The High Court · 2025

Counsel for the Applicant: Sri Chetluru Sreenivas Counsel for the Respondents: Sri D. Narendar Naik The Court delivered the following: JUDGMENT IN THE HIGH COURT FORTHE STATE OF TEL ANGANA AT HYDERABAD THE HONOURABLE SRI JUSTICE P.SAM IOSHY ARBITRATION AP PLICATION No:48 of 2O2L DATE OF JUDGMENT: 2A.LL.2O25 Between: M/s. Laina Power E ngineering, Represented by its Proprietor, A.Kalyan Kumar, S/o.A.Narsing Rao, Regd Office at 70-3-87/2, First Floor, Fathenagar, Hyderabad - 500018. AND Applicant M/s. Sokeo Porver Private Limited, l-98/ 10/ 1O7,102, Sai Madhu Towers, Beh ind Kotak Mahindra Bank, Opposite Cyber Towers Madhapur, Hyderabad - 500081, Represented by its Managing Director Nagarjuna Rao. Respondent JUDGMENT: Heard Mr. Chetluru Srinivas, learned co..l rsel for the applicant; and Mr. D.Nrendar Naik, learned cc r nsel for the respondent. Page 2 of B

2. The instant Arbitration Application has been filed by the applicant under Section 11(2) and (6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') praying the Court to appoint an Arbitrator to adjudicate the claims and disputes between the applicant and respondent arising out of the work order dated 15.06.2016, 02.07.2016, and LB.O7.2016, 20.11.2015 (amended on 06.01.2016) and 26.09.2016.

3. According to the learned counsel for the applicant, the applicant entered into contract with the respondent to carry out specialized engineering work for a 2 X 300 l"lW power plant located at Daramuda Village, Tehsil Kharsia, Raigarh District, Chhattisgarh. The respondent was serving as the EPC (Engineering Procurement Construction) agency for M/s.SKS Power Generation Chhattisgarh Limited for this project and subsequently sub-contracted specific works to the applicant through multiple work orders issued between January, 2016 and September; 2016. These work orders covered fabrication, erection and commissioning of critical piping, power cycle piping, TG building structures, ash handling systems, and STG packages for the power plant units. After completing the assigned works, the applicant submitted invoices covering April, + t 2Ol7 to May, 2O17 along with quantity measurement sheets to the respondent. On 12.O7.2017, the respondent process,: I the bills and issued reconciliation statement approving )ayment of Rs.1,16,50,227/-. Howevea despite this written ackrr wledgment of debt, no payment was forthcoming. Instead, on 7th uly 20t7, the respondent unilaterally terminated all work orders v/ thout clearing the admitted dues. The applicant made persisten attempts to secure payment including formal correspondence dal:d 10.08.2017 and a statutory demand under Section B(1) of the I rsolvency and Bankruptcy Code for Rs.1,63,74,695/- which is inclrr;ive of service tax and retention money. Even after repeated rerr inders by the applicant, the respondent failed to release any fun(l; even though the respondent had acknowledged and approved the tmounts due. +. According to the learned counsel for the a p plicant, being aggrieved by the continued default and non-p.r, ment despite admitting the liabitity, the applicant initiated corpc r rte insolvency resolution proceedings before the National Comparl Law Tribunal, Hyderabad Bench, which was dismissed on technic,r grounds. Left with no alternative, the applicant invoked art)t :ration clause contained in the work orders through a notice dat ld 11.06.2019 nominating Mr. K.L.Narsaiah as its Arbitrator and calling upon the respondent to name its own arbitrator within fifteen days. While the respondent did respond on 03.09.2019. the parties could not successfully establish the Arbitral Tribunal as mandated under Section 11 of the Act. Therefore, the applicant is before this Court for appointment of an Arbitrator to resolve the disputes stemming from the work orders dated 15.06.2Ot6,02.O7.2Ot6, t8.O7.2076, 20.11.2015 (amended on 06.01.2016) and 26.09.2016 and to secure the outstanding amount of Rs.1,66,87,916/_ (inclusive of accrued inte rest). 5 Learned counsel for the respondent coniended that the applicant has failed to fulfill their obligation under the work orders and letter of intent resurting in incomprete and substandard work. The applicant did not complete necessary work on time despite repeated warnings and cautions from the respondent as evidenced by emails dated 06.12.2016 and 07.I2.20t6. Furthermore, the applicant's poor housekeeping practices, including leaving piping and support scrap materials at the SPGCL project site were brought to the respondent,s attention by SpGCL itself. The respondent was compelled to incur additional costs of approximately Rs.30 to 40 i I I I I I I I I l i I I lakhs to complete the applicant's pending work, including lead piping, supports, scrap removal, housekeeping z 1d in stru m en t tappings. The applicant's workers also engaged in an illega I tool- down strike from 09.06.2017 to 13.06.2017, caLr ing sig n ificant loss and adverse remarks to SPGCL during critical inspections by bank and government officials.

6. Further, learned counsel for the respondent ontended that the applicant bypassed the respondent and direct ) engaged with SPGCL at the project site which is in clear violat r n of the work orders which stipulated that payment terms wero on a back-to- back basis and that the applicant, as a sub-contractc ', was req u ired to report only to the respondent. The applicant st rrted receiving payments directly from SPGCL for work executed ir April and May 2017, which was undertaken without consultinc or obta in ing approval from the respondent. As such, the responrl, nt is not lia ble for any payments related to this work and the appl ca nt's claim of Rs.1,66,87,916/- is utterly untenable, illegal and ac Cressed to the wrong party. That the respondent had already maC r full payment for all works completed by the applicant up to 31.0:l 2017, and any further claims should rightfully be directed towards SpGCL, not the respondent. -i. Lastly, the rearned counser for the respondent contended that the present Arbitration Application is premature and not maintainable as the applicant has failed to comply with the pre_ conditions under the arbitration agreement, specifically the requirement for amicable settlement of disputes through mutual discussion and consurtation. The arbitration crause wourd onry be triggered after compriance with this precondition which has not been satisfied by the applicant. Moreover, the applicant,s alleged claims are barred by limitation, and the applicant has grossly violated the statutory requirements under Section 11(5) of the Act for appointment of an Arbitrator. He submitted that the applicant,s earlier attempt to recover amounts through iBC proceedings before the Hon'ble NCLT, Hyderabad was dismissed, and the subsequent appeal before the Hon'ble NCL! New Delhi, was also dismissed in limine furiher establishing the lack of merit in the applicant,s cla im s. s' Having carefurry examined the facts and circumstances of the present case and considering the arbitration clause contained in the . ( I I work orders dated 15.06.2016, 02.07.2076, 1,8.07.2016,

26.O9.2016 and 20.11.2015 (amended on 06.01.2() .6), this Court finds that five projects undertaken by the ap: icant for the respondent are governed by the arbitration agreem: rt. The parties having failed to constitute the Arbitral Tribunal in ir cordance with Section L1(2), (3), and (4)(a) of the Act and the re:tondent having failed to nominate its Arbitrator despite receiving rj re notrce from the applicant, this Court is satisfied that judicial ntervention is warranted to facilitate the arbitration process. X. Accordingly, both the parties agree for ,lpointment of Smt. lustice Kongara Vijaya Lakshmi, a former Juri;e of the High Court of Andhra Pradesh (resident of Door No:B-2-,1 3/82/F/9, Plot No.9, Type B, Road No.7, Flim Nagar/ Behind Fllr r Nagar Club, lubilee Hills, Hyderabad 500033, Mobile Nos. 9ll t9807562 and 79O7O97366), as the sole Arbitrator to adjudicate tr: disputes and claims arising out of the work orders datec 15.06.2016, O2.O7.20t6, 18.07.2016, 26.09.2016 and 20.11..11 15 (amended on 06.01.2016) which contains arbitration clause. Tr: Arbitrator so appointed shall pass separate awards for each of tr: five projects in accordance with the provisions of the Act I

10. The instant Arbitration Application is accordingly allowed 7L. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs SD/.K.SRINIVASA RAO JOINT REGIST //TRUE COPY// SEGTION OFFICER To,

1. Smt. Justice Kongara Vijaya Lakshmi' a former J-udg-e of the Hioh Court of -e rvpg g Andhra Pradesr, lresioeni?'D"d'N;,;-i-'o1n!819 Plot No Road No 7, Film Nagar' euniiilirt N"giiClub' Jubilee Hills' Hyderabad- Lb"&is3. L,libii" ttos do+gaozso2 and 7901097366 2. One CC to Sri Chetluru Sreenivas' Advocate [OPUCI 3. One CC to Sri D. Narendar Naik, Advocate [OPUC] 4. Two CD CoPies V H/I'SL w HIGH COURT DATED: 2811112025 "i /: ^\ /r\) Iio , 11 ,,-.).. ''l( t i) .il t, ilr[ if?! t SPlTC\I c) -)-ii JUDGMENT ARBAPPL.No.48 of 2021 ALLOWING THE ARB ITRATION APPLICATION : : i I i t ! E Ii I : : I G