The sufficiency of stamp duty payment rendered the document admissible, and the named arbitrator was disqualified, leading to the appointment of Hon’ble Shri Justice K. K. Lahoti as Arbitrator.

ORDER : – This is an application under section 11(6) of Arbitration and Conciliation Act, 1996 (hereinafter referred as the Act of 1996) read with Rule 2 of the Scheme for appointment of Arbitrator framed by the Hon’ble Chief Justice of M. P., High Court Rules, 1997 seeking indulgence of this Court in the matter of appointment of sole Arbitrator for resolution of dispute arising out of the agreement/MOU between the parties.

The agreement/MOU dated 14-9-2009 (Annexure A-1) is on record at pg 8. The relevant clauses 1, 2, 4, 5, 6, 10, 11 and 20 of the agreement/MOU are quoted below :

“1. The First Partner and the Second Partner shall jointly undertake a project to construct multistoried township on the land.

2. The entire cost of construction shall be on account of the First Partner. The Bank loans, when required, shall be facilitated by the Second partner for which the First Partner shall extend all necessary co-operations including personal guarantee as may be required by the Bank.

4. The prime responsibility of the Second Partner shall be to construct the project.

5. The First Partner shall assist the Second Partner in formulating the project and arranging the infrastructure, material and the required work force and the entire cost shall be borne by the First Partner.

6. The land shall be transferred by the First Partner and his relatives in the Company, cost of which shall be borne by the First Partner and his relatives.

10. The Second Partner shall be paid charges for his services@ Rs. 189 per sq. ft. of the saleable area and if the project is prolonged beyond five years from the date of commissioning of the project i.e. approval of project by all authorities concerned, the charges payable to the Second Partner shall be subject to upward revision by 12.6% of the selling price. The amount and mode of payment shall be mutually decided by the Parties.

11. The initial revenue generated out of the sale of project shall be firstly utilized in bringing the project itself and for repayment of the subsisting Bank loans and if thought appropriate by the First Partner and Second Partner, the same shall be utilized for payment of service charges to the Second Partner and for any other purposes. The entire profit from the project, after payment of charges to the Second Partner, shall belong to the First Partner and his relatives.

20. If for any reason the parties are unable to continue for the mutual benefit and interest due to any reason whatsoever, the applicant and non-applicant No. 1 shall resolve their issue amicably under friendly consultation and if they failed to amicably resolve their issues within a period of 60 days, the issues concerning this MOU and matters arising out of it, shall be referred to the sole arbitration of Shri Jitendra Mehta, Architect of the project. The place for arbitration shall be Indore and the language shall be Hindi and English.”

2. The factual backdrop culled from the clauses of the agreement/MOU giving rise to the dispute are to the effect that the first party i.e. relatives, friends and associates of applicant and applicant himself is the owner of land admeasuring 1,876 hectares (2,01,858 sq.ft. Approximately) situated at Khajrana, Indore. It intended to develop township. For the purpose of construction, non-applicant/respondent No. 1 was approached and non-applicant agreed to the proposal of the applicant; first party expressing its willingness to undertake the responsibility of constructing the project for the applicant (Clause B).

The non-applicant had agreed to make available required funds to the applicant through banks on the basis of security of land as collateral security (Clause C).

To make the project functional, parties agreed to undertake the project in the form of a company where the applicant and non-applicant shall have equal share capital in the ratio of 50:50% (Clause 8).

The applicant and his relatives shall appoint two directors as their representatives on the Board of the Compan