ORDER This application is filed under Sections 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking appointment of Arbitrator to resolve the dispute between the parties. 2. The respondent filed a counter opposing the application. 3. Arguments of both sides are heard. Perused the record. 4. The respondent is engaged in the business of assembling and manufacturing of power supply systems. The applicants and respondent entered into a deed of partnership on 16-06-2006 for the purpose of carrying on the business of designing, developing, assembling, manufacturing and selling of uninterrupted power supply systems, inverters, power regulators, power controllers etc., under the name and style of 'Perfect Solutions Power Supply Subsequently, the applicants and respondent entered into a Memorandum of Understanding on 02-12-2007, where under the respondent took the responsibility for research and development and design work to be completed by April, 2008. The respondent has taken signatures of applicant No.1 on blank cheques stating that the same will be used to meet the day-to-day affairs of the business. The respondent, with a mala fide intention, used the blank cheques by putting his signatures also and withdrew huge amounts on various dates and deposited the same in his personal firm account. Thereafter, the respondent purchased a flat. As per the bank account statement, the respondent deposited a total amount of Rs.15,50,000/- in his personal account after withdrawing the same from the partnership account. The applicants issued a notice dated 18-09-2008 narrating the above facts and demanding the respondent to return the unused cheques drawn on Development Credit Bank Limited, Abids, Hyderabad. The respondent got issued the reply notice dated 27-09-2008 with false allegations. The respondent approached the applicants and handed over four post-dated cheques and one such cheque bearing No.88464 dated 29-09-2008 got dishonoured. The applicants issued another notice dated 27-09-2008 to the respondent demanding payment of the amount covered by the said cheque. The respondent got issued another notice dated 10-10-2008 denying the very execution of the four cheques. The applicants again got issued another notice dated 13-10-2008 and also issued a further notice on the same day seeking reference of the dispute to the arbitrator and requesting the respondent to name an arbitrator. As there was no response from the respondent, this application is filed. The applicants again got issued another notice dated 13-10-2008 and also issued a further notice on the same day seeking reference of the dispute to the arbitrator and requesting the respondent to name an arbitrator. As there was no response from the respondent, this application is filed. The applicants filed O.P.No.1292 of 2009 before the II-Additional Chief Judge, City Civil Court, Hyderabad under Section 9 of the Act for interim relief and the same is pending. As per Clause 22 of the partnership deed dated 16-06-2006, disputes have to be referred to Arbitrator. 5. In the counter-affidavit, the respondent contended that the applicants under the memorandum of understanding agreed to invest Rs.25 lakhs for carrying out research and development work, but they did not invest the amount as promised and the applicants invested only Rs.14,92,000/-, while the total expenditure incurred towards research and development project was about Rs.24,25,681/-. In view of the malicious and fraudulent allegations levelled by the applicants alleging malpractices, misappropriation etc., the subject matter must necessarily be tried in a court of law and Arbitrator could not be competent to deal with the same, as it involves elaborate evidence and intricate examination of questions of fact and law. The respondent has already filed a suit for dissolution of partnership and rendition of accounts of the firm in O.S.No.220 of 2010 before the learned II-Additional Chief Judge, City Civil Court, Hyderabad. 6. As seen from the affidavit filed by the applicants in support of the application and the counter-affidavit filed by the respondents, it is manifestly clear that both parties entered into a partnership deed dated 16-06-2006, which was followed by a memorandum of understanding dated 02-12-2007. The applicants alleged the respondent was responsible for development of research and development project and the respondent has misused blank cheques signed and delivered by the first applicant and diverted funds from the partnership account to his personal account to the extent of Rs.15,50,000/- and did not complete the research project undertaken by him. There was exchange of notices between the parties. Finally, the applicants issued a notice dated 13-10-2008 seeking reference of the dispute to the arbitrators for the purpose of arbitration in terms of Clause 22 of the partnership deed. As there was no response to the said notice, the present application is filed. 7. There was exchange of notices between the parties. Finally, the applicants issued a notice dated 13-10-2008 seeking reference of the dispute to the arbitrators for the purpose of arbitration in terms of Clause 22 of the partnership deed. As there was no response to the said notice, the present application is filed. 7. The only objection raised by the respondent is that having regard to the fact that serious allegations of fraud and misappropriation are made against him by the applicants, the same requires adjudication before a competent civil court where evidence, oral and documentary, can be adduced by both parties and it is not a matter fit for resolution by way of arbitration. 8. In a recent decision in Indowind Energy Limited v. Wescare (1) Limited and another (1) 2010 (5) SCJ 16, the Apex Court held as follows: “The scope of examination of the agreement dated 24-2-2006, by the learned Chief Justice or his Designate under Section 11(6) is necessarily to the restricted to the question whether there is an arbitration agreement between the parties. The examination cannot extend to examining the agreement to ascertain the rights and obligations regarding performance of such contract between the parties. This Court in SBP and Co. v. Patel Engineering Limited [2005 ((7) SCJ 461 = (2005) 8 SCC 618 ] and in National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd. [ (2009) 1 SCC 267 ] has held that when an application is filed under Section II, the Chief Justice or his Designate is required to decide only two issues, that is whether the party making the application has approached the appropriate court and whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such agreement. Therefore, the Chief Justice exercising jurisdiction under Section 11 of the Act has to only consider whether there is an arbitration agreement between the petitioner and the respondent/s in the application under Section 11 of the Act. Any wider examination in such a summary proceeding will not be warranted. 9. In Anil Kumarv. B.S. Neelakanta and others (2) 2010 (5) SCJ 166 , the Apex Court, following the decision of seven-Judge Bench in SBP and Co. Any wider examination in such a summary proceeding will not be warranted. 9. In Anil Kumarv. B.S. Neelakanta and others (2) 2010 (5) SCJ 166 , the Apex Court, following the decision of seven-Judge Bench in SBP and Co. v. Patel Engineering Limited (3) 2005 (7) SCJ 461 = (2005) 8 SCC 618 = 2005 (6) AL T 37.1 (DNSC) held as follows: "It is, therefore, plain that purely for the purpose of deciding whether the arbitral procedure is to be set 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 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." 10. This Court in News Today (P) Ltd., T. V. Division, Hyderabad v. S. Hari Prasad and others (4) 2009 (4) ALT 657 held as follows: "The extent and scope of power under Section 11 (6) of 1996 Act while dealing with the applications for appointment of arbitrator has been well settled after the decision of seven-Judge Bench of the Supreme Court in SBP and Company (supra), which has been followed and explained in Shree Ram Mills Limited v. Utility Premises (Private) Limited 2007 (6) SCJ 171 = (2007) 4 SCC 599 and National Insurance Company Limited v. Boghara Polyfab 2008 (12) Scale 654 . In the last of these three decisions, Supreme Court on an analysis of SBP & Company (supra) noticed that preliminary issues that might arise for consideration under Section 11 of 1996 Act fall into three categories, viz., (i) issues which the Chief Justice or his Designate is bound to decide; (ii) issues which he can also decide i.e., issues which he may choose to decide; and (iii) issues which can be let to the Arbitral Tribunal to decide; and explained these in the following manner. 1. 1. The issues (first category) which Chief Justice/his designate will have to decide are: (a) Whether the party making the application has approached the appropriate High Court. (b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. 2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the arbitral tribunal) are: (a) Whether the claim is a dead (long barred) claim or a live claim. (b) Whether the parties have concluded the con tract/transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. 3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the arbitral tribunal; are: (a) Whether the claim made falls within the arbitration clause (as for example. A matter which is reserved for final decision of a departmental authority and expected or excluded from arbitration). (b) Merits of any claim involved in the arbitration. 11. In the present case, the partnership deed stipulates that all disputes touching the affairs of the partnership firm shall be referred to arbitration in accordance with the provisions of the Indian Arbitration Act. The applicants herein are parties to the deed of partnership. It is not disputed that this Court has got territorial jurisdiction to entertain the dispute. As seen from the pleadings of both the parties, a dispute has certainly arisen out of the partnership deed. The applicants allege that the respondent has failed to develop the project as undertaken by him under the deed of partnership and the memorandum of understanding and even misused the funds by diverting them from the partnership account to the personal account of the respondent, whereas the respondent would contend that the applicants have failed to provide the necessary funds for completion of the project and the applicants invested only Rs.14,92,000/- as against total expenditure of Rs.24,25,681/- incurred by the respondent towards research and development project and, therefore, the applicants themselves are responsible for the project coming to a standstill. 12. 12. The question as to whether or not the applicants failed to provide the necessary funds for execution of the project undertaken by the respondent in terms of the partnership deed and memorandum of understanding, as alleged by the respondent and whether the respondent failed to complete the project in spite of necessary investment made by the applicants, is certainly a dispute arising under and from out of the terms and conditions of the partnership deed and memorandum of understanding and such dispute certainly deserves to be referred to arbitration in view of Clause 22 of the partnership deed providing for such a recourse. The fact that the applicants made certain other allegations to the effect that the respondent has misused signed blank cheques given by the first applicant and diverted the funds from the partnership account to the personal account and the said allegations are vehemently denied by the respondent, does not in any manner come in the way of operationalizing Clause 22 of the partnership deed, which specifically provides for resolution of the dispute by way of arbitration. Similarly, pendency of the suit O.S.No.220 of 2010 filed by the respondent before the II-Additional Chief Judge, City Civil Court, Hyderabad for dissolution of the partnership and for rendition of account, does not also create any impediment for appointment of an arbitrator to resolve the dispute. 13. In view of the principles laid down in the decisions cited, the scope of enquiry under Section 11 of the Act in the context of appointment of an Arbitrator is very limited and is confined only to consider whether there is arbitration agreement between the parties and the party who approached the Court seeking appointment of Arbitrator is a party to the said agreement and this Court has got necessary jurisdiction to appoint the Arbitrator. Any wider examination of the matter in such summary proceeding is not warranted as held by the Apex Court in Anil Kumar's case (2 supra). In the said case (2 supra), the Apex Court held that if the Court finds and is convinced that the agreement is a dead one or is patently barred by time or that it lacks territorial jurisdiction, it may hold so and the request for appointment of Arbitrator can be declined. However, no such situation exists in the present case. In the said case (2 supra), the Apex Court held that if the Court finds and is convinced that the agreement is a dead one or is patently barred by time or that it lacks territorial jurisdiction, it may hold so and the request for appointment of Arbitrator can be declined. However, no such situation exists in the present case. The learned counsel for the respondent would contend that as the allegations of fraud and misappropriation are made, it is not a fit case to refer the dispute to arbitration and in that connection he invited attention to a unreported decision of the Apex Court in N. Radhakrishnan v. M/s. Maestro Engineers and AMP; Ors. in Civil Appeal No. 7019 of 2009, wherein the Apex Court held as follows:- "In our opinion, the contention of the respondents relating to the jurisdiction of the Arbitrator to decide a dispute pertaining to a matter of this proportion should be upheld, in view of the facts and circumstances of the case. The High Court in its impugned judgment has rightly held that since the case relates to allegations of fraud and serious malpractices on the part of the respondents, such a situation can only be settled in court through furtherance of detailed evidence by either parties and such a situation can not be properly gone into by the Arbitrator." Apart from the fact that the above decision was rendered in the light of facts and circumstances of the said case, the decision cited is not applicable to the facts of the present case. In the above case, it was contended by the respondents therein that the appellant raised various issues relating to misappropriation of funds and malpractices on the part of respondents and the case involved substantial questions relating to fraud, where detailed material evidence need to be produced by either parties. The dispute in the present case is not entirely based on the allegations of fraud and misappropriation. The dispute between the parties is essentially pertaining to non-completion of the research and development project in terms of the partnership deed and memorandum of understanding. The dispute in the present case is not entirely based on the allegations of fraud and misappropriation. The dispute between the parties is essentially pertaining to non-completion of the research and development project in terms of the partnership deed and memorandum of understanding. According to the applicants, though necessary funds were invested, the respondent did not evince interest and did not complete the project, whereas the respondent contends that the applicants did not invest necessary funds as required and the investment made by them is far less than what has actually been incurred by the respondent. Whether or not the applicants have made the necessary investments for the required expenditure and whether or not the respondent has incurred expenditure more than the investment made by the applicants and as to the causes/reasons for the said non-completion, are all matters, which can certainly be resolved by reference to arbitration. Just because the applicants have also made an allegation that the respondent has misused the signed blank cheques and diverted the funds, which allegation is denied by the respondent, the dispute, which has essentially arisen between the parties relating to the non-completion of the research and development project and the causes/reasons there for, does not cease to be one, which can be resolved by arbitration. 14. In the circumstances, it is held that the objection raised by the respondent for appointment of arbitrator is unsustainable and the dispute that has arisen between the parties is referable to arbitration for its resolution. 15. In the circumstances, Sri S. Ramakrishna Reddy, c/o Sri N. Vasudeva Reddy, H.No.8-2-704/5-B, Sai Enclave, Road No.12, Banjara Hills, Hyderabad - 500 034, is appointed as sole Arbitrator to resolve the dispute between the parties by arbitration in accordance with the provisions of the Act. It is open to the learned Arbitrator to fix a reasonable fee towards his remuneration, which shall be payable by both parties in equal measure. 16. In the result, the arbitration application is allowed. There shall be no order as to costs.