The court emphasized that the arbitration notice need not adhere to a specific format and that the failure to appoint an arbitrator within the stipulated time allowed the court to entertain the arbitration application.

ORDER :

1. This application is filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996, seeking to appoint an arbitrator to resolve the disputes between the applicant and the respondents arising out of the development agreement dated 22.02.2017 and to pass an award in accordance with law.

2. The case of the applicant, which is stated to be a partnership firm and represented by its Managing Partner, is that the respondents 1 and 2 are the owners of the subject property, and the applicant entered into development agreement-cum-General Power of Attorney dated 22.02.2017, with them, to develop the subject property into a commercial building, agreeing to share 40% to the developer, and 60% to the landowners in the built up area in the proposed building. As per the agreement, the applicant paid an amount of Rs. 50,00,000/- (Rupees fifty lakhs only) to the respondents towards refundable deposit, and that construction has to be completed within 18 months, with a further grace period of 6 months from the date of sanction and permissions to be obtained from Greater Hyderabad Municipal Corporation.

3. In the affidavit it is stated that the respondents mortgaged the subject property with the Reliance Housing Finance Limited and availed a loan of Rs. 9,90,00,000/- (Rupees nine crores ninety lakhs only) and created charge over the property. The case of the applicant is that as per the agreement, the respondents agreed to clear the mortgage and also agreed to pay service/GST payable in respect of their share of 60% of built up area.

4. In pursuance of the development agreement, necessary permissions were obtained from the GHMC vide No. 53227/HO/CA/CIR 10/2016 dated 17.05.2017, for construction of cellar, sub-cellar, ground plus five upper floors and accordingly the applicant commenced the construction.

5. It is stated that the respondents insisted for deviation of the sanctioned plan and to proceed with the construction as per the working plan, and undertook to obtain occupancy certificate. A supplementary agreement dated 22.03.2018 was executed between the parties, in modification of the terms of the development agreement-cum-general power of attorney dated 22.02.2017 and by virtue of the said supplementary agreement, the applicant was authorised to sell/lease its 40% share of the built up area on completion of laying of all the slabs.

6. The further case of the applicant is that it completed the construction in all aspects, except laying the flooring and construction of washrooms, as the respondents failed to furnish the details of the location of the washrooms. It is stated that the applicant addressed e-mails dated 2.10.2018 and 4.10.2019 requesting the respondents to furnish the details of the location of the washrooms. But the respondents, issued reply dated 16.10.2018 with baseless allegations and the applicant vide letter dated 17.10.2018 replied the same.

7. The grievance of the applicant is that though it completed the construction and handed over the building, the respondents failed to return the deposit amount and also failed to pay GST amount to the extent of their 60% share and they also failed to clear the mortgage with the Reliance Housing Finance Limited and further they also could not obtain the occupancy certificate from the Greater Hyderabad Municipal Corporation.

8. In view of the above circumstances, the applicant got issued notice dated 19.09.2019 invoking the arbitration clause in the agreement and appointing Mr. Chalapthi Rao, Retired Additional District Judge, as an arbitrator on their behalf, and requesting the respondents to appoint an arbitrator of their choice on their behalf, within four weeks as contemplated under the development agreement dated 22.02.2017. Though the respondents received the notice, and failed to appoint an arbitrator on their behalf, the present arbitration application is filed under Section 11(5) and (6) of the Act.

9. Counter affidavit is filed on behalf of the respondents.