M/S. Gayatri Developers And Builders vs Panduga Ashok on 3 July, 2026

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    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

    SPONSORED

    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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    applicable Article 137, which also provides for a
    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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    Arb.App.No.207 of 2025

    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



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