Andhra Pradesh High Court - Amravati
M/S. Rajesh Mohanty Construction Pvt. ... vs Central Public Works Department And ... on 12 December, 2025
APHC010067492025 Bench
IN THE HIGH COURT OF ANDHRA PRADESH
Sr.No:-18
AT AMARAVATI [3441]
ARBITRATION APPLICATION NO: 12 of 2025
M/s. Rajesh Mohanty Construction Pvt. Ltd. ...Applicant
Vs.
Central Public Works Department and others ...Respondents
**********
Advocate for Applicant: Mr. P. Rama Sharana Sharma Advocate for Respondents: Mr. J. U. M. V. Prasad (Central Government Counsel) CORAM : THE CHIEF JUSTICE DHIRAJ SINGH THAKUR DATE : 12th December December, 2025.
PC:
This is an application filed under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator for purposes of adjudicating the disputes arising out of and in connection with Agreement No.09/VCD/2021-22.
2. The scope of the work was the Dev Development elopment of Aquaculture Infrastructure for National Fisheries Development Board at Mulapolam in Srikakulam District of Andhra Pradesh, which had to be completed by 23.08.2022.
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3. The applicant claims that work was commenced as per the agreed terms and it was on account of non-cooperation of the respondent-Department that the work could not be completed as per the contract. The applicant further claims that the respondents, subsequently, cancelled the contract arbitrarily.
4. The applicant claims that in accordance with Clause 25 of the Clauses of Contract, disputes were required to be resolved through the mechanism of arbitration. For facility of reference, Clause 25 is reproduced hereunder:
"Clause 25:- Settlement of Disputes and 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 parties from the receipt of reference from CE/CPM/ADG/SDG The constitution of Dispute Redressal Committee (DRC) 3 HCJ ARBAPPL_12_2025 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 otherwise 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 said 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 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 4 HCJ ARBAPPL_12_2025 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 of arbitrator and giving reference to the decision of the ADG/ SDG on the finding / amounts claimed, if any, in respect of each such dispute along with the notice for appointment 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 directly filed before the arbitrator without any authority. The arbitrator shall adjudicate 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." 5
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5. Learned counsel for the applicant would submit that the arbitration clause was invoked by serving a Notice, dated 07.08.2024, upon the respondents, which did not elicit the requisite response and hence the present application.
6. In the counter-affidavit, the stand taken is that the pre-arbitral mechanism, as was otherwise envisaged in the agreement having not been resorted to by the applicant, the present arbitration application was not maintainable.
7. It is stated that as per the agreed terms of the contract the applicant had to approach the Dispute Redressal Committee (DRC) within 15 days along with a list of disputes with the amount claimed in respect of each of such disputes and it is only after the DRC gave its decision that the applicant could seek reference to the arbitrator.
8. The scope of examination of the referral court, as per the recent judgment, rendered by the Apex Court in the case of Aslam Ismail Khan Deshmukh vs. ASAP Fluids Private Limited and another 1, is limited to determining whether there exists an arbitration agreement or not. The Apex Court held:
"51. It is now well settled law that, at the stage of Section 11 application, the referral Courts need only to examine whether the arbitration agreement exists - nothing more, nothing less. This approach upholds the intention of the parties, at the time of entering into the agreement, to refer all disputes arising between themselves 1 (2025) 1 SCC 502 6 HCJ ARBAPPL_12_2025 to arbitration. However, some parties might take undue advantage of such a limited scope of judicial interference of the referral courts and force other parties to the agreement into participating in a time-
consuming and costly arbitration process. This is especially possible in instances, including but not limited to, where the claimant canvasses either ex facie time-barred claims or claims which have been discharged through "accord and satisfaction", or cases where the impleadment of a non-signatory to the arbitration agreement is sought etc.
52. In order to balance such a limited scope of judicial interference with the interests of the parties who might be constrained to participate in the arbitration proceedings, the arbitral tribunal may direct that the costs of the arbitration shall be borne by the party which the Tribunal ultimately finds to have abused the process of law and caused unnecessary harassment to the other party to the arbitration."
9. Be that as it may, in the instant case, since the respondents had not denied the existence of the arbitration clause nor the factum of existence of the dispute in question, it would only be apt to refer the matter for adjudication to an arbitrator, leaving it open to the arbitrator to decide the issues which arise after filing of the detailed claims and counterclaims by the parties.
10. Since the agreement envisages the appointment of an arbitrator, who is a Graduate Engineer and has earlier worked at a level not lower than Chief Engineer/ equivalent, i.e. Joint Secretary level of Government of India, S. Jaswant Kumar, Chief Engineer (Retired), is appointed as an Arbitrator, who shall enter upon the reference and adjudicate upon the disputes arising out of and in connection with Agreement No.09/VCD/2021-22, and render the Award within the statutory period. The learned Arbitrator shall also be entitled to claim the fee as per the provisions of the Fourth Schedule of the Arbitration and Conciliation Act, 1996.
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11. Accordingly, this arbitration application is allowed.
No costs. Pending miscellaneous applications, if any, in this petition, shall stand closed.
A copy of this order be communicated to the learned Arbitrator on the address mentioned herein below:
S. Jaswant Kumar, Chief Engineer (retired), H.No: 2-2-647/235/2/1/A (489), Street No.7, Bagh Amberpet, Hyderabad - 500 013.
Phone: 73821 71638.
DHIRAJ SINGH THAKUR, CJ.
SSN