Judgment

R.V. Raveendran, J.

The respondent is a company incorporated on 9.4.2003 under the Companies Act, 1956. The appellant (Andhra Pradesh Tourism Development Corporation Ltd., for short 'APTDC') is a "government company" within the meaning of that expression in section 617 of the Companies Act, 1956.

2. According to the respondent, the parties had entered into two agreement in regard to a property known as Hill View Guest House, Alipiri, Tirupathi, measuring 1.08 acres. The first was a lease agreement under which APTDC granted a lease of the said property to the respondent for a term of 33 years; and the second was a development and management agreement under which APTDC entrusted to the respondent, the development of a Three-Star Hotel in Hill View Guest House property on construction, operation and management basis. According to the respondent, both agreements contained a provision for disputes resolution (clause 17 of the lease agreement and Article 18 of the management agreement) providing that in the event of disputes, best efforts shall be made to resolve them by mutual discussions, amicably; and in the event of the parties not finding an acceptable solution to the disputes within 30 days (60 days in the case of management agreement), the same shall be referred to arbitration in accordance with the procedure specified in the Act.

3. APTDC claims that it had terminated the said agreements on 21.4.2004 and took possession of the property on 21.8.2004. The respondent filed Arbitration Application No. 24/2005 in March, 2005 before the Andhra Pradesh High Court under section 11 of the Arbitration and Conciliation Act, 1996 ['Act' for short], alleging that certain disputes had arisen between the parties in regard to the said Lease Agreement and Management Agreement, and the parties could not arrive at a mutually acceptable solution in respect of those disputes. The respondent therefore sought appointment of a sole arbitrator for adjudication of the disputes and differences between the parties (respondent and APTDC) in regard to lease agreement dated 30.3.2002 and the management agreement dated 30.3.2002 entered between the parties.

4. APTDC resisted the application. One of the contentions urged by APTDC was that there was no arbitration Agreement between them and therefore the question of appointing an Arbitrator under section 11 of the Act did not arise. It was pointed out that according to the respondent, the arbitration agreement came into existence on 30.3.2002, when parties executed the Lease Agreement and Management Agreement on 30.3.2002 containing the arbitration clause; that admittedly the respondent was not in existence on that date, as it was incorporated more than a year thereafter on 9.4.2003; and that when it is alleged that the parties to the petition had entered into contracts which contained arbitration agreements on 30.3.2002, and one of the parties thereof had not even come into existence on that date, obviously there was no contract much less any arbitration agreement between the parties.

5. The Designate of the Chief Justice of Andhra Pradesh allowed the application filed by the respondent under Section 11 of the Act by order dated 16.8.2005 and appointed a retired Judge of the said High Court as Arbitrator, with the observation that the appellant herein is entitled to raise all its pleas including the validity of the arbitration agreement before the Arbitrator. He however noticed the contention that there was no arbitration agreement. He held that having regard to the decisions in Konkan Railway Corporation Ltd. v. Mehul Construction Co. [2000 (7) SCC 201] and Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd. [2002 (2) SCC 388], he had only a limited administrative role under section 11 of the Act, that is, to appoint the arbitrator as per the agreed procedure, leaving all contentious issues including whether there was any arbitration agreement or not, to be decided by the Arbitrator. Th