Case Name: M/s Global Buildocon through its Partners Tejkumar Tanted and Others v. Harsh S/o Bharat Sing Chauhan through POA Holder Anand and Another
Case Number: Arbitration Case No. 88 of 2026
Date: 29 October 2026
Court: High Court of Madhya Pradesh at Indore
Quorum: Justice Vinay Saraf
FACTS
Development Agreement between the applicants and non-applicants was made on 26 March 2015 and recorded on 15 April 2015 for the development of the land having an area of 1.225 Hectares at Village Bada Bangarda, Indore. The project being developed was the residential complex known as “Global Towers” with several units in it.
The non-applicants had already been given the development permission by the Town and Country Planning Department. They had obtained the land diversion order under Section 172(1) of the Madhya Pradesh Land Revenue Code, 1959. However, as per the information provided by the applicants, the non-applicants did not comply with the conditions of the development permission, and the land had been notified as a Green Area.
The petitioners contended that they had paid ₹1 crore as advance and ₹25 lakh as expenditure for registration and otherwise. The petitioners sought return of their money along with interest by means of a communication sent on 30 March 2026. Since the respondents denied the plea and raised an objection to the validity of the arbitration agreement, the petitioners invoked Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator.
ISSUES
- Whether Clause 5 of the Development Agreement constituted a valid and binding arbitration agreement?
- Whether the High Court could appoint a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996?
- Whether the applicants’ claim was time-barred and therefore incapable of being referred to arbitration?
LAW
- Section 7 of Arbitration and Conciliation Act, 1996 – Arbitration Agreement. This section describes the meaning of an arbitration agreement. It is a contract where parties agree to submit their present or future disputes to arbitration.
- Section 11(6) of Arbitration and Conciliation Act, 1996 – Appointment of Arbitrators: It allows a party to make an application to the High Court for the appointment of an arbitrator where the agreed method of appointment of an arbitrator is not being followed.
- Section 11(6-A) of the Arbitration and Conciliation Act, 1996: Restricts the role of the Court in verifying the existence of an arbitration agreement between the parties at the time of appointment.
- Section 43 of the Arbitration and Conciliation Act, 1996 – Limitation: Provides that the Limitation Act, 1963 also applies to arbitration proceedings. This means that arbitration claims must be made within the prescribed time limit.
- Section 172(1) of the Madhya Pradesh Land Revenue Code, 1959: Deals with the process of changing the use of land from one purpose to another, such as converting agricultural land for residential use.
ARGUMENTS
APPLICANT: The respondents contended that clause 5 of the Development Agreement was a valid arbitration agreement in that it reflected the intention of the parties to settle the disputes by arbitration. It was alleged that the non-applicants did not perform their duties as per the contract and claimed repayment of ₹1 crore, ₹25 lakh towards expenses and interest. The cases of Babanrao Rajaram Pund v. Samrat Builders and Developers, (2022) 9 SCC 691, Tarun Dhameja v. Sunil Dhameja, 2024 SCC OnLine SC 3715, and Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. v. Jade Elevator Components, (2018) 9 SCC 774 were cited to establish the intention to arbitrate from the entire agreement.
NON-APPLICANT: It was contended by the non-applicants that they did not receive any amount of ₹1 crore but only received cheques worth ₹37 lakh. The expenses claimed of ₹25 lakh were disputed by the non-applicants. They contended that Clause 5 is not a valid agreement to arbitrate since it permits the parties to approach a civil court if the matter is not amicably settled. In their view, an agreement to arbitrate should contain an agreement where the arbitrator’s decision will be final. This view was supported by Jagdish Chander v. Ramesh Chander, (2007) 5 SCC 719, P. Dasaratharama Reddy Complex v. Government of Karnataka, (2014) 2 SCC 201, BGM and M-RPL-JMCT (JV) v. Eastern Coalfield Ltd., 2025 SCC OnLine SC 1471, Nagreeka Indcon Products (P) Ltd. v. Cargocare Logistics (India) (P) Ltd., 2026 SCC OnLine SC 630, and Alchemist Hospitals Ltd. v. ICT Health Technology Services India (P) Ltd., 2025 SCC OnLine SC 2354.
ANALYSIS
Clause 5 of the Development Agreement was looked into by the Court and it was found that the clause did not provide a clear and definite obligation to arbitrate the disputes. It was provided in the clause that the parties could approach a civil court or any other court if the dispute was not arbitrated. The Court noticed that there was no provision which made the decision of the arbitrator binding and conclusive upon the parties.
With reference to the principles laid down in Jagdish Chander and the Supreme Court case of Alchemist Hospitals, it was held that mere use of the word “arbitration” would not make an arbitration agreement. There should be a clear intention to arbitrate the dispute.
The Court further looked into whether the present claim was within limitation. Although the agreement was made in 2015, it was only on 30 March 2026 that the applicants made a claim for a refund. As a monetary claim is normally subject to a limitation period of three years, the Court felt that the present claim is clearly barred by limitation. Referred to Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1, the Court stated that in dealing with an application filed under Section 11, the Court should filter out clearly time-barred claims or claims based on a fictitious arbitration agreement.
JUDGMENT
On 29 October 2026, the Madhya Pradesh High Court rejected the petition for nomination of a sole arbitrator. This was because Clause 5 was not found to be an arbitration agreement and the applicants’ case was well out of time. It said that it was open to the parties to make a suitable application in the civil court. No order as to costs was made.
CONCLUSION
Such a judgment brings out the point that it is essential for a contract to indicate the intentions of the parties to arbitrate the dispute and to adhere to the decision reached. Courts can refuse to entertain claims when it is clear that they have lapsed after the period of appointment of the arbitrator.
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WRITTEN BY- DEBARATI CHATTERJEE
