In this application, filed under Section 11 of the Arbitration and Conciliation Act, 1996, (Act No. 26 of 2006), the applicant seeks appointment of an arbitrator to pass an award in respect of disputes and differences which arose out of the agreement dated 1.9.1999 relating to the construction of bridge No.4 at K.M. 178/6-8 Chennai-Kumbakonam-Thanjavur Road for Highways and rural works department, Government of Tamilnadu.

2. The applicant, a partnership firm having its office at Hyderabad, entered into an agreement with the 1st respondent on 1.9.1999, for construction of the aforesaid work, pursuant to a letter of acceptance dated 9.6.1999 received from the 2nd respondent at Hyderabad. The work was completed on 30.4.2001 and was opened to road traffic. The maintenance period was also completed on 25.6.2003. During execution of the work, certain additional items were executed under the orders of the respondents. The applicant submitted a final bill for Rs.99,30,945.95. According to them, the total quantity executed, and the various amounts due to them against the existing as well as the additional items, worked out to Rs.3,86,45,642.61 and that the final bill, for this amount less the billed and paid amount of Rs.2,95,08,209.88 and the security deposit recovered from RA bills amounting Rs.7,76,513.22/-, was submitted on 25.7.2003.

3. After the applicant submitted their final bill to the 2nd respondent on 25.7.2003 a rider agreement dated 27.10.2004 was entered into between the 2nd respondent and the applicant whereby Rs.21,44,065/- was agreed to be released towards final payment leaving the amount towards additional quantities executed towards road items, additional amounts involved in adopting DMC method and the price variation payment with interest on delayed payments, unpaid. On 26.7.2005, the applicant submitted their claims aggregating to Rs.72,48,650.99 for extra quantities executed in respect of 13 existing items of the original agreement, and 3 new additional items, plus interest at 18% per annum from the date of completion i.e., 30.4.2001 till the date of actual payment. The applicant issued a reminder on 31.10.2006. On the respondents informing the applicant, vide letter dated 15.12.2006, that they would not appoint an arbitrator, the applicant again addressed letter dated 27.1.2007 seeking appointment of an arbitrator. It is only thereafter that the present application was filed seeking appointment of an arbitrator.

4. Sri A. Ramalingeswara Rao, learned counsel for the Applicant, would place reliance on Section 4 of the Contract Act to contend that communication of the letter of acceptance was complete only when it was received by the applicant at Hyderabad. Learned counsel would submit that, even if a part of the cause of action arose at Hyderabad, this Court had territorial jurisdiction to entertain the application for appointment of an arbitrator. Learned counsel would submit that the applicant had its registered office at Hyderabad, it was carrying on business at Hyderabad, it was corresponding with the respondent from Hyderabad, it had received the letter of acceptance of the agreement from the respondent at Hyderabad and that it had issued bank guarantees from Hyderabad. According to the Learned Counsel, the aforesaid, material facts, coupled with the fact that the respondent also had its branch office at Hyderabad, would suffice to confer jurisdiction on this Court to entertain the application since a part of the "cause of action" had arisen within its territorial limits. Learned counsel would submit that the very fact that payments were made, only after the rider agreement dated 27.10.2004 was entered into, was sufficient to hold that the applicant's claims were not barred by limitation, that, in any event, the question of limitation, the scope of the rider agreement, whether it has a bearing on the claims etc, were all matters which are better examined by the arbitr