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2025 Supreme(Telangana) 295
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
K.LAKSHMAN, J.
M/s. Navayuga Engineering Company Limited - Appellant
Versus
Mahira Ventures Pvt. Ltd. - Respondent
Arbitration Applicaton No.270 Of 2024
Decided On : 02-05-2025
Advocate Appeared:
For the Appellant : VIMAL VARMA VASI REDDY
Existence of an arbitration agreement is the primary inquiry under the Arbitration Act; disputes related to the execution of agreements are arbitrable and should be resolved by the arbitrator.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 11(5) and (6) - Application for appointment of a sole arbitrator - Applicant contended that disputes arose from agreements regarding facilitation fee after completion of a project, while respondents argued that the application was premature as the project was incomplete - Court held that existence of an arbitration agreement is the primary inquiry and stated parties have arbitrable disputes due to allegations of non-fulfillment of contractual obligations. (Paras 18 to 26)
(B) Legal Principles - Pre-referral jurisdiction is narrow, focusing primarily on the existence and validity of the arbitration agreement and whether disputes are arbitrable. Court maintains that it should refrain from deciding issues that the arbitrator is tasked with during arbitration. (Paras 19 to 20)
| Table of Content |
|---|
| 1. details of agreements and obligations (Para 3 , 4 , 5 , 6 , 7 , 8) |
| 2. respondents contest applicability for arbitration (Para 10 , 11 , 12) |
| 3. nature of agreements and obligations (Para 13 , 14 , 15) |
| 4. arbitration invocation process and disputes (Para 16 , 17) |
| 5. court's analysis on arbitrability and existence of agreement (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25) |
| 6. appointment of arbitrator (Para 26) |
ORDER :
K. LAKSHMAN, J.
Heard Sri Vimal Varma Vasi Reddy, learned counsel for the Applicant, and Sri E. Venkata Siddhartha, learned counsel for the Respondents.
2. The present Arbitration Application is filed under Section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act, 1996’) for appointment of a sole arbitrator to adjudicate the disputes between the Applicant and Respondents.
FACTS:-
3. M/s Navayuga Legala Estates Private Limited (NLEPL), a group company of Navayuga Group, is the Applicant herein. It was in possession of land admeasuring Ac.25.10 guntas in Sy.No.82(p), 83(p) and 84(p) (opposite new municipal office, old Mumbai Highway, Serilingampally Village, Mandal and Municipality, Ranga Reddy District (hereinafter referred to as ‘subject property’).
4. 2nd respondent intended to enter into a Joint Development Agreement for development of the subject property as a freehold land after its de-notification from SEZ in all respects. 2nd respondent requested the Applicant to act as a facilitator to facilitate the de- notification of the subject land from SEZ under the applicable laws thereby to ensure handing over of the said land to NLEPL without any encumbrances.
5. On 02.04.2018, the Applicant and 2nd respondent entered into an agreement for development of subject property. They have also entered into an amended agreement dated 27.06.2018 making certain modifications to the principal agreement 02.04.2018. The respondents agreed to hand over Rs.30 Crores worth of saleable area in the project on completion of Phase-I as a facilitation fee to the Applicant at construction costs agreed between the parties.
6. On 09.11.2018, 1st respondent entered into agreement wherein it had confirmed the de-notification of the said land from the SEZ from all respects and also confirmed delivery of possession of the same without any encumbrances, charges and thus discharged the Applicant's obligation as a facilitator. As per the terms of the agreement, dated 09.11.2018, 2nd respondent agreed to facilitate Rs.30 Crores worth of saleable area exclusively in the residential project and 50% in the Phase-I and balance 50% in the Phase –II in the shape of residential units. Respondents further agreed to handover the residential units within the period as agreed.
7. Despite fulfilling its obligation under the agreement, the respondents remained evasive about their obligation in compensating the Applicant. The Applicant’s all attempts remained futile. The Applicant vide notice dated 04.05.2024 requested the respondents to determine the area ascertainable at the cost as specified in Annexure-I of the Amendment Agreement dated 27.06.2018 within Fifteen (15) day from the receipt of notice.
8. Vide reply dated 21.05.2024, the respondents admitted that the Applicant is entitled for Rs 30 Crores and denied liability for any built up sale area. The Applicant vide letter dated 09.07.2024 requested the respondents to determine the ascertainable area. Despite receiving and acknowledging the said notice, there was no response from the respondents. Therefore, invoking the arbitration clause in the said agreement, the Applicant had issued notice dated 23.07.2024 nominating Sri Justice Challa Kodanda Ram, Former Judge of this Court, as arbitrator to resolve the disputes.
9. Vide letter dated 23.07.2024, 2nd respondent expressed its willingness to resolve the disputes through mutual discussions between the parties. Thus, 2nd respondent requested the Applicant to inform the details of the persons participating in the negotiatio
