( 1 ) IN this application the petitioner has inter alia prayed for appointment of an arbitrator as regards a dispute arising out of a memorandum of Understanding between the parties dated 13-3-2000. The petitioner herein has invoked the arbitration clause as the respondent herein has allegedly failed to pay the commission of 4. 5% on the total draw down funds. Clauses (6), (9) and (10) of the Memorandum of Understanding read thus:that in even of circumvention or breach of this agreement, directly or indirectly, the injured party shall be entitled to damages equal to the maximum fee or commission it should have realised from the said transaction conducted by the party who is in breach of this agreement. The first party agrees to provide the documents as specified in clause 1 above as early as possible failing which the first party shall be liable to pay the second party the said commission as herein above agreed to as the work of the second party would be deemed to be completed. If any additional documents other than those specified above are required by the second party, the first party shall make best endeavour to procure and supply such documents to the second party. The failure of the first party, however, to supply such additional documents would not make the first party liable to pay to the second party the commission as herein before agreed. In the event the first party delays, refuses or fails to provide the requested information, documents, dated and/or materials, or if the furnished information, documents, data and /or materials are false or misleading in any material way, or if the first party, in any way, prevents or delays the second party from completing or submitting the necessary documentation, then any such failure, refusal, delay or prevention shall constitute a breach of this engagement by the first party.

( 2 ) A demand to the aforementioned extent was made by a letter dated 4-12-2000 by the petitioner herein which is in the following terms:it is agreed in the MOU dated 13-3-2000 that in case of dispute the matter shall be referred to arbitration. IT is reminded that you approached for arranging foreign loan US $ 1. 5 million comprising 8 million dollars for capital borrowing and 7 million dollars for sinking fund. You failed to provide the necessary documents and as such you are liable to pay commission of 4. 5% on total draw down funds. BEFORE initiating further, I would once again ask you to pay the commission I am entitled to, or otherwise I will have no option but to take recourse to arbitration as agreed by us.

( 3 ) BY another letter dated 29-6-2000 the petitioner, allegedly on the ground that the respondent herein has not abided by the conditions, inter alia stated: we will give you 2 weeks time to tell us how do you are planning to pay us our commission. If we do not hear from you by 15th of july 2000, we will follow the procedure according to the agreement we made in such a situation our lawyer accredited to the Andhra pradesh High Court will according to paragraph 14. . . . . . . . . . . . . . initiate legal action against you.

( 4 ) IT is not in dispute that the disputes and differences existed between the parties. However, a stand has been taken by the respondents to the effect that (1) there does not exist any arbitration clause; (2) even assuming that there exists an arbitration clause, as the provisions of sub-section (5) of Section 11 of the Arbitration and conciliation Act, 1996 had not been complied with, this application is not maintainable; and (3) this Court has no territorial jurisdiction as the cause of action arose at Nagpur.

( 5 ) THE purported arbitration clause is contained in Memorandum of understanding which is in the following terms:arbitration: The parties agree that the jurisdiction in relation to all matters arising under and/or in any way connected with this MOU shall be subject to the jurisdiction of Courts at hyderabad. Arbitration if any shall also be at H