( 1 ) THIS is an application filed under section 11 (3), (4) and (6) of the Arbitration and Conciliation Act, 1996 (for short "the new Act") read with Para 2 of the Scheme for Appointment of Arbitrators framed by the Chief Justice of this Court under sub-section (10) of Section 11 of the Arbitration and Conciliation Ordinance, 1996, to appoint an Arbitrator on behalf of the respondents or in the alternative a sole arbitrator to resolve the dispute that arose between the applicant and the respondents.

( 2 ) THE facts (as stated in the application) leading to the filing of this application, in brief, are the following: the applicant is Non-Banking Financial company. The 1st respondent herein is a private Limited Company and the 2nd respondent is its Managing Director. The respondents approached the applicant for providing finance for purchase of a coal- fired boiler worth about Rs. 30. 00 lakhs. The applicant agreed to do so. The parties then executed a lease agreement on 11-3-1996. That agreement, inter alia, provides, in clause 24, for resolution of disputes between the parties by arbitration. The said clause is as under:"24. Arbitration: All disputes, differences, claims and questions, whatsoever, which shall arise either during the subsistence of this agreement or afterwards between the parties and/or their respective representatives touching these presents or any clause or thing herein contained or otherwise in any way relating to or arising from these presents shall be referred to the arbitration of two Arbitrators, one to be appointed by each party to the dispute and such arbitration shall be in accordance with and subject to the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof for the time being in force". Pursuant to the aforesaid agreement, the applicant provided an amount of Rs. 30. 00 lakhs to the respondents and with that money the respondents purchased a coal- fired boiler.

( 3 ) UNDER the terms of the aforesaid agreement, the 1st respondent has to repay the said loan amount with interest in 48 equal monthly instalments of rs. 1,07,500/- each. The 1st respondent also mortgaged its agricultural land to the extent of Ac. 20. 00 cents situated in Survey no. 17/1 of Piglipur village, Hayathnagar mandal and executed a registered mortgage, deed on 14-3-1996. The 2nd respondent, who is the Managing Director of the 1st respondent-Firm, also stood guarantee for repayment of the amount by the 1st respondent. The 1st respondent paid, in all, a total sum of Rs. 3,80,000/- the last payment being made on 31-10-1996 - and committed default thereafter. As several letters addressed by the applicant evoked no favourable response, the applicant got issued a lawyer s notice on 12-8-1999 calling upon the respondents to pay the balance amount of Rs. 73,45,541/- within 15 days from the date of receipt of that notice. It was further stated in that notice that if the respondents dispute the claim with regard to the quantum or otherwise, the applicant is ready and willing to refer the same to arbitration as agreed between the parties and in fact nominated one Sri C. Sudesh anand, Advocate, residing in H. No. 3-6- 444/a/3, Street No. 5, Himayatnagar, hyderabad-29 on its part as its Arbitrator and called upon the respondents to appoint their Arbitrator within 15 days from the date of receipt of the said notice. The 2nd respondent, who is the Managing Director of the 1st respondent-Firm, wrote back in reply to the said notice on 6-9-1999 not only disputing the claim of the applicant but also stating that "the question of appointing an arbitrator does not arise".

( 4 ) THEREAFTER, the applicant filed the present application in the month of October, 1999. The respondents, who were duly served, remained ex parte.

( 5 ) FROM the aforementioned facts it is clear that: (A) there is an arbitration agreement between the parties providing for resolution of disputes by arbitration, (b) dispute