Navayuga Engineering Company Limited v. Mahira Ventures Pvt Ltd
2025-05-02
K.LAKSHMAN
body2025
DigiLaw.ai
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. 2 nd 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. 2 nd 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 2 nd 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, 1 st 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, 2 nd 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.
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, 2 nd respondent expressed its willingness to resolve the disputes through mutual discussions between the parties. Thus, 2 nd 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 st respondent filed 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 certificates of compliance as per the agreements and that the invocation of arbitration was pre-mature. 11. Sri E.Venkata Siddhartha, learned counsel for the respondent No.1 placed reliance on the principle ad down by the Apex Court in Indian Oil Corporation Limited (supra) to contend that the this Court also having power to decide with regard to existence of arbitrable disputes. 12. 2 nd respondent adopted the said counter. 13.
11. Sri E.Venkata Siddhartha, learned counsel for the respondent No.1 placed reliance on the principle ad down by the Apex Court in Indian Oil Corporation Limited (supra) to contend that the this Court also having power to decide with regard to existence of arbitrable disputes. 12. 2 nd respondent adopted the said counter. 13. Perusal of the record would reveal that the Applicant and 2 nd respondent and NLEPL have entered into an agreement dated 02.04.2018 for development of the subject property on the specific terms and conditions mentioned therein. They have also entered into amendment agreement dated 27.06.2018 on the specific terms and conditions mentioned therein. Thereafter, the Applicant and 1 st respondent have entered into an agreement dated 09.11.2018 for development of the said property. In the said agreement, it is stated that the NLEPL has acquired valid and legal title and is in possession of the subject property. 1 st respondent is an associate of 2 nd respondent. 1 st respondent is in the business of purchasing, selling and developing land including construction of high-rise buildings. Therefore, 1 st respondent/ Developer and NLEPL, land owners, intended to enter into an agreement for development of subject property. The Applicant agreed to act as facilitator for de-notifying the entire schedule property from SEZ in all respects and to hand over the freehold land to NLEPL without any encumbrance etc. As per the terms of the Agreement dated 09.11.2018, respondents 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 Phase- II in the shape of residential units. Respondents further agreed to handover the residential units within the period as agreed. 14. It is further agreed that in lieu of the aforesaid agreement, date of handing over of the Units shall commence from the date of completion of Phase-1 to the extent of 50% and balance of 50% shall be handed over on the completion of Phase-II of the residential development of the Project on the schedule property or else 1 st respondent shall have to pay facilitation fee of Rs.30 Crores instead of said agreement specified under the present agreement. 1 st respondent – developer shall discharge all its obligations as regards the facilitation fees towards NECL under the first agreement on mutual terms thereto. 15.
1 st 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, controversy or claim arising out of or relating to this Agreement of related agreement or other document or the validity, interpretation, breach or termination 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 statutory notice of dispute and if not resolved thereafter it shall be referred to sole arbitrator, which Hyderabad, Telangana. The decision of the arbitral tribunal shall be final and binding on modification or re-enactment for the time being in force). The Seat of arbitration shall be the parties. Pending final resolution of any dispute, the Parties shall continue to perfor their respective obligations hereunder. This Agreement shall be subject to the exclusive territorial jurisdiction of Courts situated at Hyderabad, Telangana State, INDIA. All notice/s deemed to be served to the address of Party/ies herein a referred in this Agreement. 16. It is the specific contention of the Applicant herein that it has fulfilled its obligations under the said agreement and respondents failed to compensate as agreed. It has issued notices dated 04.05.2024, 09.07.2024 and 23.07.2024. Even then, there was no resolution of disputes. Therefore, according to the Applicant, there are disputes between the Applicant and respondents with regard to the execution of the said agreement and the same are arbitrable in nature. Invoking the aforesaid clause, Applicant has issued notice dated 23.07.2024 nominating Sri Justice Challa Kodanda Ram, the Former Judge of this Court, as an arbitrator to adjudicate disputes between the Applicant and respondents. The Applicant vide reply notice dated 09.07.2024 requested the respondents to determine the ascertainable area, execute a deed of conveyance within 15 days. The Applicant has also requested to arrange meeting to resolve the disputes. 17. Vide reply dated 24.07.2024, 2 nd respondent expressed its willingness to resolve the disputes through mutual discussions between the parties.
The Applicant vide reply notice dated 09.07.2024 requested the respondents to determine the ascertainable area, execute a deed of conveyance within 15 days. The Applicant has also requested to arrange meeting to resolve the disputes. 17. Vide reply dated 24.07.2024, 2 nd respondent expressed its willingness to resolve the disputes through mutual discussions between the parties. Therefore, 2 nd respondent requested the Applicant to inform the details of the participants in the discussion/meeting representing the Applicant so that 2 nd 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 11 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 referral stage. 19. In the light of the aforesaid discussion, it is relevant to note that in NTPC Vs. M/s SPML Infra Limited , [ (2023) 2 SCC 539 ] , the Apex Court held that the High Court under Section 11(6) confines to the examination of the existence of an arbitration agreement. The Apex Court further held as follows:- 25. Eye of the Needle: The above-referred precedents crystallise the position of law that the pre-referral jurisdiction of the courts under Section 11(6) of the Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties to the agreement and the applicant’s privity to the said agreement. These are matters which require a thorough examination by the referral court. The secondary inquiry that may arise at the reference stage itself is with respect to the non- arbitrability of the dispute. 20.
These are matters which require a thorough examination by the referral court. The secondary inquiry that may arise at the reference stage itself is with respect to the non- arbitrability of the dispute. 20. The Apex Court also considered the principle laid down by it in Indian Oil Corporation Limited vs. NCC Limited , [ (2023) 2 SCC 539 ] and in Vidya Drolia v. Durga Trading Corpn ., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549, confirming that prima facie, review is essential and only clear non-arbitrable disputes should be declined. 21. In the light of the principle laid down in the aforesaid judgments, coming to the facts of the present case, as discussed supra, the Applicant and respondents have entered into an agreement dated 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 nd 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-I of the project has not been completed, making facilitation fee non-payable. The said aspect, this Court cannot consider. It 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 respondents with regard to the agreement dated 27.11.2018 the same are arbitrable in nature to be adjudicated by the arbitrator. 25. In the present case, there are disputes between the Applicant and respondents with regard to the execution of agreement, dated 09.11.2018 and the same are arbitrable in nature. 26. Accordingly, This Arbitration Application is allowed. Sri Justice Goda Raghuram, Former Judge of the erstwhile High Court of Andhra Pradesh , is appointed as sole Arbitrator to adjudicate the disputes between the parties.
26. Accordingly, This Arbitration Application is allowed. Sri Justice Goda Raghuram, Former Judge of the erstwhile High Court of Andhra Pradesh , is appointed as sole Arbitrator to adjudicate the disputes between the parties. The parties are at liberty to take all the defences before the learned sole Arbitrator. As a sequel, miscellaneous applications, if any, pending in the Arbitration Application shall stand closed.