator to adjudicate the claims of the applicants against the respondents.
(2.)THE applicant herein claims to be a company engaged in the business of construction and development of land for the purpose of construction of multi-storeyed complexes. It is stated that the respondents herein who are the owners of the property bearing No.5-2-210 to 212, No.8, Distillery Road, Secunderabad, entered into a Registered Development Agreement-cum-General Power of Attorney, dated 15.4.2006 with the applicant for the purpose of construction of 2nd to 4th floors on the said property and as per the agreed terms the applicant obtained the required permissions to proceed with the construction. THEreafter the parties had entered into supplementary agreement dated 8.2.2008 whereby the constructed areas were divided among the parties. According to the applicant, the respondents herein were allotted excess area of 331 sft. and 71 sft. respectively for which they had agreed to pay the differential amount. It is also claimed that the applicant has paid a sum of Rs.6,28,000/- to the 1st respondent as refundable deposit and a sum of Rs.5,00,000/- to the 2nd respondent towards refundable advance amount of lease. Thus according to the applicant a sum of Rs.29,72,000/- is payable by the respondents herein. It is. alleged that the respondents had taken possession of their respective flats without the consent of the applicant and that they had also failed to refund the amounts payable to the applicant in spite of the legal notice got issued by the applicant. In the circumstances, invoking the arbitration clause in the Development Agreement, the applicant issued notice dated 21.8.2010 by registered post calling upon the respondents to come forward to appoint a sole Arbitrator to resolve the disputes amicably. Though the said notice was received, the respondents failed to respond. Hence the present application.
Separate counter-affidavits have been filed by the respondents 1 and 2 contending that the arbitration application is not maintainable under law since the applicant had approached this Court even before expiry of 30 days from the date of receipt of notice as contemplated under Section 11(4) of the Arbitration and Conciliation Act, 1996. It is also contended that the notice dated 21.8.2010 issued by the applicant was contrary to the procedure contemplated under the agreement since it was silent about the Arbitrator chosen by him

I have heard the learned Counsel for both the parties and perused the material available on record.

(3.)SO far as the first objection raised by the respondents that the applicant had approached this Court even before expiry of 30 days provided under Section 11(4) of the Arbitration and Conciliation Act is concerned, it is true that sub-section (4) of Section 11 prescribed 30 days time to the opposite party to appoint an Arbitrator and therefore a request for appointment of an Arbitrator has to be made only after expiry of 30 days from the receipt of notice. However sub-section (4) is applicable only to the matters where the appointment of Arbitrator between the parties is not covered by an agreement. The matters which are covered by an agreement for appointment of Arbitrator are governed by sub-section (6) which does not provide for a time-frame to enable the other party to respond.
For proper appreciation, Section 11 of the Act may be extracted hereunder:

"11. Appointment of Arbitrators:-(1) A person of any nationality may be an Arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the Arbitrator or Arbitrators. (3) Failing any agreement referred to in subsection (2), in an arbitration with three Arbitrators, each party shall appoint one Arbitrator, and the two appointed Arbitrators shall appoint the third Arbitrator who shall act as the presiding Arbitrator. (4) If the appointment procedure in subsection (3) applies and- (a) a party fails to appoint an Arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed Arbitrators fail to agree on the third Arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (5) Failing any agreement referred to in subsection (2), in an arbitration with a sole Arbitrator, if the parties fail to agree on the Arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (6) Where, under an appointment procedure agreed upon by the parties,- (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed Arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (7) A decision on a matter entrusted by subsection (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final. (8) The Chief Justice or the person or institution designated by him, in appointing an Arbitrator, shall have due regard to- (a) any qualifications required of the Arbitrator by the agreement of the parties; and (b) other considerations as are likely to secure the appointment of an independent and impartial Arbitrator. (9) In the case of appointment of sole or third Arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an Arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. (10) The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him. (11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request. (12Xa) Where the matters referred to in subsections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the "Chief Justice of India". (b) Where the matters referred to in subsections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to, the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of Section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court.



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