The High Court · 2025

f#"1,;1"::Ii,,:T::#Ti,J:lLTl;",[*eT,{#l:iln'tr",.ffi H*f Counsel for the petitioner: SRI ABHINAV KRISHNA UPPALURI counsel for the Respondent: Mr. *r.":i. [BHlig,iHt"" The Court made the following: OROfn i:: HONOURAI} ITR LE SRI IUSTICE PLIC I ON B' VUAYSEN REDDY OF 20z+ ON N .30o 5 [forming 19 dated 16'12'2019]' oRD ER: (oRAL) This aPPlication ts filed seeking to appoint a sole arbitr ator to licant and the resPon dent tn Conditions of Contracr' (GCC) rlnder the adjudicate the dis'putes between the app ordance with (llause 9 of the General part of agreement No'134 of 20 contract/articles ol agreement dated 05 ' 1 1.2018. 2. The.case ol rhe applicant is that tenders were called for on behalf of Govemment of'Telangana by the respondent for 'Laying ':f 400m 8 lane IAAF approved Synthetic Athletic Track at Jawaharlal Neluu Stadium at Flan;rmkonda'' The applicant and others particirrated in the tenders; the applicant was declared as successful bidder and the contract was awarded to the applicant for an estimated cost of Rs'?00'00 lakhs' The agreemeil No'134 of 2019 dated 16'12'2019 rras enttrred between the applicant and the respondent and subsequently' supplementary agreement ditt|ed 20.12.2022 was entered into for :xecution of supplementai items. It is submitted that the responden t vide Memo No. T2lKhe I olndi a/JLNS/CR/2 2 dated 20. 12.2022 acknorvl,,:dged that the work done estrmate and completion repoft in regards to the subject work l I i I i I i I , I I I I 2 is technically approved and communicated by the Engineer-in_Chiefl Panchayat Raj, Hyderabad. The work was awarded to the applicant by the respondent on 28.11.2019. The work was started and completed on 26-11.2021 to the satisfaction of the respondent. The 4th & final bill for the work done was submitted by the applicant in the month of July 2022 amounting to Rs.6,98,37,252l - (Rupees six crores ninety eight lakhs thirty seven thousand two hundred and fifty two only). That out of this amount, the balance amount of Rs.3,90,99,122l- (Rupees three crores ninety lakhs ninety nine thousand one hundred and twenty two only) was not paid to the applicant for the reasons best known to the respondent. It is submitted that the respondent have deducted/recovered several amounts illegally from the bills ofthe applicant on various accounts, and several bills were not paid/short paid in quantities/rates. The applicant had been pursuing with the respondent for the settlement of accounts but no action has been taken by the respondent.

3. It is submitted that demand notice dated 20.07.2023 was issued to the respondent making several claims including balance payment of Rs.3,90,99,122l-; an amount of Rs.25,55,000/- (Rupees Twenty five lakhs frfty five thousand only) towards refund of security deposit lying in the shape of bank guarantee. Despite such notice, the respondent did t 3 not settle the clairrs of the applicant. Thus, the applicant invoked arbitration uncler Clause 9 of the agreement No.l34 of 2tt19 dated

16.12.2019 by issuing notice dated i0.08.2023 under Section 21 of the Arbitration and rlonciliation Act, 1996 (for shorl 'Ac'. 1996')' The respondent received the said notice but did not give any reply' The applicant, u'ith reference to the notice dated 10.08.2023, issued final notice dated 08 11.2023 requesting the respondent to appoint an arbitrator. Serreral letters were also addressed to the respondi:nt and as there is inactic,n on the part of the respondent, and thus, instant application is liletl

4. Mr. Raje,sl.r Kumar Herur, leamed Govemment Pleader for Arbitration, appt:aring for the respondent, has taken p:eliminary objection regarcling the maintainabitity of the instant application as the procedure under'(llause 9 of the GCC has not been complied with. lt is submitted that the balance gross amount of Rs.3,98.75,308, - (Rupees three crores nineli'eight lakhs seventy five thousand three hundred and eight only) was r,ot paid to the applicant by the respondent due to non- receipt of rnrrtching grant under MPLADS from the district administration. l'he Superintending Engineer, Panchayat Raj. Warangal Region, has instructed the District Panchayat Raj Engi reer, PIU 4 Hanumakonda, to pursue the matter with the concemed officials fcir every fifteen (15) days and in tum, the District Panchayat Raj Engineer, PIU, Hanumakonda wrote several letters requesting for release of funds. It is submitted that the balance amount of Rs.3,98,75,308/- will be paid soon after the receipt of the funds with deduction of Rs.34,40,565/- (Rupees thirty four lakhs forty thousand five hundred and sixty five only). It is further submitted that the completion of the project by the applicant was contingent upon inspection. The letter dated 20.12.2022 issued by the applicant to the respondent explicitly states that that the work would be verified by the QC Wing, Vigilance Enforcement and Departmental QC Wing to ensure timely rectification of defect. The final payment to the applicant IS permissible only after such verification.

5. Leamed Govemment Pleader submitted that the claims of the applicant have been verified and the amount will be released as and when funds are received by the respondent fiom the Govemment/ MPLADS. It is fuither submitted that there are defects in the athletics track and signs of wear and tear, including wom-out sections and loose packing of the surface material. The applicant did not recti$, the same so far, even after being informed. 5

6. Leamed Cior emment Pleader submitted that the appoirrtment of an arbitrator w.oulcl arise only if there is dispute betrveen th,: parties The matter can bea.micably settled in terms of the Clause 9 of r.he GCC. Without resortinp to amicable settlement, the applicant c;rnnot be permitted to invok: arbitration clause.

7. Heard learnt:d counsel for the applicant and leamed Govemment Pleader for Arbitration, and perused the material on record.

8. The only ol:jection raised by the leamed Govemment Pleader for Arbitration is that in a mechanical manner and as a matter of right, the applicant oon['actor cannot resoft to arbitration process without settling the rnatter amicably in accordance with Clause 9 of GCC. According to tl-re leamed Government Pleader, the matter can l;e settled amicably if both tie, parties sit across the table.

9. Clause 9 of 'he GCC reads as under: "Clause 9 - ,lrbitration: Any dispt'te .s or dffirences arising out of or in connecti(,n with the ext'r:ution of the work shall be to the extent possib.te settle onncubly between the parties. If the amicable settlemenl atnnot be reached, all disputed issues shall he settled b1t tlrbitration in accordance with the provisions ,'tf the Arbitra,'iorz and Conciliation Act, 1996. One or more Arbitrators not in even number shall be appointed accordirg lo the Rules or as may be agreed by the Parties. The decisicn r] 6 of the Arbitrators shall be conclusive and binding on both the Parties. Arbitration proceedings shall be conducted in Englkh language and the provisions of the Arbitration and Conciliation Act, 1996 as amended from time to time shall be applied for the settlement of dispute. It is the terms of the Agreement that the arbitration proceedings shall be conducted in Hyderabad, Telangana, India in accordance with Indian Law. Indian Law shall also govern ihe contract. "

10. Leamed counsel for the applicant submitted that the objection of the leamed Govemment Pleader for Arbitration is untenable and baseless. The applicant issued several notices and reminders to the respondent to settle the claims but there was no response from the respondent. Even after issuance of arbitration notice and further notices, there was no response. Thus, the contention of the leamed Govemment Pleader that the applicant should have come forward for amicable settlement is without any merit.

11. It is evident from the record that the before issuing arbitration notice dated 10.08.2023, the applicant issued demand notice dated

20.07.2023 and the respondent was notified that the claim Nos.l to 14 under various heads were made by the applicant. The respondent was called upon by the applicant to settle the dues within a period of fifteen ( 15) days or else the matter will be referred to an arbitration as per Clause 9 of the GCC. Thus, when the demand notice dated 20.07.2023 was issued and request was made for settlement of dues, the respondent 1:: - E\' ., I 7 ought to have invited the applicant for amicable settlement' By rot doing so, the respondent waived its right for amicable settlement and the applicant was conrpelled to issue arbitration notice dated 10'08 2023 '

12. Leamed Cior'ernment Pleader for Arbitration submitted that even now, the responclent is willing to negotiate with the appl cant and I mutually settle tht: disputes, however, the same is seriously opposed by the leamed counst:l for the applicant. In view of the same, the':equest of the learned Govt:rnment Pleader cannot be accepted. The applir:ant acted in accordance 'u,r it l.r the GCC of agreement No'134 of 2(t19 dated

16.12.2019 as cl scussed in the preceding paragraphs ancl invoked arbitration clause ivhen the respondent failed to respond to the demand notice dated 20.t)',' .2023.

13. ln vieu oi the above, this application is allowed appointing Sri Justice G.V. Seethapathy, Former Judge, erstwhile l{igh Court of Andhra Pradesh. H.No.5-8-30/34, Govardhanpuri Gardensr, Yapral, Secunderabad 87. as Arbitrator to adjudicate the claims an'J disputes between the par.ies and to pass an award in accordance with law' The parties are at liberty to raise a1l factual and legal grounds in support of their respectrve claims. The leamed Arbitrator is entitled to fees as per the rates spercilied in the Fourth Schedule to the Act 1996 inserted by 8 the Arbitration and Conciliation (Amendment) Act 2015, No-3 of 2016, with effect from 23.10.2015, which shall be borne by both parties in equal shares. As a sequel thereto, miscellaneous applications, if any, pending in this application stand closed //TRUE COPY// SDI M. VIJAYA BHASKER JOINT REGISTRAR SECTION OFFICER To, '1. Sri Justice G.V. Seethapathy, H.No.5-8-30/34, Govardhanapuri Gardens, Yapral, Secunderabad -87 (By Special Messenger) (Along with a copy of order and material papers)

2. One CC to Sri Abhinav Krishna Uppaluri, Advocate [OPUC] 3. Two CCs to G.P. for Arbitration, High Court for the State of Telangana. [OUT] Plp/DL W HIGH GOURT DATED:21 l03l2O2S ORDER ARBAPPL. trlo.305 of 2024 i. i itE- I 14 /€ c ( 1o Apli ilE \(t iJ iJ 't. (C(' a Itr ++ .i .-\ -:. ':.jjl ALLOWING THE ARBITRATION APPLICAT!ON q ,^\6