ANIL KUMARversusB.S. NEELKANTA & ORS.

                              [2010] 6 S.C.R. 480


    A                            ANIL KUMAR
                                        v.
                          8.S. NEELKANTA & ORS.
                      (Arbitration Petition No. 7 of 2008)

                                  MAY 7, 2010
    8
                                 [D.K. JAIN, J.]

             Arbitration and Conciliation Act, 1996:

    c         ss. 2 (1 )(f) and 11 (5) and (6) - International commercial
        arbitration - Appointment of arbitrator - HELD: In order to set
        into motion the arbitral procedure, the Chief Justice or his
        designate has to examine and record his satisfaction (i)
        regarding territorial jurisdiction, (ii) that an arbitration
    0   agreement exists between the parties and (iii) that in respect
        of the agreement a live issue, to be decided between the
        parties, still exists - On being so satisfied, he may allow the
        application and appoint an arbitral tribunal or a sole arbitrator,
        as the case may be - In the instant case, from the material
    E   placed on record by the parties, it appears that (i) there are
/       disputes between the parties on the issues/claim raised by the
        petitioner and countered by the respondents, including
        whether the claim still subsists or has been extinguished as
        alleged by the respondents, which cannot be resolved without
        evidence; (ii) there is an arbitration agreement in Clause 41
    F   of agreement dated 19th January 2004, to which the petitioner
        is a party along with the respondents - The arbitration
        agreement is in clear terms and brings within its ambit the
        disputes sought to be raised by the petitioner: whether there
        was a breach of the terms of agreement dated 19th January
    G   2004, which would be a matter in the realm of arbitration and
        this Court cannot go into that question; (iii) the issues/claim
        raised by the petitioner, on a mere assertion cannot be said
        to be a dead one without evidence to be produced by the
        parties in support of and rebuttal thereto, on their respective
    H                                 480
          ANIL KUMAR v. B.S. NEELKANTA                     481


stands, regarding rights and obligations of the parties under A
agreements dated 19th January 2004 and 23rd January 2004,
on allotment of 74% of equity in favour of I/CL and petitioner's
right to nominate or being himself on the Board of Directors .
of Varsha; and (iv). the arbitrator is competent u/s 16 of the
Act to rule on its own jurisdiction, including to rule on any B ·
objections with respect to existence or validity of the arbitration
agreement, on a plea being raised before him that he has no
jurisdiction - Application allowed - The sole Arbitrator
appointed to adjudicate upon the claims/disputes raised by
the petitioner. [Para 14-16]                                        c
    Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya & Anr.
(2003) 3 SCR 558 = (2003) 5 SCC 531; SBP & Co. Vs. Patel
Engineering Ltd. & Anr. (2005) 4 Suppl. SCR 688 = (2005)
8 sec 618, referred to.                     -
                                                                  D
                      Case Law Reference:
     (2003) 3 SCR 558          referred to           para 10
     (2005) 4 Suppl. SCR 688 referred to             para 10
                                                                  E
     CIVIL ORIGINAL JURISDICTION : Arbitration Petition No.
7 of 2008.

    Under Section 11 (5) & (6) of the Arbitration and
Conciliation Act, 1996.
                                                                  F
    Rajiv Sawhney, Jyoti Mendiratta, Vineet Jhanji for the
Appellant.

    C.A. Sundaram, Ritu Bhalla, Dhruv Dewan, Monark Gehlot,
Anandh Kannan, Roshini Musa (for Suresh A. Shroff & Co.) for      G
the Respondents.

     The Order of the Court was delivered by


                                                                  H
         482      SUPREME COURT REPORTS                   [2010) 6 S.C.R.


     A                                ORDER

               D.K. JAIN, J. 1. This is a petition under Sections 11 (5)
         and 11 (6) of the Arbitration and Conciliation Act, 1996 (for short
.,       'the Act') for appointment of an Arbitrator for adjudication of the
         disputes which are stated to have arisen between the parties
     8
         to this petition.

              2. Since the case has had a chequered history, it would
         be appropriate to narrate the background facts, giving rise to
         this petition, in detail:
     c
            On 13th April 1998, the Andhra Pradesh Tourism
       Development Corporation Ltd. (hereinafter referred to as the
       "Corporation"), a statutory body owned and controlled by the
       State of Andhra Pradesh, awarded a lease in favour of one Ml
     D s Goldstone Engineering Ltd., presently known as Goldstone
       Teleservices Ltd. (hereinafter referred to as the "Goldstone") for
       a piece of land for oevelopment of the existing Hotel Ritz as a
       "Heritage Grand" category hotel, as notified by the Department
       of Tourism, Government of India.
     E      On 8th November 1999, Goldstone entered into an
       agreement with respondents No.1, 2 and 3 (hereinafter referred
       to as the "BSN Group") by which they agreed to execute the
       said project through a new company known as M/s Varsha Hill
       Fort Resorts Pvt. ltd. (for short "Varsha"), respondent No.4 in
     F this petition. As per the said agreement BSN Group agreed to
       acquire 74% of equity in VarSiha whilst Goldstone agreed to
       retain 26% of equity in the said Company. On 17th May 2001,
       the Corporation executed a lease deed for the said site in
       favour of Varsha. The lease provided in extenso the rights and
     G obligations of the parties with respect to the project. Clause
       12(u) of the lease deed provided that there would be no change
       in the constitution of the Lessee viz. Varsha, without the prior
       consent of the Corporation and clause 21 thereof - the non-
       assignability clause, provided that neither of the parties to the
     H lease. deed shall directly or indirectly sell, transfer, assign or
     ANIL KUMAR v. B.S. NEELKANTA [D.K. JAIN, J.]            483

  otherwise part with the whole or part of their respective interest A
  and/or benefits or obligations under the lease deed in any
  manner whatsoever to any other person or party without
  obtaining the priorwritten consent of the Corporation. On 29th
  November 2002, Goldstone and BSN Group entered into yet
  another agreement whereby the latter agreed to take over the B
- entire stake of Goldstone in Varsha. The Corporation felt that
  agreements dated 8th November 1999 and 29th November
  2002 were in breach of the terms of the lease deed dated 17th
  May 2001 as no written consent of the Corporation had been ·
  sought prior to the purported change of shareholding in Varsha, c
  on 4th August 2003, a notice for termination of the lease deed
  was issued to Varsha. According to the petitioner, in order to
  prevent the Corporation from resuming possession of the hotel
  site, on 22nd November 2003 the shareholders of Varsha, i.e.
  Goldstone and BSN Group, invited the petitioner to take over D
  shareholding of Varsha, subject to the prior approval of the
  Corporation. A meeting of the Board of Directors of Varsha was
  held on 22nd November 2003, where, according to the
  petitioner, three Directors; namely, B.S. Neelkanta (respondent
  No.1 ), Mr. P. Rameshbabu and Mrs. 8. Renuka (respondent ·
  No.2) were present. Minutes of the meeting were duly drawn E.
  wherein it was recorded that the petitioner shall be investing
  funds to the tune of Rs.15 to 18 crores in the form of equity in
  Varsha. It was also resolved that the proposal approved by the
  Board shall be subject to the approval by the Corporation and
  the execution of the relevant documents. In furtherance of the F
  said Resolution, Varsha requested the Corporation to accord
  permission for change in the shareholding pattern in favour of
  Mis Anil Kumar & Associates (hereinafter referred to as "AKA").
  The Corporation granted the permission vide their letter dated
  10th December 2003.                                  ·             G
        Pursuant to Corporation's approval, an agreement dated
    19th January 2004 was entered into between AKA, BSN
    Group comprising Mr. B.S. Neelkanta, Mrs. B. Renuka, Amogh
 .. Hotels Ltd. and Varsha respectively as parties of the first,   H
     484       SUPREME COURT REPORTS                     [2010] 6 S.C.R.


A second and third part, whereunder BSN Group agreed to
  transfer 19,68,300 shares in Varsha to AKA under the terms
  and conditions of the said agreement. The said agreement was
  signed on behalf of AKA by Anil Kumar, the petitioner herein
  and a resident of great Britain, Mr. B.S. Neelkanta (Respondent
B No.1) and Mrs. B. Renuka (Respondent No.2). The agreement
  contained the following arbitration clause:

           "41. Any dispute, difference or controversy of whatever
           nature howsoever arising under, out of or in relation to this
           agreement between the parties and so notified in writing
c          by either party to the other (the Dispute) in the first instance
           shall be attempted to be resolved amicably by them. If the
           parties are unable to do so, such dispute shall be referred
           ta arbitration by a sole Arbitrator mutually agreed by the
           parties to the dispute. In the event the parties are unable
D          to agree on an Arbitrator with 15 days, then the arbitrator
           shall be nominated by Managing Director of APTDCL on
           the request of any party. The arbitration shall be governed
           by the provisions of Arbitration and Conciliation Act, 1996
           and the venue of arbitration shall be at Hyderabad, and
E,         shall be conducted in English Language. Any decision or
           award resulting from arbitration shall be final and binding
           upon the parties."

          The said agreement was followed up by another
F agreement dated 23rd January 2004 between AKA
   represented by Mr. Anil Kumar, Goldstone, BSN Group
   represented by Mr. B.S. Neelkanta, respondent No.1 in this
  .'petition, and Varsha, represented again by Mr. B.S. Neelkanta,
   as its Director. Under the said agreement, AKA agreed to
   purchase 1,00,000 equity shares of Varsha held by Goldstone
G for a consideration of Rs.1 O lacs. As a result of the aforesaid
   two agreements, AKA became entitled to acquire 74% equity
   stake in Varsha whilst the equity shareholding of BSN Group
   stood reduced to 26%. As per agreement dated 23rd January
   2004, upon transfer of shares of Goldstone to AKA, all
H
  ANIL KUMAR v. B.S. NEELKANTA [D.K. JAIN, J.]               485


Directors of Varsha, representing Goldstone were to resign from      A
the Board of Directors of Varsha and AKA was entitled. to
nominate its directors on the Board of Varsha.

     The Corporation withdrew its order cancelling lease deed
and signed a supplemental lease deed dated 21st February             B
2004 with Varsha. The supplemental lease deed recorded the
shareholding pattern of Varsha as on that date as Anil Kumar
& Associates holding 74% equity shares and Mr. B.S.
Neelkanta holding 26% of the equity share capital of Varsha.
The said supplemental agreement was signed by the petitioner         C
on behalf of Varsha as its director. The stand of the petitioner
is that in furtherance of the said arrangement, he engaged the
services of an architect in London to prepare the plans for
construction of the Ritz hotel and on 14th March 2004, executed
two contracts, being a management agreement and a technical
services agreement with Meridien S.A. It appears that as per         D
the understanding between AKA, Varsha and Goldstone, the
shares .of Varsha, which were to be acquired by AKA under
agreements dated 19th January 2004 and 23rd January 2004
were actually subscribed by a Company known as M/s India
 International Construction Private Ltd. (for short "llCL"),         E
purportedly belonging to a group called the "Progressive
Group".

      On 31st August 2005, the petitioner received an email
from one Mr. Ashish Kumar attaching a copy of letter dated           F
22nd August 2005 addressed by Varsha to the petitioner,
advising the petitioner that Varsha was contemplating to issue
a public notice for the information of the general public that
petitioner's association with the hotel project had been
terminated and that promoter group, including the BSN Group          G
did not require petitioner's support and association with the
hotel project. It was alleged that the petitioner had not invested
 a single rupee in the project, thus hampering the progress of
the hotel project and that the promoter group viz. the BSN group,
 was forced to mobilize the requisite resources in the form of       H
    486      SUPREME COURT REPORTS                  (2010] 6 S.C.R.


A   debt and equity. The petitioner was also informed that he was
    no longer representing Varsha as its director. A separate email
    dated 5th September 2005 addressed by Mr. S.S. Neelkanta
    (respondent No.1 ). purportedly on behalf of Varsha, was sent
    to Le Meridien, informing them that their agreement with Varsha
s   regarding the hotel project had been terminated.

       As expected, vide his advocate's letter dated 23rd
  September 2005, the petitioner objected to the termination of
  his association with Varsha, as conveyed to him vide
  respondent No.1 's letter dated 22nd August 2005 and asserted
C that he, through his nominee and associate llCL is a stake
  holder of 74% equity in Varsha and would take steps to seek
  registration of the said shareholding in his own name. The
  relevant portion of the reply is extracted below:

D         "My client has fully honored his obligations under the
          Agreement and has through his nominee made substantial
          investments into the Company. My client is the approved
          investor in the Company and pursuant to his assurances
          given to the Andhra Pradesh Tourism Development
E         Corporation Ltd., that Corporation signed the
          Supplementary Lease Deed dated 21st February, 2004.
          The said Supplementary Lease is signed by my client as
          the Director of the Company. As you are fully aware the
          Andhra Pradesh Tourism Development Corporation Ltd.
F         was holding the Company in breach of the Lease
          Agreement and had issued a notice terminating the Lease
          Deed. The notice of cancellation was withdrawn and a
          Supplemental Lease executed in favour of the Company
          pursuant to the request and representations made by any
          clie~t. Further the Corporation has approved my client
G
          holding 74% of the Capital and my client has the first
          preemptive right and option to purchase the 26% shares
          held by the BSN Group as defined in the Agreement of
          19th January, 2004. The BSN Group is obliged to first offer
          the sale of those shares to my client and is further obliged
H
  ANIL KUMAR v. S.S. NEELKANTA [D.K. JAIN, J.]              487


    not to sell those shares to any other party. My client          A
    accordingly exercises his rights to purchase the said 26%
    shares held by the BSN Group directly in his own name."

      On 1st October 2005, the petitioner received a letter from
the Corporation seeking certain clarifications of documents
                                                                    B
attached with the letter on the change in shareholding pattern
ofVarsha. According to the petitioner, it was only on receipt of
this letter from the Corporation that he came to know that BSN
Group and Varsha were trying to create rights in the so-called
"progressive group", the said group having acquired shares in       C
Varsha. Thereafter, some correspondence ensued between the
Corporation and the petitioner with which I am not directly
concerned.

      3. On 22nd November 2005, the petitioner filed a petition
under Section 9 of the Act before the City Civil Court at           D
Hyderabad seeking certain interim reliefs including a direction
to Varsha to maintain status quo in connection with the terms
and conditions of lease agreement dated 17th May 2001, as
amended by supplemental lease deed dated 21st February
2004. Eventually, on 17th ,December 2005, the petitioner            E
through his Advocate sent a letter to Varsha and the BSN
Group calling upon them to confirm the appointment of an
Arbitrator within 15 days of the said letter, in terms of the
arbitration agreement. Since no reply to the said notice was
received, vide his letter dated 30th January 2006, the petitioner   F
approached the Corporation requesting them to nominate an
Arbitral Tribunal as per the arbitration agreement dated 19th
January 2004. The respondents as also the Corporation having
failed to appoint an Arbitrator, the petitioner filed a petition
under Section 11 (6) of the Act before Hon'ble the Chief Justice    G
of High Court of Andhra Pradesh for appointment of an
Arbitrator. Vide order dated 6th February 2007, rejecting the
 objections raised by the respondents, the learned Single Judge
 of the High Court allowed the petition and appointed a former
 Judge of this Court as the sol~ Arbitrator.                        H
    488     SUPREME COURT REPORTS                 (2010) 6 S.C.R.


A      4. Aggrieved by order dated 6th February 2007,
  respondent No.4 in this petition, filed a Special Leave Petition
  (C) No.5493 of 2007. This Special Leave Petition was
  subsequently amended with the permission of this Court,
  incorporating the objection of the respondent with regard to the
B jurisdiction of the High Court to entertain the petition under
  Section 11 (6) for appointment of an Arbitrator. The stand of the
  said respondent was that the dispute, if any, involved
  International Commercial Arbitration and, therefore, the
  jurisdiction to appoint an Arbitrator vested in the Chief Justice
c of India alone. On 23rd November 2007, leave to appeal was
  granted to the respondents.

        5. On 22nd January 2008, the petitioner filed the present
  petition under Sections 11 (5) and 11 (6) of the Act seeking
  appointment of an Arbitrator in terms of the Arbitration
D Agreement dated 19th January 2004.

        6. A common affidavit has been filed on behalf of the
  respondents resisting the petition. By way of preliminary
  submissions, it is pleaded that: (a) the petitioner has no locus
E standi to file the present petition inasmuch as the Arbitration
  Agreement dated 19th January 2004 was between the BSN
  Group, Varsha and a business concern known as M/s Anil
  Kumar & Associates. Therefore, the petitioner in his individual
  capacity has no locus standi to file the present petition without
F specific plea that it was being filed for and on behalf of Anil
  Kumar & Associates, allegedly a distinct entity and claiming
  shareholding in his individual capacity; (b) the shares in Varsha
  were to be acquired by M/s Anil Kumar & Associates under
  agreements dated 19th January 2004 and 23rd January 2004
G which were actually subscribed by yet another company known
  as llCL, in the assumed name of the "Progressive Group" - an
  undertaking of AKA and some others, who have not invoked
  the arbitration clause and, therefore, the present petition is
  liable to be dismissed as the petitioner has not brought any
  documentary record to show that he was authorised by llCL to
H
   ANIL KUMAR v. B.S. NEELKANTA [D.K. JAIN, J.]                  489


file the present petition and (c) in the absence of llCL and other       A
associate companies of llCL, holding shares in Varsha, in the
arbitration proceedings no declaration can be made by the
Arbitral Tribunal to the effect that the petitioner is entitled to 74%
shareholding in Varsha. The plea of the petitioner with regard
to the minutes dated 22nd November 2003 has also been                    B
disputed. Needless to say, at the outset, that all these questions
are within the competence of the Arbitrator as under Section
16 of the Act, it is for him to rule on his own jurisdiction,
including the question about existence or validity of the
Arbitration Agreement.                                                   c
     7. At this juncture, it may be relevant to note that since in
the Special Leave Petitions, filed against the orders passed
by the Andhra Pradesh High Court including the order
appointing the Arbitrator, leave had been granted by this Court
vide order dated 23rd November 2007, the hearing in the                  D
present petition on 25th August 2008 was deferred with a view
to await the decision in those appeals (Civil Appeal Nos.5645-
5647 of 2007 and 5642-5644 of 2007), which were disposed
of on 22nd May 2009 as the withdrawal of the original
application under Section 11 (6) of the Act filed by the petitioner      E
before the High Court was allowed. The effect of the said order
is that the order passed by the· High Court on petitioner's
application under Section 11 (6) has been set at naught.

     8. I have heard learned counsel for the parties.                    F
      9. Mr. Rajiv Sawhney, learned Senior Counsel appearing
for the petitioner, strenuously urged that in terms of agreement
dated 19th January 2004, it was agreed that the petitioner and
his associates would acquire 74% of equity in Varsha, they
having fulfilled their part of the obligation under the said             G
agreement by contributing towards 74% of the equity,
respondent No.1, in breach of the said agreement, has by notice
dated 22nd August 2005 sought to unilaterally terminate
 petitioner's association with Varsha for no rhyme or reason. It
was argued that not only the dispute with regard to the validity         H
    490     SUPREME COURT REPORTS                   [2010] 6 S.C.R.

A of the said notice is a live issue, even the geAuineness of the
  minutes dated 22nd November 2003, forwarded by Varsha to
  the Corporation and agreement dated 23rd January 2004,
  creating rights in a Group of Companies viz., the "Progressive
  Group" has been seriously contested by the petitioner, which
B matters can be resolved only through the medium of arbitration,
  as stipulated in Arbitration Agreement dated 19th January
  2004. It was, thus, submitted that either the Arbitrator appointed
  by the High Ccurt may be permitted to re-enter the reference
  or a new Arbitrator be appointed to adjudicate upon the
c disputes between the parties.
          10. Mr. C.A. Sundaram, learned Senior Counsel
    appearing on behalf of the respondents, on the other hand,
    vehemently contended that the present petition is utterly
    misconceived inasmuch as the controversy regarding
D   termination of relationship between the petitioner and Varsha
    in terms of letter dated 22nd August 2005 is not connected with
    agreement dated 19th January 2004 as after allotment of 74%
    of equity in Varsha to the associates of the petitioner, the
    agreement dated 19th January 2004 worked itself out and,
E   therefore, there is no subsisting dispute between the parties
    to the agreement. It was asserted that the agreement was only
    for transfer of shares of Varsha to Anil Kumar & Associates
    and with transfer of 74% of equity in favour of the associates
    of Anil Kumar, the petitioner, no cause of action to file the
F   present petition survived. It was also contended that the disputes
    now sought to be raised necessarily involve the companies
    forming the "Progressive Group", who were neither parties to
    the Arbitration Agreement nor are before me in these
    proceedings. In support of the proposition that any matter which
G   lies outside the Arbitration Agreement and is also between
    some of the parties who were not parties to the Arbitration
    Agreement, there is no question of reference to Arbitration
    under Section 11 (6) of the Act, reliance is placed on a decision
    of this Court in Sukanya Holdings (P) Ltd. Vs. Jayesh H.
H
     ANIL KUMAR v. S.S. NEELKANTA ,[D.K. JAIN, J.]            491


Pandya & Anr1• Reference was also made to the decision of A
a Bench of seven Judges of this Court in SBP & Co. Vs. Pawl ·
Engineering Ltd. & Anr., 2 to eontend that the question of
subsistence of an arbitrable dispute between the parties is to
be demonstrated by the party requesting for arbitration and is
required to be decided by me in these proceedings.             B

     11. It is manifest from the pleadings that the parties are
ad idem that there is an Arbitration Agreement between them
vide Clause 41 of agreement dated 19th January 2004, but the
contention of the respondents is that there is no live issue          C
requiring resolution by arbitration.

      12. Thus, the question that falls for consideration before
me is whether the dispute regarding termination of relationship
between Varsha and the petitioner is dead one in the sense
that on alleged allotment of equity in favour of an associate of      D
the petitioner, agreement dated 19th January 2004 has worked
itself out and no live issue in terms of the said agreement
subsists?

      13. The controversy in regard to the nature of function to      E
 be performed by the Chief Justice or his designate under
 Section 11 of the Act has been set at rest by a Bench of seven
·Judges of this Court in SBP case (supra). It has been held, per
 majority, that the function performed by the Chief Justice or his
 nominee under the said Section is a judicial function. Defining
 as to what the Chief Justice or his designate is required to
                                                                      F
 determine while dealing with an application under Section 11
 of the Act, P.K. Balasubramanyan, J., speaking for the majority
 said: (Para 39, SCC)

       "It is necessary to define what exactly the Chief Justice,     G
       approached with an application under Section 11 of the
       Act, is to decide at that stage. Obviously, he has to decide
       his own jurisdiction in the sense whether the party making
1.    c2003) 5 sec 531.
2.    c2005) a sec a1a.                                               H
     492       SUPREME COURT REPORTS                   [2010] 6 S.C.R.


 A         the motion has approached the right High Court. He has
           to decide whether there is an arbitration agreement, as
           defined in the Act and whether the person who has made
           the request before him, is a party to such an agreement. It
           is necessary to indicate that he can also decide the
 B         question whether the claim was a dead one; or a long-
           ba rred claim that was sought to be resurrected and
           whether the parties have concluded the transaction by
           recording satisfaction of their mutual rights and obligations
           or by receiving the final payment without objection. It may
 c         not be possible at that stage, to decide whether a live claim
           made, is one which comes within the purview of the
           arbitration clause. It will be appropriate to leave that
           question to be decided by the Arbitral Tribunal on taking
           evidence, along with the merits of the claims involved in
           the arbitration. The Chief Justice has to decide whether
 D
           the applicant has satisfied the conditions for appointing an
           arbitrator under Section 11 (6) of the Act. For the purpose
           of taking a decision on these aspects, the Chief Justice
           can either proceed on the basis of affidavits and the
           documents produced or take such evidence or get such
 E         evidence recorded, as may be necessary. We think that
           adoption of this procedure in the context of the Act would
           best serve the purpose sought to be achieved by the Act
           of expediting the process of arbitration, without too many
           approaches to the court at various stages of the
 F         proceedings before the Arbitral Tribunal."

          14. It is clear from the above extracted paragraph that in
    order to set into motion the arbitral procedure, the Chief Justice
    or his designate has to decide the issues, if raised, regarding:
  G (i) territorial jurisdiction; (ii) existence of an Arbitration
    Agreement between the parties and (iii) whether the claim
    made by the applicant was a dead one in the sense that the
    parties have already concluded the transaction by recording
    satisfaction of their mutual rights and obligations or have
. H recorded satisfaction regarding their financial claims.
     ANIL KUMAR v. B.S. NEELKANTA [D.K. JAIN, J.]               493


  Nevertheless, the Court made it clear that at that stage it may       A
  not be possible to decide whether a live claim made, is one
  which comes within the purview of the arbitration clause and
  this question should be left to be decided by the Arbitral Tribunal
  on taking evidence. It is, therefore, plain that purely for the
_ purpose of deciding whether the arbitral procedure is to be set       B
  into motion or not, the Chief Justice or his designate has to
  examine and record his satisfaction. that an Arbitration
  Agreement exists between the parties and that in respect of
  the agreement a live issue, to be decided between the parties,
  still exists. On being so satisfied, he may allow the application     c
  and appoint an Arbitral Tribunal or a sole Arbitrator, as the case
   may be. However, if he finds and is convinced that the claim is
   a dead one or is patently barred by time or that he lacks
  territorial jurisdiction, he may hold so and decline the request
   for appointment of an Arbitrator.                                    0
        15. Having examined the whole matter in the light of afore-
  noted principles, I am of the opinion that the petition deserves
  to be allowed. From the material placed on record by the
  parties, it appears to me that: (i) there are disputes between
  the parties on th.a issues/claim raised by the petitioner and         E
  countered by the respondents, including whether the claim still
  subsists or has been extinguished as alleged by the
  respondents, which cannot be resolved without evidence; (ii)
  there is an Arbitration Agreement in Clause 41 of agreement
  dated 19th January 2004, to which the petitioner is a party along     F
  with the respondents. The Arbitration Agreement is in clear
  terms and brings within its ambit the disputes sought to be
  raised by the petitioner: whether there was a breach of the terms
  of agreement dated 19th January 2004, in as much as the
  petitioner failed to pump in the requisite funds in Varsha either     G
  by way of equity or otherwise, as alleged, in Varsha's letter
  dated 22nd August 2005, would be a matter in the realm of
  arbitration and this Court cannot go into that question; (iii) the
   issues/claim raised by the petitioner, on a mere assertion
   cannot be said to be a dead one without evidence to be               H
    494     SUPREME COURT REPORTS                  [2010) 6 S.C.R.


A produced by the parties in support of and rebuttat thereto, on
  their respective stands, regarding rights and obligations of the
  parties under agreements dated 19th January 2004 and 23rd
  January 2004, on allotment of 74% of equity in favour of llCL
  and petitioner's right to nominate or being himself on the Board
B of Directors of Varsha; and (iv) the Arbitrator is competent
  under Section 16 of the Act to rule on its own jurisdiction,
  including rule on any objections with respect to existence or
  validity of the Arbitration Agreement, on a plea being raised
  before him that he has no jurisdiction.
c      16. For the foregoing reasons, the petition is allowed and
  Mr. Justice M. Jagannadha Rao, a former Judge of this Court
  is appointed as the sole Arbitrator to adjudicate upon the
  claims/disputes raised by the petitioner, subject te his consent
  and such terms as he may deem fit and proper. It goes without
D saying that the learned Arbitrator shall deal with the matter
  uninfluenced by the observations made by the High Court of
  Andhra Pradesh in its order dated 6th February 2007 or in this
  order, on the rival stanqs of the parties.

E         17. The Registry is directed to communicate this order to
    the learned Arbitrator to enable him to enter upon the refereAce
    and give his Award as expeditiously as practicable. The petition
    stands disposed of with no order as to' costs.

    R.P.                          Arbitration Petition disposed of.