Arbitration clause persists despite challenges; disputes require arbitrator resolution.

1. The applicant has filed this application u/S. 11(6) of the Arbitration and Conciliation Act, 1996 ( hereinafter referred to as the Act of 1996)seeking the appointment of an independent Arbitrator in order to resolve the dispute between the parties.
The facts of the case, as pleaded in this application are as under:
The applicant is a partnership firm engaged in the business of construction and development. Mr. Shailendra Agrawal is the partner of the applicant firm. The respondents are the owners of land bearing Survey No.108/3/3 area 0.405 Hect. and Survey No.108/8 area 0.177 Hect., total area 0.582 Hect. situated at Village Chitawad, Tehsil and District Indore. For the development of the above lands, the respondents engaged the applicant by way of an agreement dated 27.9.2010. As per the terms and conditions of the agreement, the respondents were required to provide the land diverted and to get the layout sanctioned. It was also agreed between the parties that after development and construction the developed areas would be divided between the parties in the ratio of 60:40, which means the applicant would get 60% of the area and the respondents would get 40% of it. The applicant was to do the entire development work at its own cost. The applicant also agreed to give a refundable security deposit of Rs.10,00,000/- and out of which Rs.5,00,000/- was paid at the time of execution of the agreement. Rs.2,00,000/- was to be spent on diversion and permission. Rs. 3,00,000/- was payable at the time of commencement of the construction work.

2. The applicant obtained a colonizer license and applied for sanctioning of site-plan on 30.11.2010 . The Joint Director, Town and Country Planning sanctioned the plan on 1.3.2014. According to the applicant, preliminary work i.e. boring, levelling, filling, etc. was done, but the respondents have failed to get the land diverted u/S. 172 of the M.P. Land Revenue Code. The applicant vide letter/notice dated 26.3.2015 called upon the respondents to get the said land diverted.

3. The applicant came to know that the respondents are intending to dispose of the said land, hence got published a public notice on 1.5.2015 followed by filing an objection before the Sub Registrar, Registration on 27.6.2015. Meanwhile, the applicant applied for modification of the sanctioned plan. On repeated requests when the land was not got diverted by the respondents, a legal notice was sent through an Advocate on 6.4.2016 calling upon them to perform their part of the contract and not to indulge in violation of the terms and conditions of the agreement. No reply was received from the respondents. Vide notice dated 30.9.2016, the applicant has called upon the respondents to appoint an Arbitrator in terms of Clause 23 of the agreement dated 27.9.2010. The applicant has filed the present application u/S. 11(6) of the Act of 1996 for the appointment of an independent Arbitrator.
The respondents are the joint owner of the land in question, respondent No.4 - Nitin Hardia passed away during pendency of this AC, he is being represented by legal heirs
The facts as pleaded in reply are as under :

4. Respondent Nos.1, 2 and 3 have denied each and every allegation made in the application, except the execution of the agreement dated 27.9.2010 and the arbitration clause contained therein. They specifically denied the receipt of Rs.5,00,000/-, hence according to them there was no valid agreement that came into force and as such this agreement is not enforceable. It is submitted that as per provisions of Section 7 of the Act of 1996, Clause 23 of the agreement does not constitute an arbitration agreement. It is also pleaded that the