Telangana High Court
M/S. Gayatri Developers And Builders vs Panduga Ashok on 3 July, 2026
Author: K. Lakshman
Bench: K. Lakshman
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
HON'BLE SRI JUSTICE K. LAKSHMAN
ARBITRATION APPLICATION No.207 OF 2025
Date:03.07.2026
Between:
M/s. Gayatri Developers and Builders & others ...Applicants
And
Panduga Ashok & others ...Respondents
ORDER
1. The present arbitration application has been filed under Section
11(6) of the Arbitration & Conciliation Act, 1996 (hereinafter “the
Act, 1996”), seeking appointment of a sole arbitrator to resolve the
disputes between the parties.
2. Heard Mr. G.V.S. Ganesh, learned counsel for the Applicants, and
Mr. Kiran Palakurthi, learned counsel for the Respondents.
3. Respondent No. 1 herein is the absolute owner and possessor of
land admeasuring Ac.1-29 Gts. (8930 Sq. Yds.) in Sy. Nos. 1, 2, 3
and 11 situated at Saheb Nagar Khurd village, Hayathnagar
Revenue Mandal, Ranga Reddy District (hereinafter “subject
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land”). Applicant No. 1 is a partnership firm involved in the
business of developing lands and properties. Applicant Nos. 2 and 3
are the partners in Applicant No. 1.
4. Applicant No. 1 and Respondent No. 1 had entered into a
Development Agreement dated 06.03.2006. Under Clause 2 of the
Agreement, it was agreed that after obtaining layout permission
from HUDA, an extent of 2500 Sq. Yds. out of the total 8930 Sq.
Yds. would be developed by Applicant No. 1. Under Clauses 7 & 8,
it was agreed that Applicant No. 1 shall construct “duplex houses”
over the agreed 2500 Sq. Yds. Further, the constructed area was to
be divided equally, i.e., 50:50 ratio. Under Clause 12 of the
Agreement dated 06.03.2006, it was agreed that Applicant No. 1
shall complete the project within a period of 18 months from the
date of layout approval from HUDA. The said period was
extendable by 06 months under Clause 26. Under Clause 28 of the
Agreement, the disputes were to be resolved through arbitration.
5. As per the record and the pleadings of the parties, no
construction/development as agreed under the Agreement dated
06.03.2006 had taken place. Thereafter, Applicant No. 1 and
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Respondent No. 1 entered into another agreement, i.e., the
Supplementary Agreement dated 24.01.2009. Under the
Supplementary Agreement, the terms of the earlier Development
Agreement dated 06.03.2006 were novated.
6. The recitals of the Supplementary Agreement state that out of the
total extent of 8930 Sq. Yds., layout permission was accorded only
to an extent of 6960 Sq. Yds., by HUDA, vide Permit No.
15/MP2/plg/H/07, for construction of twenty-two (22) residential
plots. The remaining 1450 Sq. Yds. were excluded.
7. Under Clause 1 of the Supplementary Agreement, it was agreed that
Applicant No. 1 would construct duplex houses in 10 plots, i.e., Plot
Nos. 12 to 21, on a total area admeasuring 1700 Sq. Yds. According
to Applicant No. 1, the said 10 plots fell to his share. The other
plots, i.e., Plot Nos. 1 to 11 and Plot No. 22, fell to the share of
Respondent No. 1. Apart from the construction of the duplex
houses, it was agreed that Applicant No. 1 shall construct a
residential apartment on the land admeasuring 1450 Sq. Yds. (land
left out of the HUDA permission). Under Clause 2 of the
Supplementary Agreement, it was agreed that the constructed
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residential apartment would be shared equally. Under Clause 7 of
the Supplementary Agreement, the time period for completion of
the residential apartment was within a period of 18 months from the
date of approval of HUDA and other departments.
8. As the present dispute relates to Plot Nos. 12 to 21, we confine the
facts to the same. Applicant No. 1 states that it constructed and
developed only two (02) duplex houses on Plot Nos. 12 and 18
respectively. According to Applicant No. 1, due to market slump,
the said two duplex houses were sold with great difficulty. Further,
the said houses did not fetch a good price. As such, Applicant No. 1
and Respondent No. 1 agreed to put the project on hold. Applicant
No. 1 states that it was diligent in complying with its obligations,
however, due to the Telangana agitation, it was agreed that the
construction of duplex houses was put on hold. Applicant No. 1
states that the obligation to construct duplex houses under the
Development Agreement dated 06.03.2006 and Supplementary
Agreement dated 24.01.2009 could not be fulfilled due to the
mutual understanding between the parties. The project, according to
Applicant No. 1, was further delayed due to the COVID-19
pandemic.
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9. Applicant No. 1 also states that it wanted to recommence the project
by changing its nature and that it was negotiating the same with
Respondent No. 1. However, from 2022, Respondent No.1,
allegedly, kept the issue pending and kept dodging the issue.
Further, Applicant No. 1 states that Respondent No. 1 sold Plot No.
19, and he assured that in lieu of the same, he will allot Plot No. 11
for development.
10. According to the Applicants, Applicant Nos. 2 and 3 reside in the
same locality and there were frequent parking disputes with
Respondent No. 1 and his family. As such, when they got
suspicious and verified the status of the plots, they learnt, on
05.03.2024, that Plot Nos. 13, 14, 15, 16, 17, 20, and 21 were gifted
by Respondent No. 1 in favour of Respondent Nos. 2 to 5. The
Applicants contend that the registered gift deeds are contrary to the
Development Agreement and the Supplementary Agreement. They
also contend that they have rights over Plot Nos. 12 to 21 and Plot
No. 11, and that the execution of the gift deeds causes wrongful loss
to them. As such, Applicant No. 1 invoked Clause 28 of the
Development Agreement seeking resolution of disputes through
arbitration. An arbitration notice dated 31.07.2025 under Section 21
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of the Act, 1996 was issued. Respondent No. 1 replied to the same
vide reply notice dated 13.08.2025 stating that there were arbitral
disputes. Therefore, as there was no consensus between the parties,
the Applicants have filed the present Arbitration Application.
11. On the other hand, the Respondents argued that the claims raised
by Applicant No. 1 are barred by limitation. As Applicant No. 1
failed to perform its obligations within a period of 18 months, no
claim can be made. Respondents also argued that Applicant No. 1
had abandoned the project. It was contended that there were no
negotiations between the parties and Respondent No. 1 never
extended the prescribed time period of 18 months.
12. It is well settled that the High Court exercising jurisdiction under
Section 11 of the Act, 1996 can refuse to appoint an arbitrator if the
claim is ex facie barred by limitation and is deadwood. In Arif
Azim Co. Ltd. v. Aptech Ltd. 1, the Hon’ble Supreme Court held
that it is the duty of the Courts to prima facie examine and reject
dead claims. Referring to a two-pronged test, the Court held as
follows:
1
(2024) 5 SCC 313.
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68. Although, limitation is an admissibility issue, yet
it is the duty of the Courts to prima facie examine
and reject non-arbitrable or dead claims, so as to
protect the other party from being drawn into a
time-consuming and costly arbitration process.
XXXXX
92. Thus, from an exhaustive analysis of the position
of law on the issues, we are of the view that while
considering the issue of limitation in relation to a
petition under Section 11(6) of the 1996 Act, the
Courts should satisfy themselves on two aspects by
employing a two-pronged test — first, whether the
petition under Section 11(6) of the 1996 Act is barred
by limitation; and secondly, whether the claims sought
to be arbitrated are ex facie dead claims and are thus
barred by limitation on the date of commencement of
arbitration proceedings. If either of these issues are
answered against the party seeking referral of
disputes to arbitration, the Court may refuse to
appoint an Arbitral Tribunal.
13. Likewise, in State of W.B. v. B.B.M. Enterprises 2, the Hon’ble
Supreme Court, discussing various precedents, clarified the law and
held that, where no intricate evidentiary inquiry is necessary to
conclude that the substantive claims of a party are hopelessly barred
2
2026 SCC OnLine SC 980.
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by limitation, and where the frivolity of the litigation is writ large,
the Court may refuse to appoint an arbitrator. The relevant
paragraphs are extracted below:
4. Arif Azim Company Limited considered both the
question of limitation with respect to the claim for
recovery of money and the limitation provided for
filing an application under Section 11(6). It was
categorically found after referring to a host of
precedents of this Court that the Limitation Act,
1963 is applicable to arbitration proceedings in
general and Article 137 of that Act applies to a
petition under Section 11(6) of the 1996 Act in
particular. Insofar as the substantive claim in that case
was concerned, it was found that the right to bring a
claim arose on 28.03.2018, the claim being one of
recovery of money. The period of limitation of three
years ended on 27.03.2021; within the period in which
limitation was suspended by this Court by reason only
of the Covid-19 pandemic. The limitation having
commenced from 01.03.2022 again as per the orders
of this Court, the balance period available from the
date of suspension, extended the expiry of limitation
to 13.03.2023. The notice seeking arbitration under
Section 21 was issued on 24.11.2022, bringing the
initiation of the proceeding within the limitation of
three years. Insofar as the limitation for making an
application under Section 11(6), this Court found
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period of three years, the commencement of which
was on expiry of 30 days from the date of receipt of
the notice for initiation of arbitration. Notice issued on
24.11.2022 was delivered on 29.11.2022, thus, the
limitation having commenced from 28.12.2022. The
application under Section 11(6) was filed on
19.04.2023 within the period of three years from the
expiry of 30 days from the receipt of notice. Thus,
both the claim and the application under Section 11(6)
were found to be within the limitation period, which in
the present case is not satisfied insofar as the claim is
concerned. We extract paragraph 68 from the
aforesaid decision:
“68. Although, limitation is an admissibility issue,
yet it is the duty of the Courts to prima facie examine
and reject non-arbitrable or dead claims, so as to
protect the other party from being drawn into a time-
consuming and costly arbitration process.”
5. Aslam Ismail Khan Deshmukh, was a case in which
the question arose as to whether the claim was barred
by limitation, while the application for appointment of
an Arbitrator under Section 11(6) though moved
before a wrong forum, the High Court, was within the
limitation period of 3 years as found in Arif Azim. Arif
Azim was found to have been concerned with two
issues. First whether Limitation Act, 1963 is
applicable to an application for appointment of
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arbitrator under Section 11(6) and whether the Court
may decline reference under Section 11 if the claims
are ex-facie and hopelessly time barred. This Court
noticing Vidya Drolia v. Durga Trading
Corporation, and Bharat Sanchar Nigan
Limited v. Nortel Networks India Private Limited
held that period of limitation for filing a petition
seeking appointment of an Arbitrator cannot be
confused or conflated with the period of limitation
applicable to substantive claims made in the
underlying contract. In BSNL, the notice invoking
arbitration having been issued five and a half years
after the cause of action arose i.e. rejection of
claims of Nortel by BSNL, the claim itself was held
to be ex-facie time barred. However, noticing the
decision in Interplay between Arbitration
Agreements under Arbitration and Conciliation Act,
1996 and Stamp Act, 1899, In Re., it was held that in
a scenario where the Referral Court is able to deal
with the frivolity of the litigation on the basis of
bare minimum pleadings it would be incorrect to
assume or doubt that the Arbitral Tribunal would
not be able to arrive at the same inference. It was
held that the Referral Court cannot indulge in any
intricate evidentiary inquiry into the question whether
the claims raised by the petitioner are time barred
which determination has to be left to the decision of
the Arbitrator. In the case of Arif Azim, the question of
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limitation was to be considered on the basis of the
facts disclosed, whether the period commenced from;
the date of the letter forming the basis of the claim, the
date of resignation of the petitioner or the date of
subsequent legal notice sent by the respondent to the
petitioner, which was left to be considered by the
Arbitrator. However, in the present case there is no
intricate evidentiary inquiry to be done. After
Annexure P9 of 04.01.2001, whether it be the
interim determination of dues or not, the appellant
slept over its claim for 21 years before the notice
seeking arbitration was issued on 02.06.2022;
an ex-facie dead claim.
6. Arbitration though is an alternate dispute
resolution system, which has to be encouraged, it
cannot deviate from the fundamental principle that
law favours the diligent and not the indolent.
Section 42 of the Arbitration and Conciliation Act,
1996 applies the Limitation Act, 1963 to
arbitrations as it is applied to proceedings in
Court. Hence, for recovery of amounts, as in this
case, the limitation is three years as provided in
Article 18 of the Limitation Act, 1963. The
commencement of arbitration proceedings as per
sub-section (2) of Section 43 being the date referred
in Section 21, which is the date on which a request
for initiation of arbitration is received by the
respondent, the claim itself was hopelessly time
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barred, the notice having been issued after 21
years.
7. In the present case, despite the work having
concluded on 30.07.2000, the petitioner did not
attempt to raise a bill or initiate the arbitration
proceedings till 2022, when a notice requiring
commencement of arbitration proceedings was first
issued. The High Court erred insofar as finding failure
on the part of the Engineer-in-Charge to determine the
final amount payable, having extended the limitation.
If there was such a failure on the part of the Engineer-
in-Charge, it was for the contractor to have initiated
arbitration then and there. Neither was notice issued
for arbitration nor was a final bill raised or a request
made to determine the total amount payable.
14. In the light of the principle laid down in the aforesaid judgments,
coming to the facts on hand, according to this Court, the claims
raised by the Applicants are deadwood and are ex facie barred by
limitation. The frivolity of the Applicants’ claim is evident from the
fact that there is no pleading as to the date of accrual of cause of
action. The time period for completion of the project under the
Supplementary Agreement dated 24.01.2009 was 18 months.
However, admittedly, Applicant No. 1 had not constructed the
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agreed number of duplex residential houses. The Applicants merely
plead that there was an understanding with Respondent No. 1 that
the construction be put on hold. Vague reasons such as market
slump and political agitations cannot be used to justify and
overcome the period of limitation. It is noteworthy that the
arbitration notice was issued on 31.07.2025 in relation to the claims
under the agreements dated 06.03.2006 and 24.01.2009.
15. Even if this Court were to assume that the time period of 18
months was not of essence, the obligations under the
Supplementary Agreement ought to have been followed and the
same ought to have been performed within a reasonable period of
time. Section 46 of the Indian Contract Act, 1872 provides that
where an agreement does not prescribe a time period to perform the
obligations, such obligations are to performed within a reasonable
period of time. In the present case, in the absence of any evidence
justifying the non-performance of the obligations under
Supplementary Agreement, this Court concludes that the Applicant
No. 1 had abandoned its obligations. Ergo, it had given up its
claims under the Supplementary Agreement.
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16. In light of the aforesaid discussion, the present arbitration
application for appointment of a sole arbitrator is dismissed as not
maintainable. However, there shall be no order as to costs.
As a sequel thereto, miscellaneous applications, if any, pending
in the arbitration application, shall stand closed.
___________________
K. LAKSHMAN, J
3rd July, 2026
Mgr
