This is an application for appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (“Act”).

2. The Petitioners are owners of a large piece and parcel of land admeasuring about 24,199 sq. mtrs. at Village Dhokali, Taluka and District Thane, Maharashtra. By an agreement titled as Memorandum of Understanding dated 26 November 2007 (“MOU”), Respondent No. 1 agreed to acquire development rights and purchase from the Petitioners a part of the said land admeasuring about 19,000 sq. mtrs. at or for a consideration of Rs. 101.50 crores. The MOU has an arbitration clause requiring inter alia each of the parties to appoint one arbitrator and the two appointed arbitrators to appoint the third arbitrator. Pursuant to the MOU, an escrow agreement dated 27 November 2007 (“Escrow Agreement”) came to be executed between the parties inter alia appointing Respondent No. 2 as the escrow agent to hold the sum of Rs. 25.37 crores payable by Respondent No. 1 to the Petitioners as part of the consideration under the MOU and deposited by Respondent No. 1 with the escrow agent in an escrow account. The escrow amount was to be disbursed by Respondent No. 2 in terms of the Escrow Agreement. The Escrow Agreement contained an arbitration clause requiring inter alia each of the three parties to the Escrow Agreement (i.e. the Petitioners, Respondent No. 1 and Respondent No. 2) to appoint one arbitrator and the three appointed arbitrators to appoint two additional arbitrators, thus constituting an arbitral tribunal of five arbitrators. Disputes and differences arose between the parties concerning the performance of the MOU as well as payment of the escrow amount. The Petitioners invoked the arbitration agreements contained in the MOU and the Escrow Agreement. Both the Petitioners and Respondent No. 1 appointed their respective arbitrators, but Respondent No. 2 failed to appoint any arbitrator. The Petitioners explored the possibility of continuing with the arbitration proceedings between themselves and Respondent No. 1 alone under the arbitration agreement contained in the MOU (which required two arbitrators to be nominated by the parties and the two nominated arbitrators to appoint a third arbitrator). The two nominated arbitrators were, however, of the view that it was not possible to proceed with the arbitration without the presence of Respondent No. 2 and appointment of the third arbitrator by the latter. (The three nominated arbitrators would have to appoint two additional arbitrators, thereby constituting a tribunal of five arbitrators, as per the terms of the Escrow Agreement.) The Petitioners have, accordingly, approached this court for appointment of a third arbitrator. Though there are separate prayers in the application for constituting separate tribunals of three arbitrators for deciding disputes under the MOU and of five arbitrators (the three nominated arbitrators appointing two others on the tribunal) for deciding disputes under the Escrow Agreement, the Petitioners have introduced by way of an amendment a prayer for appointment of a tribunal of five arbitrators for deciding disputes under both the MOU and the Escrow Agreement. It is this prayer which is pressed at the hearing by the Petitioners.

3. Respondent No. 1 has opposed this prayer for constituting a common arbitral tribunal (of five arbitrators) for deciding disputes under the MOU and the Escrow Agreement together. It is submitted by Respondent No. 1 that they have no objection to constituting two separate tribunals – one of three arbitrators for deciding disputes between the Petitioners and Respondent No. 1 under the MOU and the other of five arbitrators for adjudicating disputes between the Petitioners, Respondent No. 1 and Respondent No. 2 under the Escrow Agreement. This constitutes the main controversy in this petition. Both parties accept that there are disputes between them and these are covered by the two arbitration agreements, one