Case Note & Summary
The petitioner, Satyam Cineplexes Limited, a company engaged in managing multiplex cinema halls, entered into a Memorandum of Understanding (MOU) on 17.07.2010 with respondent No. 1, Patel Realty India Ltd., for development of property and lease of 52,000 sq. ft. area in a building called 'Mall of Bangalore'. The petitioner paid Rs. 15 lakhs as interest-free security deposit. Subsequently, a concluded agreement to lease was executed on 03.08.2012, along with an addendum. However, respondent No. 1 issued a notice on 07.09.2012 refunding the security deposit, stating that the terms of the lease could not be finalized. The MOU, agreement to lease, and addendum contained arbitration clauses (clause 29 of MOU, clause 16 of agreement to lease, and clauses 79 and 80 of addendum). The petitioner invoked the arbitration clause and issued a lawyer's notice on 19.11.2012, nominating an arbitrator and requesting respondent No. 1 to nominate its arbitrator. The respondents failed to comply and instead issued a reply through their lawyers. The petitioner then filed this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator on behalf of the respondents. The court, after hearing the parties, found that the respondents had failed to nominate an arbitrator despite the arbitration clause and the petitioner's notice. The court allowed the petition and appointed a sole arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - Failure to Nominate - Petitioner and respondents entered into an MOU, agreement to lease, and addendum containing arbitration clauses. Dispute arose when respondents refunded security deposit and failed to perform obligations. Petitioner invoked arbitration clause and nominated arbitrator, requesting respondents to nominate theirs. Respondents failed to comply. Court held that since respondents failed to nominate an arbitrator, the court is empowered to appoint an arbitrator under Section 11(6) of the Act. (Paras 1-4)
Issue of Consideration
Whether an arbitrator should be appointed under Section 11(6) of the Arbitration and Conciliation Act, 1996, when the respondents failed to nominate an arbitrator despite the existence of an arbitration clause in the MOU, agreement to lease, and addendum.
Final Decision
The court allowed the petition and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Arbitration clause
- Appointment of arbitrator
- Section 11(6) of Arbitration and Conciliation Act
- 1996
- Failure to nominate arbitrator
- Concluded agreement to lease
