ARBITRATION AND CONCILIATION ACT, 1996 — Ss. 11(5) & 11(6) — Unilateral appointment of arbitrator — bias presumption — invalidity — Court appointment of independent arbitrator. Where arbitration clause vested appointment power exclusively with Commanding Officer, INS Kalinga, such clause was held contrary to the ratio in Perkins Eastman and reaffirmed by Central Organisation for Railway Electrification — unilateral appointment mechanism creates justifiable doubt as to independence and impartiality of arbitrator — hence Court held appointment power cannot be exercised; application under Ss. 11(5)&(6) allowed — independent arbitrator appointed by Court. (Paras 4, extracts of SC para 20 and para 129, 169(c)-(d)).

ARBITRATION AND CONCILIATION ACT, 1996 — Ss. 11(5) & 11(6) — Unilateral appointment of arbitrator — bias presumption — invalidity — Court appointment of independent arbitrator.

Where arbitration clause vested appointment power exclusively with Commanding Officer, INS Kalinga, such clause was held contrary to the ratio in Perkins Eastman and reaffirmed by Central Organisation for Railway Electrification — unilateral appointment mechanism creates justifiable doubt as to independence and impartiality of arbitrator — hence Court held appointment power cannot be exercised; application under Ss. 11(5)&(6) allowed — independent arbitrator appointed by Court.
(Paras 4, extracts of SC para 20 and para 129, 169(c)-(d)).

ARBITRATION — existence of dispute and invocation not denied — counter-affidavit admitting arbitration clause and notice — Court requirement to appoint neutral arbitrator satisfied.
Respondents did not dispute arbitration clause or invocation but refuted liability on merits — Court held that issue of claim denial was not ground to refuse appointment — disputes must be referred for adjudication.
(Paras 2–4).

ARBITRATION — appointment by High Court — former Judge appointed — liberty to parties to file claims and counterclaims — arbitrator entitled to fee.
Court appointed Hon’ble Justice D.V.S.S. Somayajulu as sole arbitrator; directed entering upon reference and rendering award within statutory period; parties given liberty to pursue claims and counter-claims.
(Para 5; Order portion).

PARA-WISE SYNOPSIS / ANALYSIS OF FACTS AND LAW AS PER COURT VIEW

Para 1–2: Bidding Process, Work Execution, Non-Payment

The Court records that bids were invited pursuant to RFP dated 18-12-2021 for City Parade, Visakhapatnam.
Petitioner participated, was declared successful, services rendered, and appreciation letter issued.
Invoices of Rs. 2,65,31,352/- raised for additional items/services.
Despite repeated requests, payment withheld; bilateral discussions held on 30-07-2022 where assurances were extended that payment would follow verification.
Court notes continued non-payment despite assurances, leading petitioner to invoke arbitration on 29-03-2025.
Importantly, Court records that existence of arbitration clause is not denied.

Para 3: Stand of Respondents in Counter-Affidavit

Court notes respondents admit the arbitration clause and invocation but contest liability — asserting additional work was beyond scope, no approval existed, and hence payment not due.
Court does not evaluate merits, instead acknowledges that disputes exist.

Para 4: Legal Invalidity of Unilateral Appointment Clause

Court proceeds to legal issue: arbitration clause vesting appointment power in Commanding Officer, INS Kalinga — contrary to Perkins Eastman Architects DPC v. HSCC (India) Ltd., para 20 extracted verbatim.
Court indicates Supreme Court ratio applies that unilateral appointment power is invalid.
This is reinforced by citation of Constitution Bench judgment in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) — key extracts from paras 129 and 169(c)-(d) reproduced:

• Equal treatment

• Justifiable doubts arising from unilateral power

• Unilateral clause hinders equal participation

• Arbitrator selection should avoid bias

Court applies this ratio directly and concludes appointment mechanism invalid.

Para 5: Appointment and Directions

Court allows application.
Appoints Hon’ble Justice D.V.S.S. Somayajulu (Former Judge, AP High Court) as arbitrator.
Directs arbitrator to enter reference and conclude within statutory period.
Allows parties to submit detailed claims/counter-claims.
Arbitrator entitled to fee.
Miscellaneous applications closed.
No costs.

FINAL COURT-CENTRIC LEGAL ANALYSIS

The Court proceeds on two foundational principles:

1. Existence of arbitration clause and invocation not in dispute — therefore, referable under Section 11.

2. Appointment mechanism void because it vests exclusive power in a party interested in dispute — following Perkins Eastman and Central Organisation for Railway Electrification.

The Court does not delve into disputed contractual merits (quantum, approval, scope) — those are reserved for arbitral adjudication.
Its jurisdiction under Section 11 is confined to examination of existence of arbitration agreement and neutrality of appointment process.
Since respondents’ unilateral appointment authority stood invalidated by Supreme Court law, the Court assumed power to appoint and did so, ensuring independence and neutrality.