Kiran Raj

The Andhra Pradesh High Court has appointed Justice U. Durga Prasad Rao, a former judge of the High Court, as the sole arbitrator to adjudicate disputes between Alliance Enterprises and Andhra Pradesh State Fiber Net Limited (APSFL). The appointment was made under Section 11(6) of the Arbitration and Conciliation Act, 1996, following the respondent’s failure to appoint an arbitrator despite the applicant's invocation of the arbitration clause. The court dismissed APSFL’s objection on limitation, holding that the arbitration application was filed within the prescribed three-year period.

The dispute arises from a contract dated August 5, 2016, under which Alliance Enterprises was awarded work orders for providing last-mile optical fiber connectivity to government offices in Anantapur and Kadapa. The total value of the work orders amounted to ₹12,26,63,520. However, the applicant claimed that despite completing the assigned work, APSFL failed to make payments totaling ₹2,82,60,159. After unsuccessful attempts to resolve the issue, APSFL terminated the contract on January 2, 2019.

Following repeated requests for payment, the applicant invoked the arbitration clause on October 17, 2022. Clause 25 of the agreement stipulated that disputes would be referred to a sole arbitrator appointed by the Managing Director of APSFL. However, APSFL did not appoint an arbitrator, leading the applicant to file the present arbitration application on August 31, 2023.

APSFL opposed the application on the ground of limitation, arguing that the right to apply for arbitration accrued in 2019 when the contract was terminated, and therefore, the application was time-barred under Article 137 of the Limitation Act, 1963. The respondent contended that arbitration should have been initiated within three years from the date of termination.

The High Court, presided over by Chief Justice Dhiraj Singh Thakur, rejected this argument, stating: “The limitation period for filing an application seeking appointment of an arbitrator commences only after a valid notice invoking arbitration has been issued by one of the parties to the other party and there has been either a failure or refusal on the part of the other party to make an appointment as per the appointment procedure agreed upon between the parties.”

Citing Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313, and Aslam Ismail Khan Deshmukh v. ASAP Fluids (P) Ltd., (2025) 1 SCC 502, the court ruled that the limitation period begins from the date of failure or refusal to appoint an arbitrator, not from the contract termination date. Since the applicant invoked arbitration on October 17, 2022, and the arbitration petition was filed on August 31, 2023, the court held that the application was well within the prescribed limitation period.

The court further observed that since APSFL did not appoint an arbitrator within the time specified in the notice, it had forfeited its right to do so. Referring to Datar Switchgears Ltd. v. Tata Finance Ltd., 2000 (7) Supreme 145, the court stated: “If one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. However, if the appointment is not made before the first party moves the court under Section 11, the right ceases.”

Based on these findings, the court allowed the arbitration application and appointed Justice U. Durga Prasad Rao as the sole arbitrator. The arbitrator was requested to adjudicate the disputes arising from the contract and deliver an award within the statutory period. The parties were granted the liberty to submit detailed claims and counterclaims before the arbitrator.

The court further observed that the arbitrator’s fee be determined in consultation with the parties, in accordance with the Fourth Schedule of the Arbitration and Conciliation Act, 1996.

Accordingly, the arbitration application was allowed, and all pending miscellaneous applications were disposed of.

Case Title: Alliance Enterprises vs. Andhra Pradesh State Fiber Net Limited (APSFL)
Case Number: Arbitration Application No. 48 of 2023
Bench: Chief Justice Dhiraj Singh Thakur

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