The High Court · 2025

HONOTIRABLE SRI JUSTICE K. LAKSHMAN t\ RBITRATION APPLICATON No.270 OF 2024 ORDER Herrd Sri Vimal Varma Vasi Reddy, leamecl counsel for the Applicanr., and Sri E. Venkata Siddhartha, leamed counse for the Respondents.

2. 'fhe pre sent Arbitration Application is filed under S::ction 11 (5) and (r5) of the Arbitration and Conciliation Act, 1996 (ht,,reinafter 'the Act, 1996') lbr appointment of a sole arbitrator to adjurlicate the disputes tretweerL the Applicant and Respondents FACTS:-

3. M/s NrLvayuga Legala Estates Private Limited (NJ,EPl-), a group cornpanv rf Nava),uga Group, is the Applicant- herein. It was in possession of llnd admeasuring Ac.25.lO guntas in Sy.l.lo.82(p), 83(p) ard 84(r) (opposite new municipal office, old Murnbai Highway, Seri[irgampally Village, Mandal and Munibipalit'y, Ranga Reddy Drstrict (Jrereinafter referred to as 'subject property').

4. 2"d res rondent intended to enter into a Joint Devr:lopment Agreement for c evelopment of the subject property as a freehold land after its de-not fication from SEZ in all respects. 2'd re spondent .,r 1 ,r. :_ 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 Appiicant 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 ofsaleabl. u."u 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, 1" 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 ofpossession 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, 2"d respondent agreed to facilitate Rs'30 crores worth of saleable area exclusively in the residential project and 50Yo in the Phase-I and balance 5O%o in the Phase -II in the shape of 3 residential unit:i. Respondents fuilher agreed to hand<:,ver the residential units 'vithin the period as agreed.

7. Despitr' fulfilling its obligation under the agreen'rent, the respondents rernrined evasive about their obligation in comp,ensating the Applicant. lhe Applicant's all attempts remained futile. The Applicant. r,ide rLotice dated 04.05.2024 requested the resporrdents to determinr: the ar,:a ascertainable at the cost as specified in Arrnexure-I of the Arnendmr:nt Agreement dated 27.06.2018 within Fifr.een (15) day from thc rec,:ipt ofnotice

8. Vide repl1, dated 21.05.2024, the respondents adrnitted that the Applicant is entitled for Rs 30 Crores and denied liabilit;,, for any built up sale z rea. The Applicant vide letter dated 09 .07 .2024 requested the res pondents to determine the ascertainable area. Despite receiving and ac knowledging the said notice, there was no response from the -espon(rents. Therefore, invoking the arbitration clause in the said agreement, the Applicant had issued notice clated 23.07.2024 nominating Sri ,tustice Challa Kodanda Ram, Former Judgr: of this Court, as arbitrator to resolve the disputes. 9 Vide lt'tter dated, 23.07.2024, 2"d respondent expr,:ssed its willingness to resolve the disputes through mutual dis;cussions t-4:ii6 -.I.l:-1,4 :.t4"rt . :j:l 4 between the parties. Thus, 2nd respondent requested the Applicant to inform the details of the persons participating in the negotiations/meeting representing the Applicant. Thereafter, the Applicant has filed present application seeking.appointment of an arbitrator to adjudicate the disputes between the Applicant and respondents.

10. 1't respondent frled counter contending that there is an arbitral dispute that arose under the said agreements. The present application filed by the Applicant is pre-mature as Phase- 1 of the project has not been completed and so the facilitation fee is non- payable. The said agreements provided an option to pay Rs.30 Crores instead of saleable area, which was not accurately reflected by the Applicant. The Applicant has not provided necessary certihcates of compliance as per the agreements and that the invocation of arbitration was pre-mature. 1 l. Sri E.Venkata Siddhartha, leamed counsel for the respondent No.1 placed reliance on the principle ad down by the Apex Court in Indian OiI Corporation Limited (supra) to contend that the this Court also having power to decide with regard to existence of arbitrable disputes. I I I t i 5

12. 2nd res rondent adopted the said counter.

13. Perusal of the record would reveal that the.Applicarrt and 2nd respondetrt and NLEPL have entered into an agreetre trt dated

02.04.2018 for rlevelopment of the subject property on the specific terms anrl condi.ions mentioned therein. They have also entr:red into amendme'nt agr('ement dated 27.06.2018 on the specific t<:nns and conditions men-ioned therein. Thereafter, the Applicant and 1't respondent havt' entered into an agreement dated 09.1t..1018 for developrrrent of the said property. [n the said agreement, it is stated that the I'JLEPI- has acquired valid and legal title anrl is in p,:rssession of the r;ubject property. 1" respondent is an associatt:' of 2nd respondent. 1't r,rspondent is in the business ofpurchasing, selling and developing lan,1 including construction of high-rise truildings. Thereforr:, 1 " r espondent/ Developer and NLEPL, land owners, intended to enler into an agreement for development ol subject propefty. The Applicant agreed to act as facilitator for de-noti ffing the entire scliedule l)roperty from SEZ in all respects antl to hancl over the freehold land tc NLEPL without any encumbrance etc. A,; per the terms of the A greement dated 09. 1 1 .20 18, respondents zrgreed to facilitate Rs. 30 Crores worth of saleable area exclusive iy in the 6 i--'l residential project and 50Yo in the phase-I and balance 50% in Phase- II in the shape of residential units. Respondents further agreed to handover the residential units within the period as agreed.

14. It is fuither agreed that in lieu of the aforesaid agreement, date of handing over of the Units shall commence from the date of completion ofPhase-l to the extent of 50o/o and balance of50% shall be handed over on the completion of Phase-II of the residential development of the Project on the schedule property or else l't respondent shall have to pay facilitation fee of Rs.30 Crores instead of said agreement specified under the present agreement. 1't respondent - developer shall discharge all its obligations as regards the facilitation fees towards NECL under the first agreement on mutual terms thereto'

15. Clause No.6 (g) of the said agreement dated 09.11.2018 deals with 'Resolving Dispute and Jurisdiction' and the same is extracted below:- 6(g): Resolving Dispute and Jurisdiction:- Any dispute, conhoversy or claim arising out of or relating to this Agrcement of related agreement or other document or the validity, interpretation, breach or lermination thereof (a "Dispute"), including claims seeking redress or asserting rights shall be setting amicably at the first instance of such referred dispute/s within 10 days from the date of shall be in consonance with the Arbitration and Conciliation act, 1996 (or any I I I I I I l statuton/ notice Jf dispute and if not resolved thereafter it shall be ieferrcd to sole arbitrator . ri'hich Hyderabad. Telangana. The decision ol the arbitral tribunal shall be final and binding on modification or re-enactmcnt ftrr the time beLng in fr rce). The Seat of arbitration shall be the parties. l'ending final rer;olution of any dispute, the Parties shall continue to perfl.rr thoir respective obli gzlions hereunder. 'I'his r\greernent shall be subject to the exclusive terrir,orial jurisdiction of Cour.s situatel at Hyderabad, Telangana State, INDIA. A1l notice/s deemcd to be served to the address of I'artv/ics hcrein a rcfcrred in this Lgreement. lti. It is he specific contention of the Applicant here in that it has fulfil led its obligations under the said agreement and respondents faiied to oompensate as agreed. It has issued notices dated 04.05.2024,

09.07.201'-4 and 23.07.2024. Even then, there was no resolution of disputes. Therelore, according to the Applicant, there are disputes between thc App licant and respondents with regard to the exer;ution of the said agreement and the same are arbitrable in nature. Invoking the aforesaid clausr', Applicant has issued notice d,ated 23 .07 .2024 nominating Sri Jrstice Challa Kodanda Ram, the Former Jud1,;e of this Couft, ar; an arl)itrator to adjudicate disputes between thg l'.pplicant and respondents The Applicant vide reply notice dated 09.07.2024 requested the respondents to determine the ascertainable area. execute 8 a deed of conveyance within 15 days. The Applicant has also requested to affange meeting to resolve the disputes.

17. Vide reply dated 24.07.2024,2nd respondent expressed its willingness to resolve the disputes throqgh mutual discussions between the parties. Therefore, 2nd respondent requested the Applicant to inform the details of the participants in the discussion/meeting representing the Applicant so that 2"d respondent can accordingly plan for participation in the said meeting. Thereafter, there was no correspondence. However, the Applicant had issued notice dated

23.07.2024 nominating Sri Justice Challa Kodanda Ram, the Former Judge of this Court, as an arbitrator to resolve the disputes. Despite receiving and acknowledging the same, there was no response from the respondents.

18. The aforesaid facts would reveal that respondents are opposing this application contending that the present application is not maintainable since there is no arbitrable dispute. This Court in exercise of its power under Section 1l of the Act, could refuse reference to arbitration in cases which are ex-facie frivolous, non- arbitrable, so as to ensure expeditious and efficient disposal at the refenal stage. 9

19. ln the light of the aforesaid discussion' it isi relevan t to note that in N.fpc vs. M/s sPML Infra Limitedl, the Apex court held that tl.re .t{igh C rurt under Section 11(6) confines to the examination of the existence of an arbitration agreement. The Apex court fui1her held as fc,llows:-

25. Ey,: of thr, Needle: The above-referred precedents crl stallise the positior of larv lhat the pre-refenal jurisdiction of the courts under Scction ll(6)o-'the r\tt is very narrow and inheres two inquiries Thc primary inquiry is about tho existence and the validity of an arbitration agr rement' rvhich itlso inclrdes an inquiry as to the parties to the aqrecment and rhe applicant's ltriv tl to the said agreement' These are matters r'r'hich r':quire a thorouglh examioation by the referral court' The secondarl inquirv tlal may arisc at the reftrencc stage itself is with respect to the non- arbitrability of the dispute. 2C,. The lrpex Court also considered the principle laid down by it in tnrlian Oil Corporation Limited vs' NCC Limitetl2 and in Vidya Drolia r' Durga Trading Corpn'3 confirming lbat prima facie, rcview is e ssential and only clear non-arbitrable disput'es should be declined 2 L. In tlre light of the principle laid down in the aforesaid judgrnents. conring to the facts of the present case, as discusrsed supra' the App,licant irnd respondents have entered into an agreernent dated '1202:1 z scc s:s ' lzoz:1 z;'cc s:s '(2021) 2SC(l I : 12021) I SCC (Civ) 549 i I .' 10

09.11.2018 on the specific terms and conditions mentioned therein. It is the specific contention of the Applicant that it has completed its obligations under the said agreements and the respondents failed to comply with the same. Therefore, there are disputes between the Applicant and respondents which are arbitrble in nature.

22. As discussed supra, vide letter dated 24.07.2024, 2'd respondent expressed its willingness to resolve the disputes through mutual discussions. Thereafter there was no response from the respondents.

23. In the light of the aforesaid discussion, respondents cannot contend that the present application is pre-mature as Phase-l of the project has not been completed, making facilitation fee non-payable' The said aspect, this Court cannot consider. lt is for the Arbitrator to consider the said aspect

24. As discussed supra, this Court, being the referral Court, has to confine itself to see the existence of arbitration agreement, if the issue is arbitrable in nature and arbitration clause. In the present case, there is an agreement and arbitration clause. This Court is also of the considered view that there are disputes between the Applicant and II 7L respondonts rl,irh regard to the agreement dated 27.11.2018 the same are arbitrable in nature to be adjudicated by the arbitrator. 2i;. [n the present case, there are disputes between the Applicant and respondents rvith regard to the execution gf agreernr.rnt, dated

09.1 I.2C l8 and the same are arbitrable in nature

26.. Acc,rrdingly, This Arbitration Application is allorved Sri Justice Gorla Raghuram, Former Judge of the erstwhile High Court of Andh ra Pradesh, is appointed as sole Arbjtrator to adjudicate the disputcs bctrreen the parties. The parties are at liberty to ta.ke all the defences bclbrc tle learned sole Arbitrator. Ar; a sec1rel, miscellaneous applications, if any, pending in the Arbitration Application shall stand closed. I //TRUE COPY// Sd/. K. SRINIVASA RAO JOINT REGISTRAR r.o, sEcTtot! oFF|CER 1. Sri ,iustice {ioda Raghuram, Former Judge, High Court of Ardhra pradesh, PIot No.10S9, Road No.36, Jubilee Hills, Hyderabad _ 3:r. (By Special Messenger) (Along with a Copy of affidavit and material papers)

2. One CC to llri Vimai Varma Vasi Reddy, Advocate [OpUC] 3. One CC to S ri E. Venkata Siddhartha, Advocate tOpUCl 4. Two CD Cop ies kam r HIGH COUF:T DATED:02lctsl2025 ORDER ARBAPPL.hlo.270 of 2024 ,,: - ,( t O !i- t) 21 liiA\ l-, L' t, .,/ i. ALLOWINGi THE ARBIT'RATION APPI.ICATION / /4 /-{ /2