Page 1 of 9 Arb P No. 73/2024 HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU Pronounced on : 20.02.2026 Uploaded on : 24.02.2026 Arb P. No. 73/2024 M/S Mohan Lal Gupta Sons …..Petitioner Through: Mr. Udhay Bhaskar, Advocate Vs Union of India & Ors. .….Respondents Through: Mr. Sumant Sudan, Advocate vice Mr. Vishal Sharma, DSGI CORAM: HON’BLE MR. JUSTICE SANJAY DHAR, JUDGE ORDER 01. Through the medium of the present petition, the petitioner has invoked the jurisdiction of this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an Arbitrator. 02. As per case of the petitioner, it is a partnership firm duly registered with M.E.S. Department as Class ‘S’ contractor. It has also been submitted that the petitioner firm is also registered with the Registrar of Firms, Jammu. Serial No. 06 Regular List Page 2 of 9 Arb P No. 73/2024 03. According to the petitioner, contract work bearing CEUZ/135WE/01/2021-22 for ‘Construction of Technical Buildings at Rakhmuthi Under GE(P) Tanda’ as detailed in the tender inquiry No. 87864-A/11/E8 dated 02.12.2020 and the subsequent amendments issued in respect thereof, came to be allotted to the petitioner firm by the Chief Engineer, Udhampur Zone PO Garhi, vide his Acceptance Order No. 87864-A/54/E8 dated 15.04.2021 and the cost of the work was estimated at Rs. 3,51,55,470/-. 04. Pursuant to issuance of acceptance letter dated 16.04.2021 issued by the respondent No. 3-HQ, Chief Engineer, Udhampur Zone, PO Garhi, Udhampur, the petitioner firm deposited an amount of Rs. 10,54,700/ as performance security and it also furnished Performance Bank Guarantee for an amount of Rs. 10,54,700/- issued by HDFC Bank, Narwal Branch, Jammu on 24.05.2021. 05. According to the petitioner despite submission of Performance Bank Guarantee, the Garrison Engineer (South), Akhnoor vide his letter dated 01.07.2021 again asked the petitioner to deposit the Performance Bank Guarantee. The petitioner is stated to have informed Page 3 of 9 Arb P No. 73/2024 respondent No. 4-GE (South), Akhnoor C/o 56 APO, that the Performance Bank Guarantee has already been furnished. The HDFC Bank, Transport Nagar, Narwal, Jammu vide its letter dated 02.08.2021 also informed respondent No. 3 and confirmed the issuance of Bank Guarantee. 06. The petitioner firm is stated to have marshalled its resources in anticipation of receiving the work order so as to complete the execution of the work within the stipulated period of 22 months but the respondents failed to issue the work order and to handover the site to the petitioner firm. It has been submitted that on the assurance of the respondent No. 4 that work order will be issued to the petitioner firm, the site identified by the respondent No. 4 was cleared of the bushes by the petitioner firm and job of leveling the land was also undertaken. A temporary shed for storage of material was also raised on the site identified by respondent No. 4. However, respondent No. 4 failed to issue the work order for more than four months and it was only vide letter dated 04.12.2021 that respondent No. 4 issued the work order. In the said letter, the date of handing over of the Page 4 of 9 Arb P No. 73/2024 site has been shown as 13.12.2021 and date of completion of the work is shown as 17.10.2023. 07. It has been alleged by the petitioner that despite issuance of work order on 04.12.2021, hindrance-free site was not available for execution of the contract work. It has been further alleged that during the period of eight months there was steep escalation of the prices of materials like steel which was required to be consumed in large quantity for the execution of the contract work as a consequence whereof, the petitioner vide its letter dated 24.02.2022 requested respondent No. 3 to determine the contract in terms of the Condition-57 of the General Conditions of the Contract (IAFW-2249). It was further requested that accounts of the petitioner firm be settled and Performance Bank Guarantee be released in its favour or in alternative complete hindrance-free site be made available to the petitioner firm and the quoted prices be treated as enhanced by 20% over and above the amount of contract to cover up the steep rise in the rates of materials and labour since March, 2021. 08. A meeting was held between the representatives of the petitioner firm and respondent No. 4 on 28.04.2022 and Page 5 of 9 Arb P No. 73/2024 it was made clear to the said respondent that in the absence of any clause for escalation in the contract agreement, the execution of the work at this stage, is not possible and, as such, a request was made for release of the Performance Bank Guarantee. Instead of resolving the issue, respondent No. 3 vide its letter dated 24.06.2022 threatened to take action against the petitioner firm in case the needful is not done. It was responded to by the petitioner firm. 09. On 02.08.2022, respondent No. 3 is stated to have issued a final notice which was responded to by petitioner firm vide letter dated 01.09.2022. The contentions of the petitioner firm were ultimately rejected by respondent No. 3 vide his communication dated 16.09.2022. Vide communication dated 08.11.2023, the respondents informed the Bank about the cancellation of the contract and also invoked the Bank Guarantee but no such order of cancellation or termination of the contract was received by the petitioner. 10. It has been contended that an illegal action on the part of the respondents in invoking the FDR/Bank Guarantee and cancellation of the contract has led to huge financial Page 6 of 9 Arb P No. 73/2024 loses to the petitioner firm and it has also brought disrepute to the petitioner firm. It has been contended that disputes have arisen between the parties and same are required to be referred to arbitration. 11. In the backdrop of the aforesaid facts, the petitioner firm is stated to have issued a legal notice dated 12.05.2024 invoking the arbitration clause by making a request that a conciliator be appointed in terms of the Clause 71 of the General Conditions of the Contract (IAFW-2249) and if the same is not done within a period of 30 days then the letter may be deemed to be one for invocation of arbitration clause in terms of Clause 70 of the General Conditions of the Contract. It is alleged that the respondents have not responded to the said notice of the petitioner firm, hence the present petition. 12. Notice of this petition was issued to the respondents on 09.08.2024 and the learned counsel for the respondents after accepting the notice had sought time to file the objections. However, no objections have been filed by the respondents till date. On the last date of hearing viz. on 06.02.2026, it was directed that in the event objections are not filed, the right to file the same shall stand closed. Page 7 of 9 Arb P No. 73/2024 13. Heard and considered. 14. So far as the existence of Arbitration agreement vide Clause 70 of the General Conditions of the Contract is concerned, the same is not in dispute. As per this Clause, all disputes between the parties to the contract excepting those for which decision of the C.W.E. or any other person is by the contract expressed to be final and binding, have to be referred to sole arbitration after written notice by either party to the contract. The arbitrator so appointed has to be a Serving Officer having degree in Engineering or equivalent or having passed final/direct final Examination of Sub-Division II of Institution of Surveyor (India) recognized by the Government of India, to be appointed by the authority mentioned in the tender documents. 15. The invocation of arbitration clause by the petitioner is not in dispute. It is also an admitted fact that disputes have arisen between the parties during the execution of the contract work. Therefore, in order to determine these disputes, an arbitrator is required to be appointed, particularly, when the appointing authority has failed to Page 8 of 9 Arb P No. 73/2024 appoint the arbitrator in terms of the covenants of the Arbitration Clause. 16. In view of the above, the petition is allowed and with the consent of the learned counsel for the parties, Mr. Satish Chandra, Additional Director General (Retd.), R/o H. No. 89, Lane No. 4, Greater Kailash, Jammu-180011, is appointed as the sole arbitrator to adjudicate upon the disputes and differences between the parties arising out of and in connection with the agreement referred to above. 17. A copy of this order shall be communicated to the learned Sole Arbitrator by the Registry of this Court within a period of ten (10) days from today and the learned Arbitrator is requested to forward the ‘Statutory Statement of Disclosures’ under Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996, to the parties within a period of two weeks from the date of receipt of this order. 18. The parties shall appear before the learned Sole Arbitrator on the date and place, to be fixed by the learned Sole Arbitrator. It is further directed that all the Page 9 of 9 Arb P No. 73/2024 arbitration costs and fees of the Arbitral Tribunal shall be borne by the parties equally and shall be subject to the final award that may be passed by the learned Arbitrator in relation to the costs. 19. Disposed of. (SANJAY DHAR) JUDGE JAMMU 20.02.2026 SUNIL Whether the order is speaking ? : Yes Whether the order is reportable ? : No