Delhi High Court Refers 'Intertwined' Builder JV, Settlement And Mortgage Deed Disputes To Arbitration Without Fresh Notice

The Delhi High Court has referred to arbitration a fresh round of disputes between Jiangxi Construction Engineering Group Co. Ltd. and Varaha Infra Ltd., holding that claims arising from their joint venture agreements, settlement arrangement, consent arbitral award and mortgage deeds were too closely connected to be separated.

Justice Mini Pushkarna appointed former Delhi High Court judge Justice (Retd.) Jayant Nath as sole arbitrator to adjudicate the disputes between the parties.

The court observed, "Thus, the disputes as raised by the petitioners with regard to non-compliance of the terms of the Settlement Agreement and Consent Arbitral Award and the disputes with regard to the Mortgage Deed dated 06th May, 2022, are intertwined.”

The Court further held, “Accordingly, all the disputes raised by the petitioners in terms of the JV Agreements between the parties, for violation of the terms of the Settlement Agreement and Consent Arbitral Award and all the disputes in terms of the Mortgage Deed between the parties, in terms of the invocation of the Arbitration Clause by the respondent, are to be referred for adjudication before an Arbitral Tribunal.”

The dispute traces back to a memorandum of understanding executed on May 31, 2017 for forming a joint venture to bid for highway construction works floated by the National Highways Authority of India and state governments.

Under the arrangement, Varaha Infra was responsible for arranging bid security and earnest money deposits. Jiangxi Construction undertook to furnish performance bank guarantees and other related guarantees required for the projects.

The joint venture eventually secured three infrastructure contracts in Gujarat and Andhra Pradesh. Delays during execution led to disputes between the parties, which were referred to arbitration before a sole arbitrator appointed by consent.

While those proceedings were pending, the parties entered into a settlement agreement on December 21, 2021. A consent arbitral award followed on February 23, 2022.

The order records that Varaha Infra later executed a mortgage deed over plant and machinery worth Rs. 50 crore, along with a corporate guarantee, to secure bank guarantees furnished by Jiangxi Construction.

Fresh friction arose over one of the Gujarat projects. Jiangxi Construction told the Court that the Gujarat authority invoked the “risk and cost” mechanism under the EPC contract through a notice dated July 31, 2025, exposing bank guarantees worth around Rs. 106.71 crore to possible invocation.

The company then moved the High Court, seeking interim protection as well as the appointment of an arbitrator.

Varaha Infra resisted the petitions. It argued that no crystallised or enforceable claim had yet arisen and also contended that no fresh notice invoking arbitration had been issued.

The Court rejected the objection, noting that arbitration between the parties had already commenced earlier pursuant to a notice issued on August 6, 2020. It also recorded that Varaha Infra itself had invoked arbitration under the mortgage deed through an email sent on May 6, 2026.

All disputes arising from the joint venture agreements, mortgage deed, settlement agreement and consent award have now been referred to arbitration. The pending interim proceedings before the High Court will be treated as an application before the arbitral tribunal.

For Petitioners (Jiangxi Construction Engineering Group Co Ltd & Anr.): Senior Advocate Sanjoy Ghose; Advocates Dr. Farrukh Khan, Vidhi Jain, Zainab Khan, Mohit Garg.

For Respondent (Varaha Infra Ltd.): Senior Advocate Rajeev Sharma; Advocates Abhishek Birthray, Paras Choudhary, Nishant Kandpal, Arunima Singh, Kartikeya Tripathi.