Point of Law :
whenever the agreement specifically provides for appointment of named arbitrators, the appoint of arbitrator should be in terms of the contract. In the present case, under the arbitration clause No.20.2 of the agreement, both the parties have agreed to appoint one arbitrator each and the said two arbitrators, shall appoint a third arbitrator, who shall serve as the Presiding Arbitrator. Therefore, the appointment of arbitrators shall be in terms of the agreement.

ORDER :

The applicant is M/s Indu Eastern Province Projects Private Ltd., represented by its director, and the respondent is the Telangana Housing Board (for short ‘THB’) (Formerly Andhra Pradesh Housing Board), represented by its Vice Chairman and Housing Commissioner.

2. The present application is filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) read with the Scheme for Appointment of Arbitrators 1996, as framed by the Telangana High Court, Hyderabad, seeking to appoint an Arbitrator on behalf of the respondent under Clause 20.2 of the Development Agreement – cum – GPA, who would in turn, appoint the Presiding Arbitrator, along with the Arbitrator nominated by the applicant, to resolve the disputes between the applicant and the respondent, arising out of the agreement dated 22.03.2006, and to pass an award in accordance with law.

3. The case of the applicant, as stated in the arbitration application is that, the respondent – THB, called for tenders for development of a residential and commercial project over an extent of land admeasuring Acs.50.00, belonging to THB, situated in Sy.No.22(P) of Bandlalguda, 117 and 127/1 of Tattiannaram, Rangareddy District. In the said tender process, M/s Indu Projects Ltd., participated, and became the successful bidder, and the respondent - THB entered into a development agreement with the said successful bidder on 22.03.2006. With the prior knowledge and consent of the respondent - THB, and as per the terms of the agreement dated 22.03.2006, M/s Indu Projects Ltd., assigned the contract to the applicant, which is formed as a Special Purpose vehicle, for execution of the contract, and the respondent – THB, executed a General Power of Attorney (‘GPA’), dated 26.02.2008 vide registered document No.23/2008 in favour of the applicant.

4. As per the terms of GPA dated 26.02.2008, the applicant was required to take up work pertaining to designing and planning, financing, marketing, development of necessary infrastructure, provision of necessary services, operation and maintenance of infrastructure, administration and management of the project among other obligations, in conformity with detailed project report (DPR), development control rules etc.

5. The case of the applicant is that it is required to provide a detailed report consisting of development plan, architectural plans, financial structure and marketing strategy, and the respondent –THB was required to review and approve DPR within 30 days and communicate its acceptance, and unless some modifications are suggested, the applicant is required to undertake development works, apart from submitting a bank guarantee. The applicant in terms of the contract, submitted bank guarantees, which were returned over a period of time by the respondent, upon payment of the corresponding installments towards land cost.

6. It is stated that under the agreement, the project was required to be completed originally by 25.08.2010, but, subsequently under supplementary agreement dated 02.12.2009, it was extended till 30.06.2011.

7. In the application, the applicant has referred to various clauses under the agreement dated 22.03.2006, where-under the obligations of the parties under the contract and the revenue share of the THB was mentioned. It is further stated that the applicant has complied with its obligation, and could complete the project to an extent of 80%, but, as the respondent – THB failed to resolve the following issues, it could not complete the project, even within the extended period:

(i) Resolution as regards shortfall of the land to a tune of Acs.2.15 which has directly affected the villas, commercial land apartments;

(ii) Failure to give clarity in regard to changes in the plan on account of the requirement for construction of houses for Economically Weaker Sections (EWS) in terms of G.O.Ms.No.526 dated 31.07.2008, which became a stumbling block for approvals from GHMC;

(iii) Delay in handing over the