Karnataka High Court
Varun Gupta And Co vs Union Of India on 17 October, 2025
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
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NC: 2025:KHC:41584
CMP No. 336 of 2024
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF OCTOBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
CIVIL MISC. PETITION NO. 336 OF 2024
BETWEEN:
VARUN GUPTA AND CO.,
REGISTERED OFFICE AT A-64/3,
DDA FLATS, SAKET,
NEW DELHI-110 017,
REPRESENTED BY ITS PROPRIETOR,
MR. VARUN GUPTA.
...PETITIONER
(BY SRI. GANESH KHANNA, ADVOCATE FOR
SRI. ATUL MADHAVAN.,ADVOCATE)
AND:
1. UNION OF INDIA
CHIEF PUBLIC WORKS DEPARTMENT,
CPWD, 'D' WING, 6TH FLOOR,
Digitally signed KENDRIYA SADAN, KORAMANGALA,
by SHWETHA BANGALORE-560 034,
RAGHAVENDRA
REPRESENTED BY ITS
Location: HIGH
COURT OF CHIEF ENGINEER (BANGALORE).
KARNATAKA
2. EXECUTIVE ENGINEER
BANGALORE CENTRAL DIVISION-I,
CPWD, 3RD FLOOR,
A WING, KENDRIYA SADAN,
BANGALORE-560 034.
...RESPONDENTS
(BY SRI. KUMAR M N., CENTRAL GOVERNMENT, SENIOR PANEL
COUNSEL)
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NC: 2025:KHC:41584
CMP No. 336 of 2024
HC-KAR
THIS CIVIL MISC. PETITION IS FILED UNDER SECTION
11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996
PRAYING TO APPOINT SOLE ARBITRATOR FOR ADJUDICATION
OF THE DISPUTES BETWEEN THE PARTIES IN ACCORDANCE
WITH SETTLEMENT OF DISPUTES AND ARBITRATION CLAUSE
24 OF THE AGREEMENT, ARISING OUT OF AGREEMENT
BEARING NO.27/CE/BCD-I/2021-22 (ANNEXURE-B) EXECUTED
PURSUANT TO AWARD LETTER DATED 18.11.2021
(ANNEXURE -A)
THIS PETITION, COMING ON FOR ADMISSION, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
ORAL ORDER
1. Petitioner is before this Court seeking for the following relief:
"Appointing sole arbitrator for adjudication of the disputes between the parties in accordance with settlement of disputes and arbitration clause 24 of the agreement, arising out of agreement bearing no.27/CE/BCD-I/2021-22 (ANNEXURE-B); executed pursuant to award letter dated 18.11.2021 (ANNEXURE -A)".
2. The respondents have quoted a tender for augmentation of short-circuit test facilities at High Power Laboratory CPRI, Bengaluru and certain other works where the petitioner was declared the successful bidder and awarded the contract. The said -3- NC: 2025:KHC:41584 CMP No. 336 of 2024 HC-KAR tender was governed by an arbitration clause in terms of Clause 25 thereof which is reproduced hereunder for ready reference;
"Clause 25- Settlement of Disputes & Arbitration.
Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter:
(i) If the contractor considers any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in-Charge or if the Engineer in Charge considers any act or decision of the contractor on any matter in connection with or arising out of the contract or carrying out of the work, to be unacceptable and is disputed, such party shall promptly within 15 days of the arising of the disputes request the Chief Engineer/ CPM, or where there is no Chief Engineer/CPM, request the Additional Director General/Special Director General, who shall refer the disputes to Dispute Redressal Committee (DRC) within 15 days along with a list of disputes with amounts claimed if any in respect of each such dispute. The Dispute Redressal Committee (DRC) give its decision within a period of 60 days extendable by 30 days by consent of both the -4- NC: 2025:KHC:41584 CMP No. 336 of 2024 HC-KAR parties from the receipt of reference from CE/CPM/ADG/SDG. The constitution of Dispute Redressal Committee (DRC) shall be as indicated in Schedule 'F'. Provided that no party shall be represented before the Dispute Redressal Committee by an advocate/legal counsel etc. The DRC will submit its decision to the concerned ADG/SDG for acceptance. ADG/SDG in a time limit of 30 days from receipt of DRC decision will convey acceptance or other wise on the said decision. If the Dispute Redressal Committee (DRC) fails to give its decision within the aforesaid period or the ADG/SDG fails to give his decision in the aforesaid time limit or any party is dissatisfied with the decision of Dispute Redressal Committee (DRC)/ADG/SDG the neither party may within a period of 30 days from the receipt of the decision of Dispute Redressal Committee (DRC)/ADG/SDG or on expiry of aforesaid the time limits available to DRC/ADG/SDG, may give notice to the Chief Engineer/CPM, CPWD, in charge of the work or if there be no Chief Engineer/CPM,, the Additional Director General/Special Director General concerned or if there be no Additional Director General/ Special Director General, the Director General, CPWD for appointment of arbitrator on prescribed proforma as per Appendix XVII under intimation to the other party.
It is a term of contract that each party invoking arbitration must exhaust the aforesaid mechanism of settlement of claims/disputes prior to invoking arbitration.
The CE/ADG/SDG shall in such case appoint the sole arbitrator or one of the three arbitrators as the case may be within 30 days of receipt of such a request and refer such disputes to arbitration. Wherever the Arbitral Tribunal consists of three Arbitrators, the contractor shall appoint one arbitrator within 30 days of making request for arbitration or of receipt of request by Engineer-in-charge to CE/ADG/SDG/DG for appointment of arbitrator, as the case may be, and two appointed arbitrators shall -5- NC: 2025:KHC:41584 CMP No. 336 of 2024 HC-KAR appoint the third arbitrator who shall act as the Presiding Arbitrator. In the event of
(a) A party fails to appoint the second Arbitrator, or
(b) The two appointed Arbitrators fail to appoint the Presiding Arbitrator, then the Director General, CPWD shall appoint the second or Presiding Arbitrator as the case may be.
ii. Dispute or difference shall be referred for adjudication through arbitration by a Tribunal having sole arbitrator where claimed amount is Rs. 20 Crore or less. Where claimed Value is more than Rs. 20 Crore, Tribunal shall consist of three Arbitrators as above. The requirements of the Arbitration and Conciliation Act, 1996 (26 of 1996) and any further statutory modification or re-enactment thereof and the rules made there under and for the time being in force shall be applicable.
It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed, if any, in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the decision of the ADG/ SDG on the finding /recommendation of DRC. It is also a term of this contract that member(s) of the Arbitration Tribunal shall be a Graduate Engineer with experience in handling public works engineering contracts, and further he shall have earlier worked at a level not lower than Chief Engineer/ equivalent (i.e. Joint Secretary level of Government of India). This shall be treated as a mandatory qualification to be appointed as arbitrator.
Parties, before or at the time of appointment of Arbitral Tribunal may agree in writing for fast track arbitration as per the Arbitration and Conciliation Act, 1996 (26 of 1996) as amended in 2015. Subject to provision in the Arbitration and Conciliation Act, 1996 (26 of 1996) as amended in 2015 whereby the counter claims if any can be -6- NC: 2025:KHC:41584 CMP No. 336 of 2024 HC-KAR directly filed before the arbitrator without any requirement of reference by the appointing authority. The arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each dispute and claim referred to him and in all cases where the total amount of the claims by any party exceeds Rs. 1,00,000/-, the arbitrator shall give reasons for the award.
It is also a term of the contract that fees payable to arbitral tribunal shall be as approved by DG, CPWD, OM issued vide no.2/2006/SE (TLC)/CSQ/137 dated 19-11-2019 (or its latest amendment as approved by DG, CPWD). This fee shall be shared equally by parties.
The place of arbitration shall be as mentioned in Schedule F. In case there is no mention of place of arbitration, the arbitral tribunal shall determine the place of arbitration.
The venue of the arbitration shall be such place as may be fixed by the Arbitral Tribunal in consultation with both the parties. Failing any such agreement, then the Arbitral Tribunal shall decide the venue."
3. The said Clause 25 has undergone a modification on 28.06.2021. The modified Clause reads as under;
"However, a party may seek appointment of Arbitrator without taking recourse to the process of conciliation mentioned in sub-clause 25.1 above.
In the event of either party giving a notice to the Arbitrator Appointing Authority for appointment of Arbitrator, the said Authority shall appoint Arbitrator as per the procedure given below and refer such disputes to arbitration."-7-
NC: 2025:KHC:41584 CMP No. 336 of 2024 HC-KAR
4. The petitioner on 10.05.2024 invoking the said arbitration clause called upon the respondents to convey the five names from the list of CPWD empanelled arbitrators to make their choice. The respondent replied to same on 06.06.2024 giving a list of five names. The petitioner thereafter vide his notice dated 17.06.2024 taking up a contention that the arbitrators named had worked with the respondent, did not accept any of the said names and suggested five other names who were also empanelled with the CPWD, but had not worked with the respondents. It is in those circumstances that a stalemate has been arrived at and the petitioner has approached this Court seeking appointment of an arbitrator.
5. Subsequent thereto, the respondent by its letter dated 08.07.2024 appointed one of the persons named in the letter issued by the respondent as a sole arbitrator on the ground that the petitioner has -8- NC: 2025:KHC:41584 CMP No. 336 of 2024 HC-KAR not indicated consent to any one of the five arbitrators recommended by the respondent. The appointment made by the respondent is subsequent to the letter which had been issued by the petitioner on 17.06.2024 indicating five other names.
6. From the correspondence it is clear that both the petitioner and the respondent have admitted the existence of an arbitration clause and in fact both of them have submitted their respective list of arbitrators. However, unfortunately they have not been able to arrive at a consensus as regards the appointment of an arbitrator. In terms of Clause 25 which has been extracted hereinabove it is clear that it would only have to be a person with the engineering experience, empanelled with the CPWD, who could be appointed as an arbitrator.
7. It is clear that the petitioner and the respondent have not been able to arrive at a consensus as -9- NC: 2025:KHC:41584 CMP No. 336 of 2024 HC-KAR regard to appointment of an arbitrator. The petitioner contending that the list of arbitrators furnished by the respondent are relating to persons who had worked with the respondent. However there is no particular document on record which would indicate the same to be true.
8. Be that as it may. Considering the independence of arbitral proceedings, I am of the opinion that an independent arbitrator could be appointed who is empanelled with the CPWD.
9. Hence, I pass the following;
ORDER i. CMP is allowed.
ii. Sri. Sudhir Kumar Chawla, a former Director General of CPWD, C-202, Taj Apartments, Near Ghazipur Flyover, IP Enclave, Delhi-110096, is appointed as a sole arbitrator to arbitrate the disputes between the parties under the aegis of the Arbitration Centre attached to this Court.
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NC: 2025:KHC:41584 CMP No. 336 of 2024 HC-KAR iii. Registry is directed to forward a copy of this order to the Director, Arbitration and Conciliation Centre for doing the needful.
iv. Since the order is passed in the presence of both the counsel, they shall appear before the Director, Arbitration and Conciliation Centre without requirement of any further notice on 03.11.2025 at 2.30 p.m. SD/-
(SURAJ GOVINDARAJ) JUDGE RU List No.: 1 Sl No.: 64