The main legal point established in the judgment is the limited scope of the court's jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996, in appointing an arbitrator. The court emphasized that its role is confined to determining the existence of a valid arbitration agreement and appointing an arbitrator when there is no consensus between the parties.

ORDER :

1. This arbitration application is filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) seeking appointment of an Arbitrator to resolve the disputes between the applicant and 2nd respondent in respect of LLP Agreement.

2. The averments in the application, counter and documents placed on record disclose following facts:

(A) The applicant is engaged in the business of real estate and construction. The applicant entered into an LLP Agreement dated 21.5.2014 with the 2nd respondent in order to constitute Sri Aditya-Vamsiram Homes LLP, i.e. the 1st respondent. The LLP entered into, a Development Agreement with landowners in Survey Nos. 155 and 156, Narsingi Village, Gandipet Mandal, for construction of villas project named, Aditya Casa Grand. The villas were to be developed and sold as per the terms of the Development Agreement. Applicant asserts that as a co-owner of the 1st respondent company he is entitled to retain Villa No. 52 and it was mutually agreed. He claims to be aggrieved by the manner in which the 2nd respondent is conducting the affairs of the 1st respondent, illegally denying Villa No. 52 to applicant and illegally entering into sale agreement of said villa to a third party.

(B) On 4.7.2020 applicant sent a notice to 2nd respondent pointing out various aspects of functioning of their company and asking him to immediately cancel sale agreement, if any, entered into for Villa No. 52 of ‘Aditya Casa Grand’ with third party and restrain from registering sale deed with any third party for Villa No. 52 without the prior consent of the applicant.

(C) In response to the said notice, 2nd respondent addressed a letter/email, dated 8.7.2020, to applicant. He has denied the allegations and put forth his version. Second respondent stated about sale of Villa No. 52 to the third party, P. Venkata Reddy, and payment of Rs. 65 lakhs as advance reflected in the books of accounts of the LLP and claim of the applicant on the Villa is false. The 2nd respondent also invoked Clause 7.4 of the LLP Agreement to expel the applicant from the partnership, with effect from date of receipt of the letter. The 2nd respondent also invoked the arbitration clause of the LLP Agreement for resolution of all disputes, including settlement of capital amount, claim regarding Villa No. 52 and liability and obligation towards third parties and any damages payable. The 2nd respondent put forth three names to appoint as Arbitrator and sought the applicant's consent.

(D) On receipt of above correspondence, applicant addressed two letters to the 2nd respondent, dated 11.7.2020 and 24.7.2020. Applicant agreed for resolution of all disputes by arbitration. However, applicant rejected the names proposed by the 2nd respondent for appointment as Arbitrator and instead suggested two other names.

(E) In response 2nd respondent vide his letter dated 25.8.2020 stated that the names suggested by the applicant were not acceptable. As there was stalemate on who should be the Arbitrator, the present application is filed.

(F) It is the further case of the applicant that as a partner of LLP, he desired to own Villa No. 52 and the same was communicated to 2nd respondent. Second respondent agreed and allowed applicant to make internal changes to suit his requirements. He further asserts that later 2nd respondent agreed to sell this villa for Rs. 8,00,00,000/- applicant agreed and paid Rs. 2,25,00,000/- to 1st respondent. He claimed to be in possession of the said villa. While so, applicant alleges that he came to know that 2nd respondent sold this villa to Sri P. Venkat Reddy without his consent.

(G) Having come to know of this sale transaction, the applicant instituted OS No. 101 of 2021 in the Court of XIV Additional District Judge, Ranga Reddy District to grant decree of specific performance of an oral agreement of sale between the applicant and defendant No. 27, the 1st respondent herein in relation to Villa N