APHC010571762025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI ARBITRATION APPLICATION NO: 37 of 2025 Bench Sr.No:- 39 [3441] M/s. Sandhya Enviro Tech Systems ...Applicant Vs. Hindustan Petroleum Corporation Limited ...Respondent ********** Advocate for Applicant: Ms. Jyothi Ratna Anumolu Advocate for Respondent: Mr. Sreekanth Reddy Ambati CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR DATE : 30th January, 2026. P C : This is an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, “the Act of 1996”), seeking the appointment of an arbitrator for adjudication of the disputes arising out of and in connection with the auction notice, dated 12.02.2024. 2. The applicant claims to be a partnership firm, involved in the business of pre-processing of hazardous waste. It is stated that the applicant responded to an auction notice, issued by the Hindustan Petroleum Corporation Limited/respondent No. 1 herein, for the sale of “Pressed Scrap Mild Steel (MS) Drums, Empty, de-shaped & Bundled” and was found successful in the auction. The applicant, it is stated, duly paid an amount of Rs.18,17,614/- towards the full material value, which also included applicable taxes. 2 HCJ ARBAPPL_37_2025 3. The case of the applicant is that it was not permitted to lift the material on one pretext or the other. 4. A notice, invoking the arbitration clause, dated 08.01.2025, is stated to have been served, which is not denied by the respondent Corporation. 5. The stand of the respondent Corporation is that it is not liable to make any payment, as was being claimed by the applicant and further that no dispute, in fact, existed, which was required to be referred for adjudication. 6. According to the terms and conditions of the auction notice, disputes between the parties were to be resolved through the mechanism of arbitration in terms of Clause 23, which envisaged as under: “23) ARBITRATION: a)All disputes and differences of whatsoever nature, whether existing or which shall at any time arise between the parties hereto touching or concerning the agreement, meaning, operation or effect thereof or to the rights and liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before after determination, foreclosure, termination or breach of the agreement (other than those in respect of which the decision of any person is, by the contract, expressed to be final and binding) shall, after written notice by either party to the agreement to the other of them and to the Appointing Authority hereinafter mentioned, be referred for adjudication to the Sole Arbitrator to be appointed as hereinafter provided. b) The appointing authority shall either himself act as the Sole Arbitrator or nominate some officer/retired officer of Hindustan Petroleum Corporation Limited (referred to as owner or PRINCIPAL) or a retired officer of any other Government Company in the Oil Sector of the rank of Ch. Manager & above or any retired officer of the Central Government not below the rank of a Director, to act as the Sole Arbitrator to adjudicate the disputes and differences between the parties. The contractor/vendor shall not be entitled to raise any objection to the appointment of such person as the Sole Arbitrator on the ground that the said person is/was an officer and/or shareholder of the owner/PRINCIPAL, another Govt. Company or the Central Government or that he/she has to deal or had dealt with the matter to which the contract 3 HCJ ARBAPPL_37_2025 relates or that in the course of his/her duties, he/she has/had expressed views on all or any of the matters in dispute or difference. c) In the event of the Arbitrator to whom the matter is referred to, does not accept the appointment, or is unable or unwilling to act or resigns or vacates his office for any reasons whatsoever, the Appointing Authority aforesaid, shall nominate another person as aforesaid, to act as the Sole Arbitrator. d) Such another person nominated as the Sole Arbitrator shall be entitled to proceed with the arbitration from the stage at which it was left by his predecessor. It is expressly agreed between the parties that no person other than the Appointing Authority or a person nominated by the Appointing Authority as aforesaid, shall act as an Arbitrator. The failure on the part of the Appointing Authority to make an appointment on time shall only give rise to a right to a Contractor to get such an appointment made and not to have any other person appointed as the Sole Arbitrator. e) The Award of the Sole Arbitrator shall be final and binding on the parties to the Agreement. f) The work under the Contract shall, however, continue during the Arbitration proceedings and no payment due or payable to the concerned party shall be withheld (except to the extent disputed) on account of initiation, commencement or pendency of such proceedings. g) The Arbitrator may give a composite or separate Award(s) in respect of each dispute or difference referred to him and may also make interim award(s) if necessary. h) The fees of the Arbitrator and expenses of arbitration, if any, shall be borne equally by the parties unless the Sole Arbitrator otherwise directs in his award with reasons. The lump sum fees of the Arbitrator shall be Rs. 40,000/- per case for transportation contracts and Rs.60, 000/- for engineering contracts and if the sole Arbitrator completes the arbitration including his award within 5 months of accepting his appointment, he shall be paid Rs.10, 000/- additionally as bonus. Reasonable actual expenses for stenographer, etc. will be reimbursed. Fees shall be paid stage wise i.e. 25% on acceptance, 25% on completion of pleadings/documentation, 25% on completion of arguments and balance on receipt of award by the parties. i) Subject to the aforesaid, the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or re- enactment thereof and the rules made thereunder, shall apply to the Arbitration proceedings under this Clause. j) The Contract shall be governed by and construed according to the laws in force in India. The parties hereby submit to the exclusive jurisdiction of the Courts situated at Visakhapatnam for 4 HCJ ARBAPPL_37_2025 all purposes. The Arbitration shall be held at Visakhapatnam and conducted in English language. k) The Appointing Authority is the Functional Director of Hindustan Petroleum Corporation Limited.” 7. It is no longer res integra that a person who has interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. In Perkins Eastman Architects DPC v. HSCC (India) Limited1, the Apex Court held: “21. … Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016) and recognised by the decision of this Court in TRF Ltd.” 8. This principle was subsequently affirmed by a judgment of the Constitution Bench of the Apex Court in the case of Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) A Joint Venture Co.2, wherein it was held: “129. Equal treatment of parties at the stage of appointment of an arbitrator ensures impartiality during the arbitral proceedings. A clause that allows one party to unilaterally appoint a sole arbitrator is exclusive and hinders equal participation of the other party in the appointment process of arbitrators. Further, arbitration is a quasi-judicial and adjudicative process where both parties ought to be treated equally and given an equal opportunity to persuade the decision-maker of the merits of the case. An arbitral process where one party or its proxy has the power to unilaterally decide who will adjudicate on a dispute is fundamentally contrary to the adjudicatory function of arbitral tribunals. … 169. c. A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive 1 (2020) 20 SCC 760 2 2024 SCC OnLine SC 3219 5 HCJ ARBAPPL_37_2025 and hinders equal participation of the other party in the appointment process of arbitrators; d. In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counterbalance because parties do not participate equally in the process of appointing arbitrators.” 9. Be that as it may, the present arbitration application is allowed. Mr. C. V. R. Rudra Prasad, Advocate, is appointed as an Arbitrator, who shall enter upon the reference and adjudicate upon the disputes arising out of and in connection with the auction notice, dated 12.02.2024, and render the Award within the statutory period. The parties shall be free to file detailed claims and counterclaims, before the learned Arbitrator. The learned Arbitrator shall also be entitled to claim the fee in consultation with the parties. No costs. Consequently, pending miscellaneous applications, if any, in this case, shall stand closed. A copy of this order be communicated to the learned Arbitrator on the address mentioned herein below: Mr. C.V.R. Rudra Prasad, #007, Anuraga Apartment, Vivekananda Street, Opp. Dairy Towers, Gurunanak Colony, Vijayawada, Andhra Pradesh. Ph: 98481 59643. DHIRAJ SINGH THAKUR, CJ. SSN