IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI THURSDAY, THE TWENTIETH DAY OF FEBRUARY TWO THOUSAND AND TWENTY FIVE 0^. A A O •* CA PRESENT gp HO^ HON’BLE SRI JUSTICE DHIRAJ SINGH THAKUR, THE CHIEF JUSTICE ARBITRATION APPLICATION No.62 of 2023 Between; 1. M/s.Kranthi Grand DKNV Hospitalities, Rep. by its Managing Partner office at D. No. 39-20-64/4, Smt.Lanka Kranthi, W/o. Dinakar, Madhavadhara, Visakhapatnam. 2. Lanka Dinakar, S/o. Lanka Appa Rao, Age 44 years, Occ; Partner, M/s. Kranthi Grand DKNV Hospitalities, office at D.No.39-20-64/4, Madhavadhara, Visakhapatnam. ...Applicants/Petitioners AND 1. M/s. Manasa Estates and Hospitality Pvt. Ltd, Rep.by its Managing Director, D.No.9-14-1, Balaji Nagar, VIP Road, Visakhapatnam. 2. Kotu Mahindra, S/o Late. Pattabhiramireddy, Age 64 years, R/o. D.No.9-14-1, Balaji Nagar, VIP Road, Visakhapatnam. 3. Smt. Kotu Nandini, W/o. Kotu Mahindra, Age 56 years, R/ o. D.No.9-14- 1, Balaji Nagar, VIP Road, Visakhapatnam. ...Respondents Application filed under Section 11 (5) & (6) of the Arbitration and Conciliation Act, 1996 R/w para (3)(i)(c) of scheme for Appointment of Arbitrators, 1996 for the aforesaid reasons stated in the accompanying ^ affidavit the applicant therefore prays that this Honourable Court may be pleased to appoint a sole arbitrator to adjudicate all the disputes which arose i between the applicant/s and respondent/s in lieu of the Registered Sub lease Agreement bearing Doc.No.346/2018 dated 06.01.2018. : Sri Dheera Kanishka <1^ Counsel for the Petitioners Counsel for the Respondents: Sri V V Ravi Prasad The Court made the following: Bench Sr.No:-‘^I [3441] IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI ' APHC010550962023 ARBITRATION APPLICATION NO: 62 of 2023 ...Applicants M/s. Kranthi Grand DKNV Hospitalities and another Vs. ...Respondents M/s. Manasa Estates and Hospitality Pvt. Ltd. and 2 others ********** Mr. Dheera Kanishka Advocate for Applicant; Advocate for Respondent; Mr. V. V. Ravi Prasad CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR : 2^ DATE PC : application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996. (for short, “the Act of 1996”) seeking the appointment of an arbitrator for purposes of adjudicating the disputes arising out of and in connection with Sub-Lease, dated 06.01.2018. This is an 2. The applicant, it is stated, entered into a Sub-Lease/Agreeme nt with respondent No.1 - M/s. Manasa Estates and Hospitality Pvt. Ltd., who was a lessee of a property with a right of creating a Sub-Lease in favour of third taken to run a hotel from the premises in parties. The Sub-Lease was question, for a period of eight years, commencing from 01.04.2018 on a monthly rental of Rs.14,00,000/- (Rupees Fourteen Lakhs Only). 2 HCJ ARBAPPL_62_2023 amount of Rupees Thirty Lakhs was of renovating the building to make it suitable for The applicant claims that an tj, 3. invested for purposes hotel and restaurant. However, the respondents without started interfering with the peaceful possession of purposes of running a any just cause or reason the applicant and even when the applicant was entitled to remain in the said lease, the respondents forcibly occupied possession till 2026, as per the property and dispossessed the applicant in gross violation of the terms and conditions of the lease deed. 4. It is stated that as per the Clause 15 of the said lease agreement, agreed to be resolved through the mechanism of arbitration by Sri Venu Gottipati, who was specifically named as an arbitrator for such a disputes were purpose. claims that it served upon the respondents a notice, dated clause but instead of the nominated 5. The applicant 23.09.2023, invoking the arbitration arbitrator, suggested the name of one Sri K. Ravi, Advocate, as an arbitrator hence, the present application. to which the respondents did not agree seeking the appointment of an independent arbitrator, other than Mr. Venu Gottipati, who was the named arbitrator, for not accepting the named arbitrator as an arbitrator, in of the Sub-Lease Agreement, according to the applicant, in paragraph 14 of the present application is limited to the following explanation. 6. The reason terms HCJ ARBAPPL_62_2023 ’V' ...The respondents failed to agree for the said proposal 14. of the petitioner and hence the petitioners are filing this application invoking the jurisdiction of this Hon'ble court. It is submitted with respect that the petitioners do not trust the arbitrator named in the he had taken the side of the respondents and agreement since failed to respond to the cries of the petitioners. 6. Learned counsel for the respondents has vehemently opposed the Other than the agreed arbitrator, Sri Venu appointment of an arbitrator Gottipati, stating that there was absolutely no plausible reason for insisting arbitrator other than the nominated arbitrator as upon the appointment of any per the Agreement. Heard learned counsel for the parties. 7. denied that the applicant at the time of signing the Sub-Lease Deed/Agreement had agreed to have any dispute that arise between the Sub-Lease Deed/Agreement, dated 06.01.2018, resolve through arbitrator. It is not the case of the of the miscalculations and envisaged under Section 8. It is not parties to the Sri Venu Gottipati, who was to act as an applicant that Sri Venu Gottipati, suffered any ineligibilities to be appointed as an arbitrator as 12(5)ofthe Actof 1996. 9 The explanation rendered for appointment of an arbitrator other than the the Sub-Lease Deed is quite casual and without nominated arbitrator as per basis, much less has there been placed any material on record by the that the named arbitrator would not act independently or impartially. any applicant . In fact, as has been held by a three-Judge Bench of the Supreme Court iin 4 HCJ ARBAPPL_62_2023 . Northern Railway Administration vs. Patel Engg. Co. Ltd.^ and followed by Indian Oil Corporation Limited and others vs. Raja Transport Private Limited^ reference of disputes to the named arbitrator is a rule and ignoring the named arbitrator/Arbitral Tribunal shall be an exception to the rule, to be resorted to only for valid reasons. For facility of reference, what was said by the Apex Court in Indian Oil Corporation Limited and others vs. Raja Transport Private Limited (supra) is reproduced hereunder: If the arbitration agreement provides for arbitration by a named arbitrator, the courts should normally give effect to the provisions of the arbitration agreement. But as clarified by Northern Railway Admn., where there is material to create a reasonable apprehension that the person mentioned in the arbitration agreement as the arbitrator is not likely to act independently or Impartially, or if the named person is not available, then the Chief Justice or his designate may, after recording reasons for not following the agreed procedure of referring the dispute to the named arbitrator, appoint an independent arbitrator in accordance with Section 11(8) of the Act. In other words, referring the disputes to the named arbitrator shall be the rule. The Chief Justice or his designate will have to merely reiterate the arbitration agreement by referring the parties to the named arbitrator or named Arbitral Tribunal. Ignoring the named arbitrator/Arbitral Tribunal and nominating an independent arbitrator shall be the exception to the rule, to be resorted for valid reasons." ‘45. The applicant in the present case has placed no material on record which would in the least suggest the impartiality or likelihood of bias which 10. ’ (2008) 10 see 240 2 (2009) 8 see 520 HCJ ARBAPPL 62_2023 % might be exhibited during the course of the proceedings by the nominated arbitrator against the applicant. I In the case of Indian Oil Corporation Limited(supra) the Apex Court held that ‘an arbitration clause is a package which may provide for what disputes are arbitrable, at what stage the disputes are arbitrable, who should be the arbitrator, what should be the venue, what law would govern the parties, etc. A party to the contract cannot claim the benefit of arbitration under the arbitration clause, but ignore the appointment procedure relating to the named arbitrator contained in the arbitration clause’. At this stage, it would also be worthwhile to reproduce the view expressed by the Apex Court at paragraph 14 of Indian Oil Corporation Limited(supra), it held: 11. No party can say he will be bound by only one part of the agreement and not the other part, unless such other part Is impossible of performance or is void being contrary to the of the Act, and such part is severable from the 14. provisions remaining part of the agreement. The arbitration clause is a package which may provide for what disputes are arbitrable, at what stage the disputes are arbitrable, who should be the arbitrator, what should be the venue, what law would govern the parties, etc. A party to the contract cannot claim the benefit of arbitration under the arbitration clause, appointment procedure relating to the named arbitrator contained but ignore the in the arbitration clause. Be that as it may, the disputes arising out of and in connection with the Sub-Lease Deed, dated 06.01.2018, are referred to the nominated arbitrator, Sri Venu Gottipati, who shall enter upon the reference and adjudicate upon 12. 6 HCJ ARBAPPL_62_2023 shall be free to file detailed claims and counter- learned Arbitrator, who shall render the Award within the The learned Arbitrator shall also be entitled to consultation with the parties or as per the provisions of the the disputes. The parties claims before the prescribed statutory period, claim the fee in Fourth Schedule of the Arbitration and Conciliation Act, 1996. r Accordingly, the present arbitration application is disposed of. There 13. shall be no order as to costs. Pending miscellaneous applications, if any, in this petition, shall stand closed. Sd/- E KAMESWARA RAO JOINT REGISTF^R //TRUE COPY// OFFICER SEC To 1. The Registrar (Judicial), High Court of Andhra Pradesh, Amaravathi. CC to Sri Dheera Kanishka, Advocate [OPUC] (communicate the 2. One order to Sri Venu Gottipati, nominated Arbitrator) 3. One CC to Sri V V Ravi Prasad, Advocate [OPUC] 4. The Managing Director, M/s.Manasa Estates and Hospitality Pvt. Ltd, Balaji Nagar, VIP Road, Visakhapatnam. S/o Late. Pattabhiramireddy, Age 64 years, R/o. 5. Kotu Mahindra, D.No.9-14-1, Balaji Nagar, VIP Road, Visakhapatnam. 6. Smt.Kotu Nandini, W/o. Kotu Mahindra, Age 56 years, R/ o. D.No.9-14- 1, Balaji Nagar, VIP Road, Visakhapatnam. 7. The Section Officer, OS Section, High Court of Andhra Pradesh at Amaravathi. 8. Three CD Copies TK sree HIGH COURT DATED:20/02/2025 ■■ ,i'' ORDER ARBAPPL.No.62 of 2023 X 0 5 MAR 2075 tTIl Col ^ Current Secuon DISPOSING OF THE ARBITRATION APPLICATION