IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

MONDAY, THE TWENTY EIGHTH DAY OF NOVEMBER TWO THOUSAND AND TWENTY TWO PRESENT

THE HONOURABLE SRI JUSTICE K.LAKSHMAN ARBITRATION APPLICATION NO: 121 OF 2021 ALONG WITH I.A. NOS. 4, 5 AND 6 OF 2022

Between:

1. A. Gopala Krishna (Died per LR)

2. Adusumilli Jahnavi, D/o Late A.Gopala Krishna, aged about 23 yrs., R/o H.No.8-2-293/A/82/1259/A, Road No.36, Hyderabad - 500 033.

(Applicant No.2 brought on record as LR of deceased applicant No.1 as per the Hon'ble Court Order dated.22.06.2022 in IA No.3 of 2022 in ARB.APPL No.121 of 2021).

...Applicant

AND

M/s.Urban Asia Gachibowli, 4th Floor, 402, Times Square, Gachibowli Road, Vijayalakshmi Nagar, Indira Nagar, Hyderabad. Rep.by its Authorised Signatory, Mani Kishore Reddy.

Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, Road No.19, (corner of Road No.19 and Road No.21), Plot No.453, Jubilee Hills. Hyderabad - 500 033.

Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, Suite 1B, Usha Mansion, Behind Topaz Building, Punjagutta, Hyderabad -500 082.

Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, 8-2-293/82A/467, 4th Floor, Road No.36, Jubilee Hills, Hyderabad - 500 033 ...Respondent

Arbitration Application Under Section 11 (5) & (6) of the Arbitration and Conciliation Act 1996 R/w. Scheme for Appointment of Arbitrators, 1996 praving that for the reasons stated in accompanying affidavit, that this Hon'ble Court may be pleased

• I. To appoint an arbitrator on behalf of the Respondent, to adjudicate the Claims and disputes between the Applicant and the Respondent pursuant to Clause 24 of the Lease Deed dated 30/12/2017
• II. To award the costs of the Application;

I.A. NO. 2 OF 2022

Between

• 1. A. Gopala Krishna (Died per LR)
• 2. Adusumilli, ahnavi, D/o Late A.Gopala Krishna, aged about 23 yrs., R/o H.No.8-2-293/A/82/1259/A, Road No.36, Hyderabad - 500 033.

... Applicant/Proposed Applicant No. 2

AND

M/s.Urban Asia Gachibowli, 4th Floor, 402, Times Square, Gachibowli Road, Vijavalakshmi Nacar, Indira Nagar, Hyderabad, Rep.by its Authorised Signatory, Mani Kishore Reddy.

Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, Road No.19, (corner of Road No.19 and Road No.21), Plot No.453, Jubilee Hills, Hyderabad - 500 033.

Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, Suite 1B. Usha Mansion, Behind Topaz Building, Punjagutta, Hyderabad - 500 082. Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, 8-2-293/82A/467. 4th Floor, Road No.36, Jubilee Hills, Hyderabad - 500 033

...Respondent/ Respondent

Application Under Order XXII Rule 9 Read with Section 151 of CPC, praying that in the circumstances stated in accompanying affidavit, this Hon'ble Court may be pleased to set aside the abetment and as a consequential relief, this Hon'ble Court may be pleased to permit the applicant No.2 herein to amend the cause title due to the death of Applicant no. 1 Mr. A. Gopala Krishna and add the name of the Applicant No. 2 Adusumilli Jahnavi in the interest of justice

IA NO: 4, 5 & 6 OF 2022

Between:

M/s.Urban Asia Gachibowli, 4th Floor, 402, Times Square, Gachibowli Road, Vijayalakshmi Nagar, Indira Nagar, Hyderabad. Rep.by its Authorised Signatory, Mani Kishore Reddy.

Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, Road No.19, (corner of Road No.19 and Road No.21), Plot No.453, Jubilee Hills, Hyderabad - 500 (33.

Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, Suite 1B, Usha Mansion, Behind Topaz Building, Punjagutta, Hyderabad - 500 082. Also at

M/s.Urban Asia Gachibowli, Represented by Mani Kishore Reddy, 8-2-293/82A/467, 4th Floor, Road No.36, Jubilee Hills, Hyderabad - 500 033.

...Petitioner/ Respondent in

IA No.2 of 2022 and AA No. 121 of 2021

And

1. A. Gopala Krishna (Died per LR)

2. Adusumilli Jahnavi, D/o Late A.Gopala Krishna, aged about 23 yrs., R/o H.No.8-2-293/A/82/1259/A, Road No.36, Hyderabad - 500 033.

(Applicant No.2 brought on record as LR of deceased applicant No.1 as per the Hon'ble Court Order dtd.22.06.2022 in IA No.3 of 2022 in ARB.APPL No.121 of 2021).

...Respondent/Applicant in IA No.2 of 2022 and AA No. 121 of 2021

I.A. No. 4 of 2022

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to recall the orders dated 22.06.2022 made in IA.no. 1 of 2022 in Arb. Appl No. 121 of 2021 by duly taking on record the counter filed by the petitioner/respondent herein in the said IA pending disposal of the above Arbitration Application

IA NO: 5 OF 2022

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to recall the orders dated 22.06.2022 made in IA.no. 3 of 2022 in Arb. Appl No. 121 of 2021 by duly taking on record the counter filed by the petitioner/respondent herein in the said IA pending disposal of the above Arbitration Application

IA NO: 6 OF 2022

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to recall the orders dated 22.06.2022 made in IA.no. 2 of 2022 in Arbitration Application No. 121 of 2021 by duly taking on record the counter filed by the petitioner/respondent herein in the said IA pending disposal of the above Arbitration Application.

Counsel for the Applicant : SRI. A. VENKATESH Counsel for the Respondent: SRI ZEESHAN ADNAN MAHMOOD

The Court made the following: COMMON ORDER

.IHE H,)N'BLE SRI JUSTICE K.LAKSHM,.N

AIIBIT IAT'ION APPLICATION No.l21 OF- 2121 ALC NG WITH I.A.NOs.4 ⁵AND 6 0ti 202:l

COI\IMON ORI)I.,R:

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The preser t Arbitration Application is filed under Section I I (6) of the Arbitratior and Conciliation Act, 1996 (hereinzLiter the Act, 1996') fbr appoi ilment of arbitrators to resolve the disputes between the pa(ies.

2. Heard r,lr. A.Venkatesh, leamed counsel for the lipplicant, Mr. Zeeshan Ad ran Mahmood, leamed counsel for Resp,.rnd-'nt"

3. The A,pplicant claims to be the owne' of property admeasuring 16000 Sq. Ft. spread over the second flor:r, 111i16 1oo., fourth floor anrL ther terrace in the building constructrci or Plot No. 12591A, Road I'lo. 36, Jubilee Hills, Hyderabad (hereinaftcr 'subject propefty').

4. 1-he Applicant and the Respondent entered into a lease deed dated 30.12.2017 (hereinafter 'the agreement') wheretry the subject propefty was lt asecl out to the Respondent for a perioC ,cf three years As per the tenr s of the agreement, the rent payable by ttre Respondent was Rs. 6,52,:591- per month (excluding CAM charqes + GST) and

the said amount was payable on or before I Oth of every month. According to the Applicant, the Respondent by virtue of Clause 3 and Clause 7 was also liable to the agreed rent including the CAM + GST charges. The terms also provided that if the Respondent defauls in payment of monthly rent for a consecutive period of 3 months, it is liable to pay interest to the tune of 1.5% per month.

5. According to the Applicant, payment of the rent and CAM + GST charges before l0'h of every month was the essence of the agreement. The Applicant states that the Respondent failed to pay the agreed rent and CAM + GST charges frorn September 2019 despite repeated requests. The Applicant terminated the agreement by issuing a notice dated 28.08.2020 and seeking possession of the subject property along with arrears of rent amounting to Rs. 79, 23, 5901- for a period from 01.09.2019 1o 30.06.2020.

6. The Respondent replied to the termination notice dated 28.08.2020 on 12.09.2020 disputing the claims of the Applicant and stated that it has been paying the rent regularly including CAM + GST charges. The Applicant then issued a rejoinder notice dated 07.102020 reiterating its claims. While things stood thus, the

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Respondent also filed a suit bearing O.S. No. l2l2 ol2r)21 on the t-rle of Hon'ble XX Junior Civil Judge, City Civil Court, Hyderabad seeking perpetu al injunction. The said court vide order dated 26.03"2021 pass:d an ex parte order directing the partie:, to maintain status quo.

7. Accord ing to the Applicant, despite receiving -h{i termination notice and despLte the lease deed coming to an end dlLe: to efflux of time, the Respo rdent is continuing to be in possession u'ithout paying the rents as pe'the agreement. The Applicant filed an application under Section 9 of the Act, 1996 vide A.O.P. No 41 o lit02 I in which an ex parte ,lrder dated 22.04.2021 was passed directing the Respondent tc deposit the rental arrears to ther tune of Rs. 1,15,31,716/- 1or the period of 01.09.2019 to 30.0!,.2:02() within ^a period of 3 day s.

8. Subs:quently, the Applicant invoked CLruse 24 of the agreement dat:d 30.12.2017 and issued an arbitraticxr notice dated 26.04.2021 .ln the said arbitration notice, the Applicant no:r.rinated Sri G.Gopala Kri:;hna Murthy, Retired District Judge, and t:alled upon the Resqonder t to appoint its nominee arbitrator.

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9. As no reply was received from the Respondent to the arbitration notice dated 26.04.2021,, the Applicant filed the present arbitration applicatiorr seeking appointment ofan arbitrator on behalf of the Respondent. The Applicant claims that the Respondent is liable to pay rents to the tune of Rs. 1, 1 5,3 1,7 16/- along with mesne profits of Rs. 10,00,000/- per month, l8% GST and Rs. 90,000/- per month towards CAM charges from 01.10.2020 till the date of vacating the subject property.

10. The Respondent filed its Counter Affidavit disputing the claims of the Applicant. The Respondent contends that it has been timely paying the rents to the tune of Rs. 7,84,794l- which includes that it had made huge investments for the interior works of the subject property with the consent of the Applicant and it has been regularly paying electricity, water and maintenance charges. The Respondent also contended that it was the duty of the Applicant to pay the CAM + GST Charges as received from it to the Central Govemment which it the CAM + GST Charges without any default. Further, it contends failed to do.

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I 1. Accorling to the Respondent, the panies arreed to settle and extend the rgreement dated 30.12.2017 for a furtt,er period of ³ years on the :ondition of Rs. 15,00,000/- were paid by the Respondent. Th,: Respondent claims that it has paid a total amount of Rs. 10,00,000/- on various dates i.e., 23.11.2020, 26.11.2020 ar,d 05.12.2020 to tt e Applicant and the balance was to be pr:Lid during the registration of the lease deed. However, the agre( rnent was not extended. The l{espondent also contended that its liqrror lioense was cancelled on a( count of the Applicant. The Respondent alleges that the Applicant < eliberately is not paying the property tax so that the municipal authorities seize the subject property and Rt:s;rondent is not allowed to con( iuct its business.

12. Whi e the present arbitration application r.r'as pt:nding, the Applicant pass:d away on22.10.2021. Applicant No. 2. claiming to be the daughter and legal heir of the original Applicant filed interlocutory a:plications vide l.A. No. I of 2022, I.lt. No. 2 of 2022 and I.A. No. . of 2022praying this Court to impleird he: and bring her on record as the legal heir of the original Applicant for the purpose of th< present Arbitration Application The z\pplicant in the above mEntio ted Interlocutory Applications claims that the subject

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property was bequeathed to her by the original Applicant vide ^a registered Will Deed dated 05.01.2021.

13. This Court vide order dated 22.06.2022 allowed the Interlocutory Applications filed by Applicant No. 2 impleading her as the legal representative ofthe original Applicant.

14. The Respondent filed I.A. No. 4 of 2022, l.A. No. 5 of 2022 and I.A. No. 6 of 2022 to recall the orders dated 22.06.2022 passed in I.A. No. I of 2022, I.A. No. 2 of 2022 and I.A. No. 3 of 2022 whereby Applicant No. 2 was impleaded as the legal representative of the original Applicant. The Respondent contends that Applicant No. 2 cannot be impleaded as the legal heir as other legal heirs of the original Applicant were not anayed as parties. Relying on the decisions in Daulat Ram v. Sodhal and Bhagat Ram v. Suresh2, the Respondent contended that production of Will Deed is insufficient to prove that Applicant No. 2 is the legal heir of the original Applicant and the genuinity of the Will Deed has to be proved before a competent Civil Court.

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15. During the course of hearing, the parties together have filed a Joint Memoran lum of Compromise dated 27.10.2022 stating they have partially settled the disputes and the present Arbitration Application may be decided in light of such partial settlement.

16. On pe usal of the aforesaid facts and contentions of the parties, the following issues have to be decided by this Court:

• 1. Whether this Court could have impleaded Applicant No. 2 as the legal representative of the original Applicant?
• 2. Whether this Court can record partial compromise/settlement entered into by the parties while exercising powers under Section 11 of the Act?
• 3. Whether any arbitral disputes exist between the parties which warrant appointment of an arbitrator?

Issue No. $1$ :-

17. The Respondent contends in I.A. Nos. 4 to 6 of 2022 that Applicant No.2 could not have been impleaded as legal heir of the original Applicant. Firstly, because other legal heirs were not arrayed as parties and secondly, because the genuineness of the Will Deed relied upon by Applicant No. 2 has to be proved before a competent Civil Court. This Court cannot accept the said contentions of the Respondent.

18. Before discussing the issue at hand, it is apt to refer to Section $2(1)(g)$ of the Act, 1996 and Section 40 of the Act, 1996. The said provisions are extracted below:

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Section $2(1)(g)$ :

"legal representative" means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting;

Section 40:

Arbitration agreement not to be discharged by death of party

(1) An arbitration agreement shall not be discharged by the death of any party thereto either as respects the deceased or as respects any other party, but shall in such event been forceable by or against the legal representative of the deceased.

(2) The mandate of an arbitrator shall not be terminated by the death of any party by whom he was appointed.

(3) Nothing in this section shall affect the operation of any law by virtue of which any right of action is extinguished by the death of a person.

19. Section $2(1)(g)$ of the Act provides that any person who in law represents the deceased (who before his death was party to the arbitration) or a person acting in a representative capacity on whom the estate of the deceased devolves can act as a legal representative of

the deceased fol the purpose ofarbitral proceedings. Section 40(1) of the Act, providr s that in the event of death of any of the party to an arbitration, the proceedings shall continue - hy/aga inst the legal representative < f such deceased person. Therefbre, llection Z(t)(g) read with Sectit,n 40(1) of the Act, provides that a deceasecl who was party to an art itration proceeding can be representr:d by his legal representative.

20. An a'bitration does not get abated merely rn the death of the party- Thr : claims under the arbitration agre ement can be prosecuted bylr gainst the legal representatives of the deceased party. The Supreme lourt in Ravi Prakash Goel v. Ch:rndra Prakash Goel3 explain ng the scope of Section 40 helci that a legal representative can seek appointment ofan arbitrator umler Section 1l ofthe Act, 1996. The Court also held that arbitrator can be appointed even in the abr ence of a probate to a Will Deed bas,:d on which the legal represent ative claims a right to represent the deceased. The relevant paragr aphs are extracted below:

21. The definition of "legal representative" becarlc neoessary because sl ch representatives are bound by and alsc, entrtled to enforce an arbitration agreement. Section 40 clearly ;irys that an arbitration agreement is not discharged by the deatr rf rL Darty.

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The agreement remains enforceable by or against the legal representatives of the deceased. In our opinion, a person who has the right to represent the estate of the deceased person occupies the status of a legal person (sic representative). Section 35 of the 1996 Act which imparts the touch of finality to an arbitral award says that the award shall have binding effect on the "parties and persons claiming under them". Persons claiming under the rights of a deceased person are the personal representatives of the deceased party and they have the right to enforce the award and are also bound by it. The arbitration agreement is enforceable by or against the legal representative of a deceased party provided the right to sue in respect of the cause of action survives.

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28. In the instant case, the appellant being the only son of his deceased mother, is undisputedly a partner in the partnership firm with the respondents especially where the dispute concerning the partnership affairs had arisen already during her lifetime. The view taken in the impugned order that the appellant has no presently establishable binding arbitration agreement with the respondents is erroneous in law and facts. The impugned order is also bad in law in the teeth of the law laid down by this Court in Prem Lata v. IsharDass Chaman Lal [(1995) 2 SCC 145 : AIR 1995 SC 714]. This apart, the appointment of arbitrator could not be rejected on the ground of non-probate of the will executed by the mother when no family member is disputing the will and the appellant's claim vis-à-vis the partnership firm, even otherwise also the appellant is the legal heir of the deceased partner being her only son. In our view, non-probate of will is not a germane factor to be considered at the time of appointment of arbitrator under Section 11 of the Arbitration Act. In our opinion, the partnership deed clearly recites that all the disputes touching the affairs of the partnership firm were referable to arbitrator and it cannot be gainsaid that the dispute regarding accounts of the partnership firm is a dispute touching the affairs of the firm.

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29. As already stated, it was not legally essential to specifically make a mention that the partners included their legal heirs, representatives, assigns or legatees, etc. and the arbitration clause could be invoked by the appellant as the legate as well as the legal heir/legal representative of the deceased Dulari Devi particularly where the dispute had arisen during her lifetime. The appellant's claim in the instant case is based on the will as well as being a legal heir of the deceased Dulari Devi. The appellant, in our opinion, possessed a legal and enforceable right to in oke arbitration clause and move application under Section 11 of the Arbitration Act before the High Court for appointment of arbitrator. The word "party" as used in the partnership deed does not exclude inclusion of legal heirs, legal representatives, etc. as being canvassed by the respondents. Thus, in our opinion, in view of the provisions of Sections 40 and 46 of the Partnership Act read with Section 40 of the Arbitration Act, the appellant has a legal right to commence arbitration by moving an application under Section 11 of the $\angle$ rbitration Act in the High Court as in our view, the right to sue survives on him as legal representative of the deceased Dulari Devi and he is entitled to invoke Clause 13 of the partnership deed. Moreover, the dispute referable to arbitration had already arisen during the lifetime of Dulari Devi which is also well settled that where a dispute is referable to arbitration, the parties cannot be compelled to take recourse to in the civil courts.

30. In the present case, none of the other legal representatives $\frac{1}{2}$ dispute the Will Deed dated 05.02.2021 executed by the original Applicant (since deceased) in favour of Applicant No. 2. It is relevant to note that the agreement dated $30.12.2017$ defining the parties specified that the term Lessor (original Applicant) will mean and include legal heirs, successors $\quad\text{in}\quad$ interest, executors and

administrators. The said part of the agreement dated 30.12.2011 is extracted below:

MR.A. GOPAL,,T KRISFINA s/o A.VSubba Rao and Mrs. M.VIJAYALAKSIIMI w/o MV Narasimha Rao R/o plot no 1259/A, road # 36. Jubilee Hills, Hyderabad-500033. Hereinafter referred to as the LESSOR (Which expression shall unless repugnant to the subject or context thereof, mean and include their lesol heirs, successots itt interest. execulors, adntinistrators and ossigns) of the FIRST PART.

22. lt is relevant to note that the Respondent also does not dispute the fact that Applicant No. 2 is the daughter of the original Applicant. The Court cannot refuse to implead a legal heir of ^a deceased party to an arbitration merely on the ground that the veracity of the Will Deed was questioned by the opposite parry. Further, where the other legal representatives do not dispute the Will Deed, such legal representative in whose favour the property was bequeathed can be impleaded in place ofthe deceased party. Ifany dispute regarding the succession ofthe subject property arises, the same will be an inter se dispute between the Applicant No. 2 and the other legal heirs of the original ApplicanVdeceased. Therefore, the Applicant No. 2 was rightly impleaded as a legal representative of the original Applicant. Therefore, there is no need to recall order dated 22.06.2022 passed by this Court in I.A.Nos.1 to 3 of 2022 as sought in I.A.|,los. 4,5 and6 of 2022 and thur, l.d.Nos.4 to 6 of 2022 are dismissed.

Issue 2:-

23. As strted above, the parties filed a Joint Mernorandum of Compromise dtted 27.10.2022 agreeing to certain ternrs rnentioned therein. Howev:r, the said Memorandum in Clause 8 state,d that the compromise we s partial. The said Clause is extracted telow:

24. ln view of the partial compromise, the Arbitration or,rce,:dings in AI{B. APPL. No. 121 of 2021 will be proceedel with after recording t re compromise as agreed above.

This raises a,luestion whether the Court in exerci;e of its power under Sectior 1 I of the Act, 1996 can re(rord a partial compromise/se ttlement entered into by the par-ties" [t is relevant to note that the prwer of the Court under Section tr I of tl:e./rct, 1996 is limited. If the courts on perusal of the pleadings finds that, prima facie, an arbit ation agreement exists and finds that tbere are, prima facie, disputel between the parties to such an agreernent, it has to appoint an art itrator. Existence ofan arbitrable dispittr: is a condition precedent to a ppoint an arbitrator and the dispute is r;aid t,: exist till it is decided by .he arbitral tribunal

24. Thereforc, in cases where an application under Section ¹¹ is pending and an arbitrator is yet to be appointed, the Court can record a compromise entered into between the parties which brings the entire arbitral dispute to an end. In other words, where the entire arbitral dispute comes to an end on account of a compromise, the Court can dispose off the appiication for appointment ofan arbitrator recording such compromise.

25. The Supreme Court in V. Sreenivasa Reddy v. B.L. Rathnammaa held that the Court can record compromise while deciding an application under Section 11 ofthe Act, 1996. The Court has to only see whether sufficient material is placed on record evidencing that such compromise was entered into by the parties. The relevant paragraphs are extracted below:

26. We note that in the said backsround there is no definitc material on record to indicate that there was a concluded settlement betwee ntheparties bascd on which the petition was disposed and. therefore there is no rcason to hold that there is no dispute which required rcsolution through arbitration: nor are we in a position to hold that there is Nqyatiqn of the earlier agreement. Though the leamed Judge of the High Court of Karnataka through the order dated 05.07.2011 had disposed of the petition under Section 1l(6) ol the Act, 1996 by recording the submission that the matter has

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been settled out of court, the so-called settlement has not been recorded nor made a part of the order so as to bind the parties and to indicate that the dispute had been resolved and had accordingly erased the original dispute or amounted to Novation. That apart, no material is placed on record to show that the settlement had been reduced into writing and had been placed before the Court when the petition was disposed of so as to indicate that the right to arbitration under the original agreement cannot be claimed. If that be the position, the rejection of the IA also on the ground that the original order had merely recorded the settlement will not indicate that a concluded settlement was placed before the Court.

17. That apart, as rightly portrayed in the affidavit of the appellant filed in Arbitration Application No. 52/2016, not just the original dispute but even the fact as to whether the matter was settled amongst themselves or not is a dispute arising out of and in connection with the agreement dated $23.11.2006$ entered into between the parties. If that be the position, the learned Chief Justice, High Court of Judicature at Hyderabad was not justified in rejecting the application only on the contentions urged therein on behalf of the respondent about the petition being hit by Order II Rule 2 of CPC and also the principles of res-judicata. It cannot be accepted in the present facts that there was abandonment of part of any claim nor was there a conclusive adjudication of the dispute between the same parties on merits to constitute res-judicata. As already indicated above, the socalled settlement has neither been recorded in the earlier proceedings nor any document brought on record to indicate that factually the settlement had taken place so as to wipe out the original dispute. In such circumstance, a party to the arbitration agreement contending that there was a dispute amongst them cannot be left without a forum for resolution of the dispute by taking a hyper technical view of the matter. In any event, whe her the dispute which had arisen at the first instance has been settled; if the dispute subsisted, whether the claim is within the period of limitation, the nature of relief if any and all other contention on merits are to be considered in the arbitral

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proceedings. Hence, keeping open all contcntions on merits, we are ol the view that the sole Arbitrator is to be appointed to resolve the dispute between the parties.

26. In the present case, this Court cannot record a partial compromise between the parlies. A perusal of the Memorandum dated27.10.2022 indicates that the disputes between the parties have not been fully resolved. At this stage, it may not be possible to separate the disputes which have been settled and the ones which still exist. This Court also feels that the settled disputes may be related to the ones which remain unsettled. Therefore, while a full and final compromise between the parties may be recorded under Section 1 ¹of the Act, a partial compromise resolving only few of the disputes cannot be recorded by the Court. However, this Court grants liberty to the parties to place the Memorandum of Compromise dated 27 .10.2022 and get the same recorded before the arbitral tribunal.

lssue 3:-

27. The scope of High Court's power under Section I 1 of the Act, 1996 is extremely limited. The Court has to only see whether, prima facie, an arbitration agreement exists. The Court cannot go into disputed questions of facts which are to be decided by the arbitrator. Clause 24 of the agreement dated 30.12.2017 provides that arbitration

shall be the mode of dispute resolution. The said clause is extracted below:

24. This agreement shall be governed in accordance with the laws of India. In case of any dispute arising in respect of this agreement, the matter shall be referred to arbitration in consonance with the provisions of the arbitration and conciliation act. 1996. The arbitral tribunal shall consist of three arbitrators, one each nominated by Lessor and the Lessee who shall then jointly nominate the third arbitrator. The decision of the arbitrators so appointed shall be binding upon the parties. The law governing the arbitration proceedings shall be Indian law and the proceedings at Hyderabad and conducted language. shall be held in the English

25. It is relevant to note that the Supreme Court in Vidya

Drolia v. Durga Trading Corporation⁵ laid down the test to exercise power under Section 11 of the Act, 1996. In his separate opinion, Hon't le Sri Justice N.V. Ramana, Former Chief Justice of India, held as follows:

244. Be ore we part, the conclusions reached, with respect to Ques ion $1$ , are:

244.1. Sections 8 and 11 of the Act have the same ambit with respect to judicial interference.

244.2. Usually, subject-matter arbitrability cannot be decided at the stage of Section 8 or 11 of the Act, unless it is a clear case of deadwood.

244.3. The court, under Sections 8 and 11, has to refer a matter to arbitration or to appoint an arbitrator, as the case may be, unless a party has established a prima facie

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(summary findines) case of non-cxistence of valid arbitration agreement, by summarily portraying a strong case that he is entitled to such a finding.

the arbitration agreement cannot tre dctermincd on ^a prima facie basis. as laid dorvn above i.e. "when in 244.4. The court should refer a matter if the validitv of doubt. do refer".

facie validity of an arbitration agreement includes only: 244.5.1. Whether thc arbitration asreenlcnt rvas in 244.5. The scone of the court to cxamine the nrima writing? or

244.5.2, Whether the arbitration asrccmcnt lvas Soqtaincd in exchalge of letters, tclecom mu nication, etc,?

244.5.3. Whether the core contractual ingredicnts q ua the arbitration aqreement rvere fulfilled?

244.5.4. On rarc occasions. rvhethcr the subiect-matter of disputc is arbitrable?

29. From the facts and contentions raised by the parties, it is clear that disputes regarding payment of the rental dues and its quantum exist between the parties. Disputes also pertain as to who is liable under the agreement to pay the taxes. Therefore, in view of Clause 24 of the Agreement, this Court deems it appropriate to refer the matter to arbitration.

30. In light of the aforesaid discussion and the law laid down by the Supreme Court, the I.A.Nos.4 to 6 of 2022 are dismissed. The present Arbitration Application is allowed. Sri Mangari Rajender,

Retired District Judge, is appointed as the arbitrator on behalf of the Respondent und Sri G. Gopala Krishna Murthy (Retired District Judge) will be the nominee arbitrator of the Applicant. Both the arbitrators with consensus shall choose the third arbitrator.

Consequently, miscellaneous Petitions, pending if any, shall

stand closed.

Sd/- B.S. CHIRANJEEVI JOINT REGISTRAR $\neg B$ SECTION OFFICER

One Fair Copy to the Hon'ble Sri Justice K. LAKSHMAN (For His Lordships Kind Perusal)

To,

1. Sri M. Rajencer, Retired District Judge, Arbitrator on behalf of the Respondent, Villa No. 142, Keerthi Richmond Villa, Sunsity, Hyderabad – 500086. (By Special Mess anger)

//TRUE COPY//

( along with a $copy$ of affidavit and material papers)

2. Sri G. Gopala Krishna Murthy (Retired District Judge) Arbitrator of the Applicant H.No. 3-4-756/1, Flar No. 102, Sai Raghavendra Residency, Barkathpura, Hyderabad, PIN 500 027. (By Special Messenger)

( along with a $copy$ of affidavit and material papers)

3.11 & LR Copies

• 4. The Under Secretary, Union of India Ministry of law, Justice and Company Affairs, New Delhi
• 5. The Secretary Telangana High Court Advocates Association, Library, High Court Buildings Hyderabad
• 6. One CC to SRI. A VENKATESH Advocate [OPUC]
• 7. One CC to SRI. ZEESHAN ADNAN MAHMOOD Advocate [OPUC]
• 8. Two CD Copies

nib

HIGH COURT

$\mathsf{KL}, \mathsf{J}$

DATED:28/11/2022

COMMON CRDER

ARBITRATION APPLICATION No.121 of 2021

ALONG WITH I.A. NOS. 4, 5 AND 6 OF 2022

ALLOWING THE ARBITRATION APPLICATION AND DISMISSING THE I.A. NOS. 4 TO 6 OF 2022