Judgment :-

D.K. JAIN, J.

1. This is a petition under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 (for short `the Act') for appointment of an Arbitrator for adjudication of the disputes which are stated to have arisen between the parties to this petition.

2. Since the case has had a chequered history, it would be appropriate to narrate the background facts, giving rise to this petition, in detail:

On 13th April 1998, the Andhra Pradesh Tourism Development Corporation Ltd. (hereinafter referred to as the "Corporation"), a statutory body owned and controlled by the State of Andhra Pradesh, awarded a lease in favour of one M/s Goldstone Engineering Ltd., presently known as Goldstone Teleservices Ltd. (hereinafter referred to as the "Goldstone") for a piece of land for development of the existing Hotel Ritz as a "Heritage Grand" category hotel, as notified by the Department of Tourism, Government of India.

On 8th November 1999, Goldstone entered into an agreement with respondents No.1, 2 and 3 (hereinafter referred to as the "BSN Group") by which they agreed to execute the said project through a new company known as M/s Varsha Hill Fort Resorts Pvt. Ltd. (for short "Varsha"), respondent No.4 in this petition. As per the said agreement BSN Group agreed to acquire 74% of equity in Varsha whilst Goldstone agreed to retain 26% of equity in the said Company. On 17th May 2001, the Corporation executed a lease deed for the said site in favour of Varsha. The lease provided in extenso the rights and obligations of the parties with respect to the project. Clause 12(u) of the lease deed provided that there would be no change in the constitution of the Lessee viz. Varsha, without the prior consent of the Corporation and clause 21 thereof -- the non-assignability clause, provided that neither of the parties to the lease deed shall directly or indirectly sell, transfer, assign or otherwise part with the whole or part of their respective interest and/or benefits or obligations under the lease deed in any manner whatsoever to any other person or party without obtaining the prior written consent of the Corporation. On 29th November 2002, Goldstone and BSN Group entered into yet another agreement whereby the latter agreed to take over the entire stake of Goldstone in Varsha. The Corporation felt that agreements dated 8th November 1999 and 29th November 2002 were in breach of the terms of the lease deed dated 17th May 2001 as no written consent of the Corporation had been sought prior to the purported change of shareholding in Varsha, on 4th August 2003, a notice for termination of the lease deed was issued to Varsha. According to the petitioner, in order to prevent the Corporation from resuming possession of the hotel site, on 22nd November 2003 the shareholders of Varsha, i.e. Goldstone and BSN Group, invited the petitioner to take over shareholding of Varsha, subject to the prior approval of the Corporation. A meeting of the Board of Directors of Varsha was held on 22nd November 2003, where, according to the petitioner, three Directors, namely, B.S. Neelkanta (respondent No.1), Mr. P. Rameshbabu and Mrs. B. Renuka (respondent No.2) were present. Minutes of the meeting were duly drawn wherein it was recorded that the petitioner shall be investing funds to the tune of Rs.15 to 18 crores in the form of equity in Varsha. It was also resolved that the proposal approved by the Board shall be subject to the approval by the Corporation and the execution of the relevant documents. In furtherance of the said Resolution, Varsha requested the Corporation to accord permission for change in the shareholding pattern in favour of M/s Anil Kumar & Associates (hereinafter referred to as "AKA"). The Corporation granted the permission vide their letter dated 10th December 2003.

Pursuant to Corporation's approval, an agreement dated 19th January 2004 was entered into between AKA, BSN Group comprising Mr. B.S. Neelkanta, Mrs. B. Renuka, Amogh