SANGEET LODHA,J. - (1.) This arbitration application has been filed by the applicant under Section 11 (6) of the Arbitration and Conciliation Act, 1996 ("the Act") for appointment of Sole Arbitrator on account of the respondents failing in appointing the Arbitrator in terms of the arbitration clause in the contract on demand being raised by the applicant.
(2.) The relevant facts are that the respondent entered into a Business Conducting Agreement with the applicants for utilising the space/property owned by them. The respondent company vide clause 3 of the said agreement confirmed entering into possession of the conducting area for the purpose of fit-outs on 1st November, 2007 for a period of eighty five days till 24th January, 2008 which was considered as conducting fee free period for undertaking civil, electrical and AC ducting work as per the requirements of the respondent company. Vide clause 4 of the said agreement, the term of the agreement was fixed for a period of nine years out of which the initial period of twelve months was to be lock in period during which neither party was entitled to terminate the said agreement. Vide clause 5 of the agreement, the respondent company agreed to pay to the applicants from the effective date a monthly conducting fee of Rs. 45 per sq. ft. carpet area amounting to Rs. 4,29,750/-. Under Clause 6, the respondent company was liable to deposit with the applicants a sum of Rs. 15,00,000/- to be retained by the applicants as interest free deposit of which last instalment of Rs. 3,75,000/- was payable on the effective date 25th January, 2008. All payments were to be made by the respondent company in the ratio of 3:1 (75% : 25%). The respondent company committed breach in payment of balance deposit of Rs.3,25,000/-. That apart, the respondent company failed to pay to the applicants in ratio of 3:1 the agreed conducting fee Rs. 4,29,750/- per month w.e.f. 25.1.08. Due to non-payment of agreed conducting fee for the period from 25.1.08 to 31.5.08 which comes to Rs. 18,16,040/-, the applicants exercising their rights under the said agreement vide notice dated 24.5.08 demanded total dues a sum of Rs. 42,75,540/- including the conducting fee for the notice and grace notice period amounting to Rs. 8,59,500/- and Rs. 16,00,000/- towards out of pocket investments on the premises as per respondent's requirements (after adjusting the amount of Rs. 11,25,000/- held by the applicants as interest free deposit). The applicants also informed the respondents that on failure to make payment, they will be constraint to approach this Court invoking arbitration clause 19 of the agreement for appointment of Sole Arbitrator under Section 11 of the Act.
(3.) The applicants preferred an Arbitration Application No. 51/08 before this Court. On notice being served, the respondent filed the reply and raised objection that as per clause 19 of the agreement, the Sole Arbitrator is required to be appointed by mutual consent, however, no efforts were made in this regard adhering to the arbitration clause and therefore, the application preferred under Section 11 of the Act is not maintainable. The objection raised was sustained by a Coordinate Bench of this Court vide order dated 21.7.2015 and accordingly the arbitration application was rejected in the following terms:- "Having considered the facts noticed above, I do not find the notice dated 24.05.2008 competent to get the arbitrator appointed by this court under Section 11 (6) of the Arbitration of Conciliation Act, 1996. Accordingly, this application is dismissed. However, dismissal of this application in no manner shall adversely affect rights of the applicant for appointment of arbitrator as per clause 19 under the separate notice, that is said to be already given. The respondents shall also be at liberty to agitate its all objections, if any such notice is received." ;