IN THE HIGH COURT OF ANDHRA PRADESH Bench APHC010432042024 Sr.No:-15 AT AMARAVATI [3441]

ARBITRATION APPLICATION NO: 24 of 2024 M/s. Schangalaya Motors ...Applicant Vs.

Andhra Pradesh State Fibernet Limited ...Respondent **********

Advocate for Applicant: Mr. Dheera Kanishka Advocate for Respondent: Mr. A. Tulsi Raj Gokul CORAM : T HE CHIEF JUSTICE DHIRAJ SINGH THAKUR DATE : 7^th February, 2025.

P C :

This is an application filed under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an independent arbitrator to adjudicate upon the disputes arising out of and in connection with Request for Proposal, dated 13.01.2019.

2. Clause 6.36 of the said RFP, envisages the resolution of disputes through the mechanism of arbitration. For facility of reference, Clause 6.36 of the RFP is reproduced hereunder:

“6.36 Arbitration and Jurisdiction:

In case of any dispute, the matter will be referred to a Sole Arbitrator to be appointed by the Managing Director of APSFL in accordance with the “Arbitration and Conciliation Act, 1996”. The arbitration shall be held in Vijayawada, India and in the English language only Subject to the above, the Courts of AP alone only shall have jurisdiction in the matter.”

3. Learned counsel for the applicant would submit that the appointment of a sole arbitrator by one of the parties to the dispute is otherwise unsustainable in view of the view already taken by this Court in Arbitration Application No.63 of 2023, decided on 28.02.2025.

4. This Court, in the aforementioned case had held that appointment of the arbitrator as also the Award rendered by him as non est in the eye of law, following the view expressed by the Apex Court in Perkins Eastman Architects DPC vs. HSCC (India) Limtied, (2020) 20 SCC 760

5. In Perkins Eastman Architects DPC (supra), the Apex Court held:

“20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377] where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Ltd. , all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an arbitrator.

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21. But, in our view that has to be the logical deduction from TRF Ltd. Para 50 of the decision shows that this Court was concerned with the issue, “whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an arbitrator” The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that