The court emphasized the importance of arbitration in resolving disputes arising from the agreement between the parties.

JUDGMENT

(Prayer: Original Petition is filed under Section 11(5) of the Arbitration and Conciliation Act, 1996, as amended by the Arbitration and Conciliation Act 2021 (3 of 2021) praying to pass an order of appointing a sole arbitrator to resolve the dispute between the petitioners and the respondent arising out of and in connection with the agreement for development dated 05.02.2018.)

1. This petition has been filed under Section 11(5) of Arbitration and Conciliation Act, 1996, (hereinafter referred as “the Act”), seeking to appoint a Sole Arbitrator to resolve the dispute between the petitioners and the respondent arising out of and in connection with the agreement for development dated 05.02.2018.

2. Learned counsel appearing for the petitioners would submit that the petitioners gave their landed property admeasuring 4800 sq.ft to the respondent / builder for a joint development and entered into an Agreement for Development dated 05.02.2018, at Chennai for construction of luxury residential apartments. As per the said agreement, the respondent would construct the apartment out of which, the petitioners are entitle to retain 943 sq.ft of undivided share of land and a flat measuring 1814 sq.ft along with a monetary consideration of Rs.7.25 Crores.

3. The grievance of the petitioners is that in terms of the said agreement, within a period of 18 months from the date of obtaining the plan approval, the respondent supposed to complete the construction of apartment and handover the same to the petitioner. The planing permission was obtained on 09.03.2019 and therefore, the respondent supposed to have handedover the flats on 19.09.2020. However, the respondent handed over the flats only on 12.07.2021. Hence, the petitioner is entitled for the damages in terms of the said agreement. That apart, the respondent supposed to pay a sum Rs.7.25 Crores immediately upon the registration of UDS. However, even after the Registration of UDS between 11.07.2019 and 11.01.2021, the respondent failed to make the payment. Therefore, the respondent is liable to pay the interest on the delay payment at the rate of 9% per annum on the principal amount to the petitioner. The respondent admitted the lapses on their part and agreed to pay the interest at the rate of 9% per annum and also acted upon such assurances by making three interest payments during February to April 2021. Thereafter, the respondent declined to pay the interest. Hence, to resolve the such dispute, by invoking Clause 11 of the Joint Development Agreement dated 05.02.2018, the petitioners have sent a notice under Section 21 of the Act on 23.08.2022 by nominating Mr.Madhivanan to act as Arbitrator. However, the respondent by their reply letter expressed their unwillingness for the appointment of Arbitrator. Hence, the petitioners have filed the present petition seeking for appointment of Arbitrator.

4. Per contra, Mr.K.S.Viswanathan, learned Senior Counsel appearing on behalf of the learned counsel for the respondent strongly opposed for appointment of Arbitrator. He would submit that the present dispute pertains to the payment of 9% interest and no where in the contract, the parties agreed for payment of interest. In the absence of any such provision of payment, the respondent is not liable to pay interest and hence, this petition is liable to be dismissed. However, with regard to the delay in handing over the flats, as per the provision of the agreement, the respondent agreed to pay a sum of Rs.50,000/- per month and Rs.20 per sq.ft as compensation, in which there is no dispute at all. Hence, he prayed for dismissal of the petition.

5. Heard the learned counsel appearing for the petitioner as well as the respondent and perused the materials available on record.

6. For better appreciation, Clause 27 of the AMD Agreement is reproduced hereunder:

“CLAUSE 11. RESOLUTION OF DISPUTES

“Any dispute, controversy or difference which may arise between the parties out of or i