Paid in Full, No Flat, No Arbitrator: What a Telangana High Court Order Teaches Buyers

In 2021, two sets of Hyderabad flat buyers signed agreements of sale for flats in the same housing project. One recorded a total sale consideration of Rs 31,29,000 paid in phases. The other recorded Rs 25,29,150. Both promised possession within thirty six months from the date of obtaining necessary permissions. Both contained an arbitration clause. By March 2025, the buyers' legal notices said, construction had not even begun.

On October 8, 2026, the buyers reached the end of a second round in the Telangana High Court, and they still do not have an arbitrator. The court was openly sympathetic. It still could not help them, because of how their notices were worded.

The short answer. In Arbitration Application Nos. 148 and 154 of 2025, decided on October 8, 2026, Justice Moushumi Bhattacharya held that the buyers had a real dispute but disposed of their applications because their legal notices only proposed arbitration and did not nominate an arbitrator as the agreed procedure required. The court said the dispute should be adjudicated by a civil suit or another proceeding and gave liberty to issue fresh invocation notices in proper form. The trade-off: an arbitration clause can look like a quick private route, but a defective first step can cost a buyer who has already paid in full another round of notices and months of delay.

What happened to these Hyderabad buyers?

The order records two agreements of sale with the same vendors, M/s Bhuvanteza Infra Projects Pvt. Ltd. and another respondent. In one, the buyers paid Rs 31,29,000. In the other, they paid Rs 25,29,150. Each agreement said possession would be given within thirty six months from the date of obtaining necessary permissions.

On March 24, 2025, the buyers sent legal notices. According to the order, the notices said the buyers had paid the entire sale consideration, that construction of the project had not commenced, and that the necessary statutory permissions had not been obtained. The buyers said the period of thirty six months plus six months had expired on March 2 and March 21, 2025. They demanded invocation of the arbitration clause and sought return of the consideration with interest at 24 percent a year.

The court recorded that the vendors remained unrepresented despite service, including substituted service by publication in Eenadu on May 12, 2026 and in Telangana Today on June 26, 2026, and attempts by speed post, messages and calls. The court therefore proceeded ex parte.

Why did the court not appoint an arbitrator?

The court found that a dispute plainly existed. It said the vendors' failure to perform, despite the buyers having fulfilled their side, "evidences an existing dispute which requires adjudication," and that the vendors retained the entire consideration without refunding it.

The problem lay in the notices. The court said that "as the first measure, the applicants should have appointed an Arbitrator and left the rest to the respondents," who could then agree or disagree with the nominee. The notices contained no nomination, only "a proposal to the respondents to accept initiation of arbitration or nominate their own arbitrator." The buyers had therefore not shown that the agreed appointment mechanism in the agreements had failed.

The court concluded that, although "the sympathy of this Court is with the applicants," it could not allow the applications "in the absence of a valid Legal Notice/Invocation Notice as required under section 11(6)" of the Arbitration and Conciliation Act, 1996.

What does Section 11(6) of the Arbitration Act require?

Section 11 of the Arbitration and Conciliation Act, 1996 lets parties agree on a procedure for appointing arbitrators. Sub-section (6) applies where, under an agreed appointment procedure, a party fails to act as required, the parties fail to reach an agreement expected of them, or a person or institution fails to perform a function entrusted under that procedure. In such cases an application can be made for the appointment.

The logic is sequential. The agreed procedure must first be set in motion, and it must fail, before the court's power is engaged. In this case, the court read the clause as requiring the buyers to name an arbitrator first. Because they only invited the vendors to start arbitration or name their own arbitrator, the court held that failure of the procedure had not been shown. The exact steps depend on how each agreement's clause is worded, which is why the clause itself is the first thing to read.

How do the possible next steps compare?

The order itself named two paths: a fresh invocation notice in proper form, and a civil suit or other proceeding. The table sets out what the order says about each, alongside the earlier steps already taken.

This is the second time the same buyers have been sent back. The order records that their earlier applications were disposed of by a coordinate bench on February 21, 2025, granting liberty to send fresh notices as per the agreements. The present applications followed those notices.

Are other forums available to flat buyers in Telangana?

The order does not discuss forums outside arbitration and civil suits, and it says nothing about whether the project was registered with the real estate regulator. PropNewz has covered two other routes. Our guide to filing a TG RERA complaint under Section 31 explains who can file and how, and our explainer on consumer commission jurisdiction and e-Jagriti covers pecuniary limits.

Which route fits depends on the facts of each case, the wording of the agreement, whether the project is registered and what relief is sought. A buyer facing a stalled project should take legal advice on forum choice before sending any notice, because, as this order shows, the first step can decide how long everything after it takes.

What should you check in an arbitration clause before you sign?

The dispute clause decides how a buyer must start a complaint if things go wrong, so it deserves the same attention as the price. The agreements in this case promised possession "within thirty six months from the date of obtaining necessary permissions," a formula that ties the clock to permissions rather than a fixed date.

1. Find the dispute resolution clause and note whether it names an arbitrator, an institution, or a procedure for appointment.
2. Check who must take the first step and what that step is, such as nominating an arbitrator in the notice.
3. Check the seat, venue and language of arbitration, and whether costs are split.
4. Look at how the possession date is defined, and whether it runs from a date certain or from permissions the buyer cannot verify.
5. Ask whether the project is registered with TG RERA and keep a copy of the registration details.
6. Keep proof of every payment, with dates, because any forum will ask for it.
7. If a dispute arises, have a lawyer draft the invocation notice to match the clause word for word.

On the notice itself, this order does not set out a template, and the correct content depends on the clause. What it does make clear is what was missing here: a nomination. The court said the buyers should have appointed an arbitrator and left the vendors to agree or disagree. A notice that only asks the other side to consent to arbitration, or to suggest a name, may not be enough where the clause expects the claimant to nominate.

The order also notes that the vendors did not reply to the legal notices and remained silent throughout. The court noted that silence, but it still decided the applications on the wording of the buyers' own notices.

For buyers whose agreements were signed during construction, our earlier guide to the choice between withdrawing and staying when possession is delayed sets out how Section 18 of the RERA Act frames those options.

What does this mean for buyers who have already paid in full?

The buyers in this case had, on their own account, paid the entire sale consideration years before possession was due. The court's finding that the vendors retained the consideration without refund underlines how much exposure a buyer carries when money goes in faster than construction. It is a reason to read the payment schedule alongside the dispute clause before signing. Whichever route these buyers take next, the order leaves them with liberty, not a remedy, and the clock on their money keeps running.

Frequently asked questions

Why did the Telangana High Court not appoint an arbitrator for the flat buyers?

The court found a real dispute but held that the buyers' legal notices only proposed arbitration and did not nominate an arbitrator as the agreed clause required. Without a valid invocation notice under Section 11(6) of the Arbitration and Conciliation Act, 1996, it could not allow the applications.

How much had the buyers paid?

The order records total sale consideration of Rs 31,29,000 under one agreement and Rs 25,29,150 under the other, paid in phases. The buyers' legal notices of March 24, 2025 said the entire consideration had been paid and that construction had not commenced.

What options did the court leave open?

The court said the dispute should be adjudicated by way of a civil suit or any other proceeding that gives suitable relief, and granted the buyers liberty to issue fresh invocation notices in proper form, if so advised. The applications were disposed of with no costs on October 8, 2026.

What does Section 11(6) of the Arbitration Act cover?

It applies where, under an appointment procedure agreed by the parties, a party fails to act as required, the parties fail to reach an expected agreement, or a person or institution fails to perform a function under that procedure. An application can then be made for the appointment.

Last updated 2026-11-01. PropNewz Team.