APHC010347822025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI ARBITRATION APPLICATION NO: 19 of 2025 Bench Sr.No:-32 [3574] M/s. Omega Elevators ...Applicant Vs. Union of India and Others ...Respondents ********** CORAM : THE CHIEF JUSTICE LISA GILL DATE : 25th September 2026 Present : Advocate for Applicant : Mr Bhargav Hasurkar (through VC) Advocate for Respondents : Mr Mallampalli Srinivas (Central Govt., Counsel) LISA GILL, CJ: Prayer in this application is for appointment of an arbitrator in view of the dispute which has arisen between parties pursuant to letter of acceptance dated 08.09.2023 issued to applicant by respondent railways. 2. It is submitted that pursuant to Tender No.B-E-29-I-EGS-18-23- 24, applicant was declared successful bidder, issued letter of acceptance dated 08.09.2023; performance bank guarantee as well as earnest money deposit was deposited; project, as per letter of acceptance, was to be completed within a period of nine months from the date of issuance. 3. It is the applicant’s case that due to respondents’ failure to ensure site readiness and conduct mandatory inspections, execution of the contract 2 HCJ AA_19_2025 could not be carried out; despite repeated communications by the applicant, no action was taken by the respondents, instead respondent No.3 issued termination advice dated 25.03.2024; W.P.No.8109 of 2024 was filed by applicant which was dismissed on 04.04.2025 giving liberty to applicant to seek remedies available in terms of Clause 63 of General Conditions of Contract [‘GCC’, for short], which deals with conciliation of disputes including claims if any for any completed works and claims as far as encashment of bank guarantee if applicable; in the meanwhile, respondents issued fresh proceedings dated 07.04.2025 for encashing performance bank guarantee and forfeiture of EMD purportedly without any formal communication to applicant; WP.No.9889 of 2025 was then filed which was allowed on 17.06.2025, liberty was afforded to applicant to avail alternate remedies of conciliation and arbitration in terms of clause 63 of GCC. WA.No.728 of 2025 was filed challenging order dated 04.04.2025 in WP.No.8109 of 2024. Said writ appeal was dismissed; notice of dispute was issued by applicant in terms of Clause 63 of GCC and served upon respondents via e-mail on 27.06.2025; Conciliator was not appointed within a period of thirty days; accordingly present application under Section 11 of Arbitration and Conciliation Act, 1996, for appointment of a sole independent arbitrator was filed. It is further submitted that upon attempt of the Railways to encash the bank guarantee, learned Special Court for Trial and Disposal of Commercial Disputes, Vijayawada granted an injunction. 3 HCJ AA_19_2025 4. Learned counsel for applicant submits that there is a clear cut dispute between parties and sole independent arbitrator be appointed in terms of GCC which are applicable in the present case. 5. Learned counsel for respondents submits that though existence of a dispute between the parties is not denied, dispute in question is not an arbitrable one inasmuch as it falls within excepted clauses as per clause 63 of GCC. 6. Heard learned counsel for parties and have perused the file. 7. Hon’ble the Supreme Court in various decisions has held that question of arbitrability should be left to the discretion of the arbitrator. Gainful reference in this respect can be made to judgment of Hon’ble the Supreme Court in M/s GVV Constructions Private Limted v. Union of India and Others1 wherein while adjudicating upon permissible extent of judicial scrutiny prior or at the stage of appointment of an arbitrator, it is held as under: “14. The extent of judicial scrutiny permissible even at the stage anterior to appointment of an arbitrator or at the stage of appointment of an arbitrator under Section 11 of the Act has travelled through four distinct phases each marking a progressively narrower conception of the Court's role, culminating in the position that holds the field today. In Konkan Railway Corpn. Ltd. & Ors. v. Mehul Construction Co., (2000) 7 SCC 201, reaffirmed by a Constitution Bench in Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd., (2002) 2 SCC 388, this Court characterised the power of appointment under Section 11(6) 1 2026 SCC OnLine SC 1799 4 HCJ AA_19_2025 as purely administrative, leaving every contested question, including the existence of the agreement and arbitrability, to the Arbitral Tribunal under Section 16. The aforesaid view was overruled by a seven-Judge Bench in SBP & Co. v. Patel Engineering. Ltd. and Another, (2005) 8 SCC 618, wherein it was held the power to be judicial, requiring the court, at the referral stage, to decide, amongst other things, the existence of a valid arbitration agreement. This view was refined in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267, which classified the issues arising on a Section 11 application into three categories, of which "Category III" issues, namely whether the claim made falls within the arbitration clause, illustratively including "a matter which is reserved for the final decision of a departmental authority and excepted or excluded from arbitration", were held to be decided by the Arbitral Tribunal alone, and not by the referral court. 15. The Arbitration and Conciliation (Amendment) Act, 2015, on the basis of the recommendations contained in the 246th Report of the Law Commission of India, inserted Section 11(6A)(9) in the Act, by which the scope of examination by the Court, "notwithstanding any judgment, decree or order of any Court", is confined, at the stage of appointment, to the existence of the arbitration agreement. In Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729, this Court applied the amended provision literally, holding that the referral court is only required to examine "if an arbitration agreement exists, nothing more, nothing less". A three-Judge Bench of this Court in Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714, held that Section 11(6A) legislatively overruled the wider scrutiny contemplated by SBP & Co. and Boghara Polyfab (supra). 16. Another three-Judge Bench of this Court in Vidya Drolia and Others v. Durga Trading Corporation, (2021) 2 SCC 1, harmonised the standard of review under Sections 8 and 11 of the Act and held that a court should decline reference only where it is manifestly and ex facie 5 HCJ AA_19_2025 certain that the arbitration agreement is non-existent, invalid, or that the dispute is non-arbitrable; short of that, the governing maxim is "when in doubt, do refer." This "eye of the needle" standard has since been applied consistently, in subsequent decisions by this Court in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) 2 SCC 455 (holding that limitation, being a mixed question of fact and law bound up with the Tribunal's Section 16 jurisdiction, is ordinarily for the Arbitral Tribunal) and in In Re: Interplay Between Arbitration Agreements and the Indian Stamp Act, 1899, (2024) 6 SCC 1 (holding by a seven-Judge Bench, that even insufficiency of stamping is a curable, evidentiary question for the Tribunal, and thus overruling N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1 (overruled)).” After discussing its various earlier dispensations especially in respect to ‘excepted matters’, it was held by Hon’ble Supreme Court in aforesaid case as under: “18. What emerges from the foregoing survey is that, under the Act, the question whether a particular claim is covered by, or falls outside, an "excepted matters" clause of a works contract is a matter squarely within the competence of the Arbitral Tribunal under Section 16, and not a question for a court exercising even the wider, appointment-stage jurisdiction under Section 11, much less for a court exercising the discretionary jurisdiction of judicial review under Article 226 of the Constitution, whose very engagement with the merits of the dispute, in the present case, was declined on the ground that it involved complicated questions of fact.” It was specifically held that whether the dispute regarding termination is, in whole or in part, an ‘excepted matter’ which is outside the arbitrator’s 6 HCJ AA_19_2025 jurisdiction and, if so, what is the remedy surviving to the applicant are questions that are committed to arbitrator in the first instance in terms of Section 16 of the Arbitration Act. Gainful reference in this respect can also be made to decision of Hon’ble the Supreme Court in Managing Director, Bihar State Food and Civil Supply Corporation Limited v. Sanjay Kumar2. 8. As noted in the foregoing paras, there is no dispute about the existence of a dispute between the parties. Respondents have raised an objection qua its arbitrability on account of it falling in excepted matters. In my considered opinion, this cannot be a ground to deny appointment of an arbitrator, keeping in view the authoritative judgments of Hon’ble the Supreme Court referred above. Respondents are free to raise this question before learned arbitrator. 9. At this stage, learned counsel for parties agree that Sri Justice A. V. Sesha Sai, former Judge of High Court of Andhra Pradesh, may be appointed as sole arbitrator. 10. Keeping in view facts and circumstances as stated above, as well as consensus upon arbitrator to be appointed, Sri Justice A. V. Sesha Sai, former Judge of High Court of Andhra Pradesh, is appointed as sole arbitrator to decide the dispute arising between parties qua notice of dispute issued by applicant on 27.06.2025 including the question of arbitrability of the dispute. 2 2025 SCC Online SC 1604 7 HCJ AA_19_2025 This appointment is subject to declaration under Section 12 of the Arbitration Act to be made by learned arbitrator with regard to his independence and impartiality to settle disputes between parties. Learned arbitrator to pass an award within time limit specified under Section 29-A of the Arbitration Act and he shall be paid fee in accordance with Fourth Schedule of the Arbitration Act as amended from time to time. Needless to mention, parties would be at liberty to raise all the claims/defences/counter-claims/pleas before the arbitrator. 11. Arbitration Application is thus disposed of accordingly. No costs. Pending miscellaneous application(s), if any, also stand(s) disposed of accordingly. Copy of this order be dispatched to Sri Justice A. V. Sesha Sai, at the following address: Justice A. V. Sesha Sai, Villa No.C-31, Rain Tree Villas, Opp: Nagarjuna University Road, Namburu, Guntur District, Andhra Pradesh – 522 510. Mobile No.83310 10693. LISA GILL, CJ. Vjl Whether the order is Speaking/Reasoned : Yes / No Whether the order is Reportable : Yes / No