The High Court · 2025

1 Amigos Builders and Devetopers, (A partnership Firm), Rep. by its Managing Partner, T. Anitha xumar Re'ooy,'O-ti.. ii pi"u#"" i/"nr"nt., Flat No 101 , Lepakshi Hospitat Lane, rimmi6!y;J;;;i#.'fi ;;i[is r zsoz, nnon,., Pradesh 2 T Anitha Kumar Reddy, s/o. T. Dasaratha Ra occ. Business, r/o. Kotthagangireddy palli, pe Cuddapah-5 1 6329, AndhE piaOesh'. ," mi Ralik aged about 45 years, ndlimarri, Tangedupalle,

3. Dasari Anand Babu, s/o D Venkata Narayana, aged about 46 vears. occ. Business, r/o. D No. .t _65, vrrrigrntrp;rii I i;b;fri A;;;ihd;, ;;;;; Pradesh-S1541i. 4. P.Lakshmi pathi, s/o p.Vrenkappa, aged about l4 years,occ. Business. r/o. D No.2-28-24, Main Road, CoriiG,InJniiJi'ur, nnahra pradesh_S15231 ,..Respondents . ^ Arbitration Apprica-tion fired under Section 1 1(5) & (6) of the Arbitration and Concitiation Act of ig?6, R.,y Sctreme for nppointment of Arbitrator, 1996 read with the scheme of Appointment or eJitiaiSrs, .r996, as.i;;';y'i;" Honourabte High Court for ihe State T"i;;;;;; and under Ctause in toan "f Agreement dated o1t04t2022, to resorve th" ;;;;i.r between the Appricant and the Respondents. Counsel for the petitioners ; Sri. Srinivasa Rao Bodduluri counsel for the Respondent Nos. 1 & 2: sri srikanth Kancharra The Court made the fo owing: ..4 HONOURABLE SRIJUSTICE B. VIJAYSEN REDDY ARBITRAT ION APPLI CATION N0.283 0F 2024 ORDER: (ORAL) This application is tiled seeking to appoint a sole arbitrator to adjudicate the disputes between the applicant and the respondents in terms of the loan agreement dated 01.04.2022.

2. It is stared thatin 2022, respondent No.2 approached the applicant to lend an amounl of Rs.4,50,00,000/_ (Rupees four crores fifty lakhs only) for the purpose of construction business. Respondent No.2 stood as personal guarantor and signed the document dated 01.04.2022 for availing the loan amount. As per the loan agreement, the respondents ) agreed to repay an amount of Rs.9,00,00,000/_ (Rupees nine crores only) which includes principal amount of Rs.4,50,00,000/- along with interest of an amount of Rs.4,50,00.000/_ repayable within a period of twenty two (22) months from the date of the loan agreement with a further option to roll over fbr a maximum period of sixty days (60) days with mutual consent. tt is further stated that in the event ofdefault ofthe loan amount by the respondents, an interest at the rate of 36 per cent per annum uould be charged on the defaulted amount for a period, till the date of realisation of the amount. 2

3. According to the applicant, the respondents failed to repay the loan amount within the stipulated period of twenty two (22) months which expired on 01.01 .2 024 as agreed under loan agreement' Respondent No.2, apart from executing personal guarantee, has issued two post-dated cheques and demand promissory note executed by respondent No.l. As the respondents failed to repay the loan amount' legal notice dated 15.07.2024 was issued by the applicant calling upon the respondents to repay the loan amount of Rs'10,89,00,000/- (Rupees ten crores eighty nine lakhs only) along with interest within a period of fifteen ( 15) days from the date of receipt of the notice. As attempts were made by respondent No.2 to alienate his properties to frustrate the loan I recovery, the applicant filed C.O.P. No.77 of 2024 tnder Section 9 of the Arbitration and Conciliation Act, 1996 (for short'Act 1996',) before the leamed Princlpal Special court in the cadre of District Judge for Trial and Disposal of Commercial Disputes at Hyderabad (for short 'Commercial Court') seeking to direct the respondents to furnish security for an amount of Rs. 10,89,00,000/- and order dated 18'07 '2024 was passed by the Commercial Court directing the respondents to fumish security for an amount of Rs' 10,89,00,000/-' however' the respondents have not fumished any security as directed by the ./ ) Commercial Court. As such, the applicant was constrained to approach this Oourt.

4. Leamed counsel for the respondents contended that there is no compliance of the procedure contemplated under Section 21 of the Act 1996 and mandatory notice was not issued by the applicant invoking arbitration clause. Thus, this application is liable to be dismissed.

5. There is no denial by the respondents that disputes arose between the parties and the legal notice dated 15.07.2024 was issuea 6y ttre applicant demanding repaymenr of the loan amount of Rs. 10,89,00,000/. Paragraph Nos.6 and 7 of the said notice show that'the applicant demanded the respondents to repay the loan amount as otherwise warned that recovery proceedings will be initiated by appointing an arbitrator of his choice for adjudicating the disputes. The. respondents were notified that in the event of demands of the applicant not being met, recovery proceedings will be initiated and arbitrator will be appointed. Thus, the objection of the respondents that there is no compliance of Section 2 I of the Act 1996 is without any merit.

6. Leamed counsel lbr the respondents lurther submitted that there is no proof of service of arbitration notice- However, as seen from the 4 record, notice has been sent by the applicant to the respondents through registered post on 15.07 .2024. Unless, there is any material produced before this Court about non-service ofnotice, it has to be presumed that notice which has been duly issued is served on the parties. Even otherwise such contention is merely technical. The object of Section 2l ofthe Act 1996 is only to notifr the respondents that disputes have arisen between the parties and the applicant is willing to initiate arbitration proceedings.

7. In the opinion of this Court, the notice dated 15.07.2024 is sufficient compliance of Section 2l read with Section 11, of the Act t996.

8. Accordingly, this application is allowed appointing Sri Justice A. Santhosh Reddy, Former High Court Judge, Plot No.46, H.No.16-2- 740146, Opp: Vasu Apartments, Kalyan Nagar, Gaddiannaram, New Malakpet, Hyderabad - 500060, as Arbitrator to ad.judicate the claims and disputes betrveen the parlies and to pass an award in accordance with law. The parties are at [iberty to raise all factual and legal grounds in support of their respective claims 5

9. The learned Arbitrator is entitled to fees as per the rates specified in the Fourth Schedule to the Act 1996 inserted by the Arbitration and Conciliation (Amendment) Act 2015, No.3 of 2016, with effecr from

23.10.2015, which shall be borne by both parties in equal shares. There shall be no order as to costs. As a sequel thereto, miscellaneous applications, if any, pending in this application stand closed. \ To, //TRUE COPY// Sd/- M. VIJAYA BHASKER JOINT REGISiTRAR g SECTION OFFICER /

1. Sri Justice A. Santhosh Reddy, Former High Court Judge, Plot No. 46, H. No. 16-2-740126, Opp: Vasu Apartments, Kalyan Nagar, Qaddiannaram, New Malakpet, Hyderabad - 500060. (By Special Messenger) (Along with a Copy of affidavit and material papers)

2. One CC to Sri. Srinivasa Rao Bodduluri, Advocate [OPUC] 3. One CC to Sri Srikanth Kancharla, Advocate [OPUC] 4. Two CD Copies DUgh o' --::l t I I I ( e) o.J ltlE ST4 14- 07ilAn M $I ,i , HIGH COURT DATED:131O212O25 ORDER ARBAPPL No.283 of 2024 ALLOWING THE APPLICATION