ORDER : This application is filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 read with Scheme for Appointment of Arbitrator, 1996, seeking to appoint an arbitrator on behalf of the respondent under Clause 20.2 of the Development Agreement cum GPA, who would in turn appoint the presiding arbitrator along with the arbitrator nominated by the applicant, to resolve the disputes between the applicant and the respondent arising out of the agreement dated 28.11.2005. 2. As per the averments made in the affidavit filed in support of the arbitration application, the case of the applicant is that the respondent – Telangana Housing Board, (Formerly the Andhra Pradesh Housing Board), called for tenders for the development of a residential and commercial project, and the applicant through its holding company – M/s Indu Projects Ltd., submitted bids and the said firm became the successful bidder. The respondent entered into development agreement cum- GPA dated 28.11.2005, with the applicant, for development of residential and commercial project, in a total extent of Acs.65.00, situated at KPHB colony in Sy.No.1009 of Kukatpally village, Balanagar mandal, Hyderabad, on various terms and conditions. 3. As per the development agreement dated 28.11.2005, the applicant is required to complete the construction and development of the project within 24 months from the date of signing of the agreement i.e., it is required to complete the project by 27.11.2007. The applicant could not complete the project within the time stipulated and by virtue of the supplementary development agreement dated 02.12.2009, time for completion of the project was extended till 31.05.2011. 4. The case of the applicant is that it could complete 90% of the project within time, but due to failure on the part of the respondent in discharging its reciprocal contractual obligations, it could not complete the execution of the entire project within time. 5. In the affidavit, the applicant has mentioned the issues which the respondent failed to resolve timely, and which made it impossible for the applicant to proceed with the completion of the project. As the said issues pertain to merits of the claim, and are in the nature of disputed questions of fact, need not be gone into while deciding this arbitration application. Hence, the said issues mentioned in the affidavit, are not being reproduced. 6. As the said issues pertain to merits of the claim, and are in the nature of disputed questions of fact, need not be gone into while deciding this arbitration application. Hence, the said issues mentioned in the affidavit, are not being reproduced. 6. The further case of the applicant is that though it made several representations to the respondent, seeking its co-operation for resolution of pending works, extension of time for completion of project, and best efforts to hold negotiations, as there is no co-operation from the respondent for amicable solution, it was constrained to issue notice dated 28.03.2019 invoking the arbitration clause No.20.2 under the agreement and nominating Sri Justice K.C.Bhanu, retired Judge of the High Court as arbitrator on its behalf, and calling upon the respondent to nominate an arbitrator on its part, who would then jointly choose the presiding arbitrator. The case of the applicant is that on receipt of the said arbitration notice, the respondent issued reply notice dated 16.04.2019 with untenable allegations, and failed to nominate arbitrator on its behalf. In these circumstances, the present arbitration application came to be filed. 7. Counter affidavit is filed on behalf of the respondent. The awarding of the contract and the execution of the agreement dated 28.11.2005 and the supplementary agreement dated 02.12.2009 for extension of time till 31.05.2011 for completion of project, are not denied. It is stated that in the supplementary agreement dated 02.12.2009, under Clause 6, the applicant has specifically accepted that there is no fault on the part of the respondent for the delay, and under Clause 9 of the said agreement, the applicant, which is the developer company, has agreed to indemnify the respondent any loss due to delay on the part of the developer company in not completing the project within the stipulated time. It is stated that the applicant has failed to complete the project within the extended time, and vide letter dated 31.12.2017, sought for further extension of time. As the enquiries by the Vigilance and the Enforcement Wing and the CBI are pending by then, the matter was referred to the Government for decision and the same is pending. 8. It is stated that the applicant has failed to complete the project within the extended time, and vide letter dated 31.12.2017, sought for further extension of time. As the enquiries by the Vigilance and the Enforcement Wing and the CBI are pending by then, the matter was referred to the Government for decision and the same is pending. 8. It is further stated that under the bona fide belief that the developer will duly perform its obligations under the contract, respondent executed some registered sale deeds in favour of the purchasers, but on noticing that the developer is unlikely to complete the project, the respondent took a decision vide Circular No.100/AE/PC/2010, dated 07.02.2012 directing all the Executive Engineers and other officers to stop further registrations. 9. It is stated that purchasers of the flats filed W.P.No.33899 of 2012 and batch and though interim orders were granted initially, directing the respondent to execute sale deeds, on filing of the vacate petitions, this court, directed the respondent to hold negotiations to address the grievance of the purchasers, but at the same time to safeguard the interest of the respondent. Accordingly negotiations were held with the applicant and also with other developer companies, wherein the officials of the respondents intimated the conditions to be performed by the developers under the development agreements, and further stating that the willingness will be sent to the Government for approval. But the applicant did not give its willingness, and sought for several concessions. The same was intimated to the Government and also to this Court. 10. In the meanwhile A. P. Reorganization Act, 2014 was passed and pursuant to which the Government of Telangana, issued G.O.Ms.No.1061, General Administration (Cabinet) Department, dated 16.05.2016, appointing Cabinet Sub Committee to review all the issues relating to the Joint Venture Projects of the Housing Board including the requests for extension of time. Accordingly, the Cabinet Sub-Committee conducted meetings and the representatives of the applicant – developer company participated in the meetings, and eventually, the Cabinet Sub Committee, made its recommendations and the same are pending with the Government for approval. Once the approval of the Government is received and the developer company complies with the conditions imposed, the registrations can be commenced. 11. Once the approval of the Government is received and the developer company complies with the conditions imposed, the registrations can be commenced. 11. It is further stated that in the meanwhile, Government received Vigilance Report No.108, dated 28.09.2013, inter alia recommending for criminal action against the developer for improperly grabbing the project without actual eligibility, and the unused land of Ac.2.87 gts. was resumed, and dismantled prefab structures thereon. Further, the office of the Enforcement Directorate has also attached Acs.2.57 gts. of land in the project on 25.03.2015, wherein unauthorised temporary structures were constructed by the developer. 12. In the counter affidavit, the events of default stated to have been committed by the applicant – developer have been stated. As already noted above, since they pertain to merits of the claim, and are in the nature of the disputed questions of fact, they are not required to be considered in this application. As such, they are not being reproduced. 13. It is eventually stated that as the recommendations of the Cabinet Sub Committee are pending approval with the Government, even before receipt of approval, invoking arbitration clause and filing of the arbitration application, are premature. 14. Learned counsel for the applicant, while reiterating the averments made in the affidavit filed in support of the arbitration application, further submitted that the applicant has completed 90% of the project within the time granted, and due to the failure on the part of the respondent in discharging its reciprocal contractual obligations, it has become impossible to proceed with the project and to complete the same within time. Learned counsel sought to point out the alleged failures on the part of the respondent in complying with its obligations under the agreement. He submits that the applicant has made its efforts to negotiate with the respondents and resolve the issue, but it could not succeed, and on the other hand, the impugned action of the respondent is detrimental to the interest of the applicant. He submits that there is no dispute with regard to existence of the arbitration clause in the agreement, and as the respondent failed to resolve the issues, the applicant issued notice dated 28.03.2019 invoking arbitration clause in the agreement, and nominating a named retired High Court Judge as arbitrator on its behalf, and sought the respondent to nominate the arbitrator on its behalf, who shall in turn nominate the presiding arbitrator. But the respondent issued reply dated 26.04.2019 with untenable grounds, and failed to nominate arbitrator on its behalf. In these circumstances, the present application is filed and learned counsel for the applicant seeks to allow the application. 15. On the other hand, learned Special Government Pleader appearing for the respondents submits that the applicant has not completed the project within the time allowed under the principal agreement dated 28.11.2005, and even under the supplementary agreement dated 02.12.2009, and this constitutes an ‘event of default’ under Clause 17.1.1 of the agreement dated 28.11.2005, and as such the respondent is entitled to take action under the said development agreement and also under general law. Learned counsel further submits that having admitted under the supplementary agreement that there is no delay on the part of the respondent, the applicant cannot now turn around and say that it could not complete the project because of the delay on the part of the respondent in discharging its contractual obligations. Learned counsel further submits that the Vigilance and Enforcement Department and the CBI are investigating the issue, and criminal action is pending, and in these circumstances, arbitrator cannot be appointed. He further submits that the recommendations of the Cabinet Sub Committee are pending with the Government for approval, and without waiting for the same, applicant is not justified in invoking the arbitration clause, and the present application is premature. He further submits that the decision of the Government would be based on the recommendations of the Cabinet Sub Committee, and such decision cannot be set aside or modified by the Arbitrator, and that if the decision of the Government is not acceptable to the applicant, the appropriate remedy would be to approach a civil court, and arbitration cannot be the remedy. Learned Special Government Pleader further submits that the alleged problems faced by the applicant were there right from the beginning and considering the said circumstances, first extension was granted, and hence the applicant is estopped from canvassing the very same problems and seek for reference of the issue to arbitration, and in these circumstances, the invocation of arbitration clause is barred by limitation both under the provisions of the said agreement and also under the general law. With these submissions, learned Special Government Pleader appearing for the respondent, seeks to dismiss the application. 16. With these submissions, learned Special Government Pleader appearing for the respondent, seeks to dismiss the application. 16. In the present case, there is no dispute with regard to existence of the arbitration clause in the agreement dated 28.11.2005. Clause 20.2 of the agreement provides for arbitration and the same is extracted as under ready reference: 20.2 Arbitration: In the event of a Dispute arising out of or in connection with the agreement not being resolved in accordance with the provisions of Section 20.1 above, either party shall be entitled to by notice in writing (“Arbitration Notice”), to the other party, refer such dispute for final resolution by binding arbitration in accordance with the Arbitration and Conciliation Act, 1996. 20.2.1. All proceedings in any such arbitration shall be conducted in English. The proceedings shall be held in Hyderabad, India. 20.2.2. Both the Developer Company and APHB shall appoint arbitrators (the procedure of which will be spelt out later)” Reading of the above clause makes it is clear that parties to the agreement have agreed that in the event of dispute arising out of or in connection with the agreement not being resolved through negotiations, either party, after issuing arbitration notice, shall be entitled to refer such dispute for final resolution through arbitration. 17. In the present case, the case of the applicant is that it could complete 90% of the project and could not complete the entire project due to failure on the part of the respondent in discharging its reciprocal contractual obligations under the agreement. In the arbitration application, the applicant also points out certain issues, which the respondent failed to resolve. Similarly, the respondent has also pointed out the alleged defaults committed by the applicant under the agreement. These circumstances show that disputes arising out of the agreement exist between the parties. 18. The contention of the learned counsel for the respondent is that in view of the investigations by the Enforcement Directorate and the CBI into the project, and pending criminal action, arbitrator cannot be appointed. 19. This court in the connected matter in INDU EASTERN PROVINCE PROJECTS PRIVATE LTD. REPRESENTED BY ITS DIRECTOR vs. TELANGANA HOUSING BOARD, REPRESENTED BY ITS VICE CHAIRMAN AND HOUISING COMMISISONER, TELANGANA HOUSING BOARD, [ARB.APPL.NO.68 OF 2019 dated 09.06.2020], considered similar issue. 19. This court in the connected matter in INDU EASTERN PROVINCE PROJECTS PRIVATE LTD. REPRESENTED BY ITS DIRECTOR vs. TELANGANA HOUSING BOARD, REPRESENTED BY ITS VICE CHAIRMAN AND HOUISING COMMISISONER, TELANGANA HOUSING BOARD, [ARB.APPL.NO.68 OF 2019 dated 09.06.2020], considered similar issue. The relevant issue, and the finding on the said issue, are as under: “3(a) Whether registration of criminal case and allegations of fraud in the process of awarding contract, is a bar for referring the disputes arising out of the agreement to arbitration? Issue 3(a) Fraud and criminal case: In the judgment relied on by the learned counsel for the applicant in Swiss Timing Ltd. { (2014) 6 SCC 677 }, the facts disclose that on the basis of registration of criminal case by CBI against Chairman of respondent Common Wealth games Organizing Committee and some officials of petitioner, respondent sought to invoke non-liability clause in Clauses 29 and 34 of the agreement that empowered respondent to terminate the contract in case of corrupt, fraudulent, collusive or coercive practices in connection with agreement. It was contended that since the allegations could not be properly gone in by arbitrator, decision of criminal proceedings should be awaited instead of constitution of Arbitral Tribunal. The Apex Court, while not accepting the above contention, held that it is mandatory for the courts to refer disputes to arbitration, if agreement between parties provide for reference to arbitration. Thus, registering of criminal case as to execution of said contract, is not an absolute bar to refer disputes to arbitration. The Apex Court further held that there is no inherent risk of prejudice to any party in permitting arbitration to proceed simultaneously with criminal proceedings, since findings recorded by Arbitral Tribunal are not binding in criminal proceedings. In an eventuality where ultimately award is rendered by Arbitral Tribunal and criminal proceedings result in conviction, rendering underlying contract void as provided for in the contract, necessary plea can be taken on the basis of such conviction to resist execution/enforcement of award. The Apex Court further held that if the matter is not referred to arbitration and criminal proceedings result in acquittal leaving no ground for claiming that underlying contract is void or voidable, it would result in undesirable delay in arbitration. The relevant excerpts of the judgment are as under: 24. The Apex Court further held that if the matter is not referred to arbitration and criminal proceedings result in acquittal leaving no ground for claiming that underlying contract is void or voidable, it would result in undesirable delay in arbitration. The relevant excerpts of the judgment are as under: 24. Keeping in view the aforesaid observations made by this Court in Today Homes case { (2014)5 SCC 68 }, I see no reason to accept the submission made by the learned counsel for the respondents that since a criminal case has been registered against the Chairman of the Organizing Committee and some other officials of the petitioner, this Court would have no jurisdiction to make a reference to arbitration. . . . 28. To shut out arbitration at the initial stage would destroy the very purpose for which the parties had entered into arbitration. Furthermore, there is no inherent risk of prejudice to any of the parties in permitting arbitration to proceed simultaneously to the criminal proceedings. In an eventuality where ultimately an award is rendered by the Arbitral Tribunal, and the criminal proceedings result in conviction rendering the underlying contract void, necessary plea can be taken on the basis of the conviction to resist the execution/enforcement of the award. Conversely, if the matter is not referred to arbitration and the criminal proceedings result in an acquittal and thus leaving little or no ground for claiming that the underlying contract is void or voidable, it would have the wholly undesirable result of delaying the arbitration. 29. In the present case, it is pleaded that the manner in which the contract was made between the petitioner and the respondent was investigated by CBI. As a part of the investigation, CBI had seized all the original documents and the records from the office of the respondent. After investigation, the criminal case CC.No.22 of 2011 has been registered, as noticed earlier. It is claimed that in the event of the Chairman of the Organizing Committee and the other officials who manipulated the grant of contract in favour of the petitioner are found guilty in the criminal trial, no amount would be payable to the petitioner. Therefore, it would be appropriate to await the decision of the criminal proceedings before the Arbitral Tribunal is constituted to go into the alleged disputes between the parties. Therefore, it would be appropriate to await the decision of the criminal proceedings before the Arbitral Tribunal is constituted to go into the alleged disputes between the parties. I am unable to accept the aforesaid submission made by the learned counsel for the respondents, for the reasons stated in the previous paragraphs. The balance of convenience is tilted more in favour of permitting the arbitration proceedings to continue rather than to bring the same to a grinding halt. In AMEET LALCHAND SHAH vs. RISHAB ENTERPRISES { (2018) 15 SCC 678 }, the Apex Court relying on its earlier judgment in A. AYYASAMY v. A. PARAMASIVAM { (2016) 10 SCC 386 ), held that mere allegations of fraud is not a ground to nullify the effect of arbitration agreement between the parties and also that the duty of the court is to impart to the commercial understanding, reflected in the terms of the agreement, a sense of business efficacy, held, it is only where serious questions of fraud are involved, the arbitration can be refused. The relevant portion is as under: “34. Under the Act, an arbitration agreement means an agreement which is enforceable in law and the jurisdiction of the arbitrator is on the basis of an arbitration clause contained in the arbitration agreement. However, in a case where the parties alleged that the arbitration agreement is vitiated on account of fraud, the Court may refuse to refer the parties to arbitration. In Ayyasamy case { (2016) 10 SCC 386 }, this court held that mere allegations of fraud is not a ground to nullify the effect of arbitration between the parties and arbitration cause need not be avoided and parties can be relegated to arbitration where merely simple allegations of fraud touched upon internal affairs of the parties is levelled. A.K.Sikri, J. observed that it is only in those cases where the court finds that there are serious allegations of fraud which make a virtual case of criminal offence and where there are complicated allegations of fraud then it becomes necessary that such complex issues can be decided only by the civil court on the appreciation of evidence that needs to be produced.” 20. In view of the facts and circumstances of the case, and the law laid down by Apex Court, and the above finding in the connected matter in A.A.No.68 of 2019, the contention of the learned Special Government Pleader in this regard, cannot be sustained. 21. As it is stated in the counter affidavit, and also agreed by learned Special Government Pleader appearing for respondent, the matter is pending before Government for taking decision. This matter was heard and reserved for orders, but even when the matter was again listed subsequently for further hearing, time was sought and no information was furnished with regard to the decision taken by the Government. As such, no useful purpose would be served in keeping the matter pending and more so, if any decision is taken by Government, the same can be placed before arbitrator. 22. Further it is to be noticed that the request for arbitration in the present case is subsequent to the Amendment Act No.3 of 2016, which came into force with effect from 23.10.2015, whereunder sub-section 6-A to Section 11 of the Act, has been inserted. The said provision for ready reference is extracted as under: 11. Appointment of Arbitrators: . . . (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement.” Considering the above provision, the Apex Court in MAYAVATI TRADING (P) LTD. v. PRADYUAT DEB BURMAN, (2019) 8 SCC 714 held that the position of law that prevails after the insertion of Section 11(6-A) is that Supreme Court or, as the case may be, the High Court, while considering any application under Sections 11(4) to 11(6) is to confine itself to examination of existence of arbitration agreement, nothing more, nothing less, and leave all other preliminary issues to be decided by arbitrator. 23. In view of the above facts and circumstances, and as there is no dispute with regard to existence of the arbitration agreement, and the applicant is raising dispute arising under the said agreement, this court is not inclined to go into merits of contentions of both the parties, and leave them to be decided by the arbitrator. 24. For the foregoing reasons, the arbitration application is allowed. 25. 24. For the foregoing reasons, the arbitration application is allowed. 25. The arbitration clause provides for appointment of an arbitrator by each party. As such Sri Justice K.C. Bhanu, Former Judge of erstwhile High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh, is nominated as Arbitrator on behalf of the applicant. Sri Justice G.V. Seethapathy, Former Judge of erstwhile High Court of Andhra Pradesh, is nominated as Arbitrator on behalf of the respondent. 26. As there cannot be appointment of even arbitrators, the above said Arbitrators, will in turn nominate a Presiding Arbitrator. The Arbitrators, so nominated, shall pass an award in accordance with law. 27. The learned Arbitrators are entitled to fees as per the rates specified in the Fourth Schedule to the Act of 1996, inserted by Act 3 of 2016 with effect from 23-10-2015, which shall be borne by both parties in equal shares. 28. Interlocutory applications pending, if any, shall stand closed. No order as to costs. 29. Before parting with the case it is made clear that all the issues are left open to both the parties to agitate before the Arbitrators, and the Arbitrators shall pass award on merits and in accordance with law, uninfluenced by any finding or observation made in this order.