1

2026:CGHC:6014

AFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

ARBR No. 28 of 2025

M/s Tata Projects Ltd Having Its Registered Office At Corporate Centre, 3rd

Floor, Building Block B, 34 Sant Tukaram Road, Carnac Bunder, Mumbai

400009

And Its Corporate Office At 14th - 15th Floor, Cignus, Plot No. 71A, Kailash

Nagar, Mayur Nagar, Passpoli Powai, Mumbai 400087 Represented Through

Its Power Of Attorney Holder Shri Rahul Jadwani

... Applicant

versus

1- Chhattisgarh Infotech Promotion Society Having Its Registered Office At

SDC Building, 2nd Floor, Near Police Control Room, Civil Lines, Raipur,

Chhattisgarh 492001 Represented Through Its Chief Executive Officer

2- State Of Chhattisgarh Through Secretary, Department Of Electronics And

Information Technology, Mahanadi Bhawan, Mantralaya, Nava Raipur Atal

Nagar, District - Raipur, Chhattisgarh

3- Union of India Through The Secretary, Department Of Telecommunications,

Ministry of Communications, Sanchar Bhawan, 20 Ashoka Road, New Delhi –

110001

... Respondent(s)

For Petitioner(s) :Mr. Tushad Cooper, Senior Advocate assisted

by Ms. Shrishti Kumar and Mr. Abhishek Vinod

Deshmukh, Advocates.

2

For Respondent(s) :Mr. Abhishek Sinha, Senior Advocate assisted

by Mr. Rishabh Garg, Advocate.

For Respondent No. 2 :Mr. S.S.Baghel, Government Advocate.

For Respondent No. 3 :Mr. Ramakant Mishra, Deputy Solicitor General

alongwith Mr. Tushar Dhar Diwan and Mr.

Rishabh Deo Singh, Advocates.

Date of Hearing :22.01.2026

Date of Judgment : 03.02.2026

Hon’ble Mr. Ramesh Sinha, Chief Justice

C A V Order

1.Heard Mr. Tushad Cooper, Senior Advocate assisted by Ms. Shrishti

Kumar and Mr. Abhishek Vinod Deshmukh, learned counsel for the

Applicant. Also heard Mr. Abhishek Sinha, Senior Advocate assisted by

Mr. Rishabh Garg, learned counsel for the Respondent No. 1, Mr.

S.S.Baghel, learned Government Advocate for the Respondent No. 2 as

well as Mr. Ramakant Mishra, learned Deputy Solicitor General alongwith

Mr. Tushar Dhar Diwan and Mr. Rishabh Deo Singh, learned counsel for

the Respondent No. 3.

2.By this application under Section 11(6) of the Arbitration and Conciliation

Act, 1996 (for short, the Act of 1996), the Applicant has prayed for the

following relief(s):

“a) Appoint an independent and impartial person as the

second arbitrator towards constitution of the arbitration

tribunal under and in connection with the Master

Services Agreement dated 18 July 2018;

b) Pass any such other order(s) as this Hon’ble Court

may deem fit and proper in the facts and circumstances

of the case.”

3.The facts, as projected by the Applicant are that the Applicant is a

Company incorporated under the provisions of Companies Act, 1956. It

3

is one of India’s leading Engineering, Procurement and Construction

(EPC) companies with over 45 years of experience in executing large and

complex urban and industrial infrastructure projects, and provides

turnkey solutions for construction of roads, bridges, rail and metro

systems, commercial buildings, airports, power plants, transmission and

distribution systems, chemical process plants, water and waste

management, and mining systems. The Respondent No. 1, Chhattisgarh

Infotech Promotion Society (for short, the CHiPS), is a registered Society

promoted by the Government of Chhattisgarh. Respondent No. 1 is the

nodal agency for propelling Information Technology (IT) growth and

implementation of IT plans in the State and acts as the State Designated

Agency (for short, the SDA) for implementation of the Bharat-Net Project.

The Respondent No. 2, State of Chhattisgarh is implementing the Bharat-

Net Project through Respondent No. 1 and is the beneficiary of the

Project including the works performed under the Master Services

Agreement (for short, the MSA) and was directly monitoring the

execution of the Project. The Respondent No. 3 is Union of India,

Department of Telecommunications.

4.Bharat-Net Project is one of the flagship schemes of the Respondent No.

3 launched to provide broadband connectivity to 2.5 lakh Gram

Panchayats in the country. Respondent No. 3 supervises the

implementation of the Project in Chhattisgarh in co-ordination with

Respondent No. 1 and 2. The majority of the funding of the Bharat-Net

Project is provided by Respondent No. 3 through Universal Service

Obligation Fund (for short, the USOF) with the objective to provide

affordable broadband connectivity throughout the country. The MSA was

for the benefit of respondents No. 2 and 3 who had actively participated

4

in and monitored the progress of the Project. The Project is entirely

funded by Respondent No.3 who also owns all the Project assets.

5.Mr. Tushad Cooper, learned Senior Advocate appearing for the Applicant

would submit that the Bharat-Net Project is one of the biggest rural

telecom projects in the world, implemented in a phased manner to

provide broadband connectivity to approximately 2.5 lakh Gram

Panchayats in the country. It is a project of national importance and part

of the ‘Digital India’ initiative. In the State of Chhattisgarh, Phase-II of the

Project was being implemented on a State-led model, in collaboration

with Respondent No. 2. Respondent No. 1, being the State-designated

agency, invited bids for design, supply, installation, integration, testing

and commissioning of optical fiber cables (OFC) (underground) IP-MPLS

network, radio network and State network operations center (S-NOC)

including operations and maintenance for 8 years. The tender evaluation

process involved active participation of representatives from Respondent

No. 2 and Respondent No. 3 through various committees. Technical and

financial evaluation was conducted with oversight from USOF and DOT

officials. The selection of successful bidder was approved at multiple

levels including state and central government authorities. On 18.04.2018,

the Applicant submitted its bid for the Project in consortium with Tata

Communications Transformation Services Limited and Dinesh Engineers

Private Limited. The Applicant was the lead bidder and was authorized to

execute the contract and represent the Consortium under and in relation

to the contract. Upon evaluation of bids, the Applicant emerged as the

successful bidder and on 18.07.2018, the MSA was executed between

the Applicant (referred to as the Master System Integrator or MSI in the

MSA) and Respondent No.1, for a total contract value of Rs.

3056,69,43,538/- (inclusive of GST) which included total Capital

5

Expenditure (CAPEX) of Rs.1975,99,99,180/- to be paid during the

implementation phase and Operating Expenditure (OPEX) of

Rs.1080,69,44,357/- to be paid during the O&M phase. In terms of the

MSA, the Applicant was required to complete the implementation phase

within 1 year and then operate and maintain the Project for 7 years.

However, while implementing the Project, the Applicant encountered

several delays and impediments for reasons not attributable to the

Applicant and attributable to the Respondents. Consequently, the

implementation phase was substantially delayed, and the Project Go-live

finally came into effect from 11.09.2023 (on which date as well, about 4%

of the works remained due to Respondent No. 1’s failure to provide Right

of Way). This led to significant additional costs being incurred by the

Applicant. Further, to make the matters worse, the Respondents also

failed to make timely payments to the Applicant for completion of the

works. The Respondent No. 1 committed multiple material and

fundamental breaches of the MSA including, but not limited to: (a) non-

payment of contractual dues; (b) unilateral imposition of penalty; (c)

encashment of performance bank guarantee; (d) arbitrary and unilateral

cancellation of project go-live; (e) interim O&M work orders and failure to

make payment; (f) non-issuance of the work order towards the O&M

works; (g) abandonment of the MSA; and (h) failure to pay prolongation

costs.

6.Mr. Cooper would submit that due to Respondent No. 1’s continued

defaults and non-cooperation, the Applicant was compelled to invoke the

formal dispute resolution mechanism provided under the MSA to protect

its legitimate contractual rights. In terms of clause 1.36 of the MSA, on

20.03.2025, the Applicant issued a notice of dispute setting out its claims

and seeking amicable resolution of disputes but no response was issued

6

to the Applicant’s notice and the disputes were not amicably settled

despite all the efforts of the Applicant. Further, considering the persistent

fundamental defaults committed by the Respondent and the repudiation

of the MSA, the Applicant terminated the MSA by its notice dated

24.04.2025 and the MSA stood terminated with effect from 02.05.2025.

Thereafter, on 08 May 2025, the Applicant issued the Notice of

Arbitration, referring the disputes to arbitration and nominating an

arbitrator, viz. Hon’ble Justice (Retd.) Dilip Babasaheb Bhosale, former

Chief Justice of Allahabad High Court, and requesting the Respondents

to nominate an Arbitrator towards constitution of the Tribunal, wherein

various disputes were referred, as detailed in paragraph 18 of the

petition. Subsequently, on 19.05.2025, Respondent No. 1 issued its

response to the termination notices dated 24.04.2025 and 02.05.2025

issued by the Applicant. Respondent No. 1’s response contained wholly

baseless allegations and was a mere counter blast to the termination of

the MSA by the Applicant. On 28.05.2025, Respondent No. 1 replied to

the Notice of Arbitration refusing to appoint an arbitrator on frivolous

grounds. On the same date, Respondent No. 3 also responded to the

Notice of Arbitration raising a frivolous ground that it is not a party to the

MSA and that the disputes do not pertain to it. The Respondent No. 2 did

not reply to the Notice of Arbitration.

7.Mr. Cooper would further submit that prior to filing of the present petition,

the Applicant had filed two writ petitions, being WPC 3351/2024 and

WPC 2724/2025 before this Hon’ble Court and a petition under Section 9

of the Arbitration Act (being MJC No. 27 of 2025) before the learned

Commercial Court, Raipur seeking interim relief relating to the

performance bank guarantee issued under the MSA. The Notice of

Arbitration was received by Respondent Nos. 1 to 2 on 09.05.2025 and

7

Respondent No. 3 on 13.05.2025. Despite expiry of 30 days from the

receipt of the Notice of Arbitration, the Respondents have failed to

appoint an Arbitrator towards constitution of the Arbitral Tribunal.

Therefore, the Applicant is filing the present application seeking

appointment of an independent and impartial person as the Second

Arbitrator so that the tribunal may be constituted at the earliest. The

conditions required to be fulfilled under Section 11 of the Arbitration Act,

have been satisfied in the present case. As such, an arbitrator must be

appointed in terms of Section 11 of the Arbitration Act.

8.On the other hand, Mr. Abhishek Sinha, learned Senior Advocate

appearing for the Respondent No. 1 has raised preliminary objection that

there is lack of authority of Tata Projects Limited to file Section 11

application on behalf of the consortium. Admittedly, the contract in

question was entered into and executed by a Consortium comprising the

Applicant, M/s Tata Communications Transformation Services Limited

and M/s Dinesh Engineers Limited (DEL). The present Application under

Section 11 of the Act has been filed unilaterally by Tata Projects Limited,

allegedly on behalf of the Consortium, without any authorisation or

consent from the co-members, M/s Tata Communications

Transformation Services Limited and DEL. As such, the Applicant lacks

the requisite locus standi to maintain the instant proceedings, rendering

the Application non-maintainable in law. The Applicant lacks any

express authorisation from the other members of the Consortium for

contesting legal proceedings. It does not have the authority to initiate

legal proceedings unilaterally without express authorisation or joinder of

the other members of the Consortium. Such unilateral legal proceedings

violate the principle of joint and several liability inherent in the Consortium

Agreement. Accordingly, the application is defective, misconceived and

8

liable to be dismissed for the want of proper authorisation and

maintainability. Furthermore, this objection was raised by the

Respondent No. 1 in the previous round of litigation as well, more

particularly in its reply in MJC No. 27 of 2025 before the Hon’ble

Commercial Court, Naya Raipur, filed by the Applicant on the direction of

this Hon’ble High Court seeking a stay on the encashment of Bank

Guarantee which has been disposed of for becoming infructuous.

Despite being aware of this objection, the Applicant has failed to cure this

defect. It is thus clear that the other Consortium members have not

authorised the Applicant to contest the Application on their behalf.

Secondly, the dispute pertains to a Works Contract and falls under the

Exclusive Jurisdiction of the Chhattisgarh Madhyastham Adhikaran

Adhiniyam, 1983 (for short, the Act of 1983). The dispute arises out of a

works contract, as defined under Section 2(i) of the Act of 1983. The Act

of 1983 mandates that all disputes relating to works contracts involving

the State Government or its public undertakings, valued at Rs. 50,000 or

more, shall be exclusively adjudicated by the Arbitration Tribunal

constituted under Section 3 of the Act of 1983. Section 7 of the Act of

1983 provides that party to a works contract, irrespective of an arbitration

clause, shall refer the dispute to the Tribunal. Further, Section 20 of the

1983 Act bars jurisdiction of Civil Courts. Admittedly, the Respondent

No. 1 - the signatory to the contract in question - is an undertaking of the

State of Chhattisgarh. Further, the works under the contract in question

relates to supplying and laying of PLB HDPE Duct (Permanent

Lubricated High – Density Polyethylene Pipe), which is covered under the

definition of works contract under the 1983 Act. The purpose for the

contract in question is to create a digital highway by laying Optical Fibre

Cable from the Block to the Gram Panchayat, in order to enable the

9

intended services, such as internet, telephone, e-services, value-added

services, among others, to customers. As per the scope of works, the

Applicant had to cover a total ring length of 32,466 km in 5964 Gram

Panchayats. As per the BOQ, the Petitioner had to supply 32,466 Km of

PLB HDPE Duct / Pipe and lay down the same under the contract in

question. As such, the work predominantly relates to first supplying and

then laying down pipes for further laying down of Optical Fibre Cable

from Block to Gram Panchayat. Out of the total contract value of Rs.3056

Crores, Rs.1975 Crores was granted for CAPEX. The work of supplying

and laying down the PLB HDPE Duct / Pipe itself amounts to

approximately Rs.1410 Crores as per the rates quoted by the Petitioner

in its bid, which is approximately 75% of the CAPEX value. Therefore, it

is clear that the contract in question is a works contract. Consequently,

the present application for the appointment of a Second Arbitrator under

Section 11(6) of the Act is not maintainable, as the subject matter of the

dispute is statutorily reserved for adjudication by the Tribunal under the

Act of 1983.

9.Mr. Sinha would submit that the parties consent or a prior participation in

the proceedings under the Act of 1996 or the existence of an arbitration

clause in the contract referring to the Act of 1996is immaterial for the

reason that statutory mandate overrides contractual agreements. The Act

of 1983 is a special statute designed to govern disputes arising from

works contracts involving the State Government. The Supreme Court in

M.P. Rural Road Development Authority & Anr. v. M/s L.G.

Chaudhary Engineers and Contractors (2018) 10 SCC 826 held that

disputes arising from works contracts must be referred to the Tribunal

under the Act of 1983, and the Act of 1996 is excluded in such cases.

The Court emphasized that the statutory mandate of the Act of 1983

10

cannot be circumvented by contractual stipulations or conduct of the

parties. Further, there is no waiver by conduct or agreement. The

respondent’s participation in prior proceedings or agreement to an

arbitration clause under the Act of 1996 does not amount to a waiver of

the statutory jurisdiction of the Act of 1983 Act. In Lion Engineering

Consultants v. State of M.P. [(2018) 16 SCC 758], the Apex Court

clarified that objections to the jurisdiction of an Arbitral Tribunal under the

Act of 1996, on the ground that the dispute falls under the Act of 1983,

can be raised even under Section 34 of the Act of 1996, without formal

amendment, and are not barred by prior participation or failure to raise

objections under Section 16(2) of the Act of 1996. The Hon’ble Court

held that the statutory bar under the Act of 1983 Act pertains to the

subject matter being incapable of arbitration under Section 34(2)(b)(i) of

the 1996 Act, and such objections cannot be waived. Any proceeding or

Award passed under the Act of 1996 in a subject matter reserved under

the Act of 1983 Act is a nullity.

10.Mr. Sinha would submit that the contract in question comes under the

definition of “works contract”. Even though the phrase “all types of pipe

supply and pipeline laying work” was expressly inserted by way of

amendment in 2019, the said insertion is merely clarificatory in nature,

and the scope of the pre-amendment definition was already broad

enough to encompass such works. The definition of “works contract” is

wide enough. It is necessary to first go through the pre-amendment

definition of works contract under the Act of 1983 Act. The same is given

below:

“Section 2(i) - works-contract means an agreement in

writing or a letter of intent or work order issued for the

execution of any work relating to construction, repair or

11

maintenance of any building or superstructure, dam, weir,

canal, reservoir, tank, lake, road, well, bridge, culvert,

factory, work-shop, powerhouse, transformer or such other

works of the State Government or public undertakings or of

the Corporations of the State as the State Government may,

by notification, specify in this behalf at any of its stages,

entered into by the State Government or by any official of

the State Government or by public undertakings or

Corporation or by any official of the State Government for

and on behalf of such Corporation or public undertakings

and includes an agreement for supply of goods or material

and all other matters relating to execution of any of the said

works and also includes the services so hired for carrying

out the aforesaid works and shall also include all

concession agreement, so entered into by the State

Government or public undertakings or Corporation, wherein

a State support is involved or not”.

11.Mr. Sinha would submit that a bare perusal of the pre-amendment

definition of "works contract" under Section 2(i) of the Act of 1983 clearly

reveals that the expression is couched in broad and inclusive language,

indicative of the Legislature’s intent to confer it with wide amplitude. The

definition encompasses “any work relating to construction, repair or

maintenance of any building” as well as “such other works of the State

Government which may, by notification, be specified at any of its stages”.

The repeated use of the word “any”—both in reference to the nature of

the work and the type of infrastructure—manifests that the scope of the

definition is not confined solely to the enumerated items, but extends to

other similar works which contain the essential characteristics of a works

contract, irrespective of whether the specific nature of the work is

expressly mentioned. The term “any”, as explained in Black’s Law

Dictionary, carries a diversity of meanings and may imply “all,” “every,”

“some,” or “one”, depending on the context. It is frequently synonymous

with “either,” “each,” or “all.” When interpreted contextually in the present

statutory scheme, it affirms the Legislature’s intent to encompass a wide

spectrum of construction-related activities under the umbrella of “works

12

contract.” This interpretation finds authoritative support in the judgment

of the Hon’ble Madhya Pradesh High Court in Kamini Malhotra v. State

of M.P., (2002) 3 MPJR 389- a pertinent issue analogous to the present

matter came up for consideration before the Hon’ble Madhya Pradesh

High Court. The dispute arose from a contract entered into by the

petitioner for the installation and construction of Water Treatment Plants.

The Petitioner had instituted proceedings under Section 9 of the

Arbitration and Conciliation Act, 1996 seeking interim protection.

However, a preliminary objection was raised by the Respondent-State,

challenging the maintainability of the petition on the ground that the

contract in question qualified as a “works contract” as per Section 2(i) of

the Act of 1983, and hence, by operation of Sections 7 and 20 of the said

Act, the Civil Court’s jurisdiction stood ousted. The Petitioner vehemently

argued that the statutory definition of “works contract” was exhaustive

and rigid, and since the Water Treatment Plant or similar works were not

expressly enumerated within the statutory language, the agreement could

not be brought within its scope. It was further contended that unless a

specific item was listed, the contract should fall outside the jurisdiction of

the Arbitration Tribunal constituted under the Adhiniyam. Conversely, the

Respondent emphasized the wide amplitude of the statutory language,

particularly the repeated use of the term “any”, in reference to “any work

relating to construction, repairs, or maintenance” of “any building,

superstructure, tank, canal, reservoir,” etc. It was argued that the use of

the term “any”, coupled with the inclusive nature of the definition, clearly

manifested the legislative intent to bring within its sweep all such

contracts that involve essential components of construction, even if not

expressly mentioned in the statute. The Hon’ble High Court, after

examining the contract and the relevant provisions of the Adhiniyam,

13

upheld the Respondent’s contention and held that “It is clear that the

word ‘any’ in Section 2(i) of the Adhiniyam appears to have a very wide

spectrum, because it relates to the execution of any work relating to

construction, repairs or maintenance of ‘any’ building or superstructure,

tank, canal, reservoir, etc. The repetition of the word ‘any’ in the said

definition prior to the word ‘work’ as well as before the nature of

construction, e.g., building, superstructure, etc., clearly indicates the

intention of legislature to provide for its wide amplitude and application.”

Applying this reasoning to the facts of the case, the Hon’ble Court further

observed that “The basic work constituting the Water Treatment Plant

included construction of buildings as well as storage tanks and

reservoirs. Ancillary equipment and gadgets for water purification and

treatment may also be involved, but such ancillary items would not alter

the fundamental nature of the work, which essentially remained the

construction of civil structures like buildings and tanks.” Accordingly, the

Hon’ble High Court concluded that the contract was in the nature of a

works contract, falling within the exclusive jurisdiction of the Arbitration

Tribunal constituted under the Act of 1983, and that the jurisdiction of

the Civil Court under Section 9 of the 1996 Act was barred. Similarly, in

D.D.Sharma v. Madhya Pradesh Rural Roads Development

Authority, the Hon’ble High Court addressed the issue of whether

consultancy services rendered for supervision of rural road construction

would fall within the ambit of a “works contract.” The Court held in the

affirmative, reasoning that where the contract involves consultancy

services intrinsically linked with the execution and development of public

works infrastructure, the same falls within the inclusive limb of the

statutory definition, namely “all other matters relating to execution of the

said works i.e., the roads.”

14

12.Mr. Sinha would further submit that the contract in question, though

executed prior to the 2019 amendment to the Act of 1983, nonetheless

falls squarely within the ambit of a “works contract” as defined under the

unamended Act. The nature of the work involves civil construction

activities for laying underground pipelines intended for subsequent laying

of optical fibre cables, which inherently involves trenching, duct

installation, back-filling, and related infrastructure works activities that

are functionally and structurally similar to road construction and utility

infrastructure works. This Hon’ble Court may take judicial notice that

OFC pipeline work often runs along public roads and highways, involves

public right-of-way excavation, and forms part of State-led infrastructure

development. Such activities are essentially civil engineering and public

utility infrastructure works that fall within the broader scope of

“construction and maintenance” activities relating to telecommunication,

electricity, or public service infrastructure. It is a well-established

principle that the true character and substance of the contract, not its

nomenclature or form must guide its classification under any statute.

Accordingly, even in the absence of an express reference to “pipelines”

in the unamended definition, the contract in question satisfies all the

essential indicia of a works contract and was thus, at all relevant times,

amenable to the jurisdiction of the Hon’ble Madhyastham Adhikaran. The

pre-amendment definition of “works contract” itself grants the State

Government the authority to include ‘other works’ within its broad and

inclusive scope. The phrase “…or such other works of the State

Government or public undertakings or of the Corporations of the State as

the State Government may, by notification, specify in this behalf at any of

its stages…” explicitly empowers the State Government to expand the

definition by issuing a notification at any stage of an ongoing works

15

contract involving the government, a public undertaking, or corporation of

the State. As discussed earlier, the expansive nature of the pre-

amendment definition already encompasses the present contract. In line

with this, during the ongoing contract, the government, by way of the

2019 notification, lawfully included pipe supply and pipeline laying work

within the scope of the definition. Even though the definition was

amended during the subsistence of the contract, such a change was well

within the State Government’s powers and squarely falls within the

jurisdiction of Arbitration Tribunal, notwithstanding that it occurred after

the parties had entered into the agreement.

13.In the alternative, Mr. Sinha would submit that the 2019 amendment is

merely clarificatory in nature and is retrospective in its operation. It is a

settled principle of statutory interpretation that clarificatory amendments

are retrospective in nature and operate to explain the law as it always

stood. Such amendments do not create new rights or obligations but are

intended to clarify existing provisions where ambiguity may have existed.

In this context, the 2019 amendment to the Act of 1983, whereby the

term “pipelines” was expressly included within the definition of “works

contract”, is merely clarificatory in nature and does not amount to a

substantive legislative change. The insertion only affirms what was

already implicit within the wide and inclusive language of the original

definition. This principle has been upheld in Viva Highways Ltd. v.

Madhya Pradesh Road Development Corporation, (2018) 3 ESC

1675, wherein a Division Bench of the Madhya Pradesh High Court

considered whether the amended definition of “works contract” in the

Madhya Pradesh Madhyastham Adhiniyam, 1983—introduced by way of

a 2017 amendment—was clarificatory and therefore applicable to

pending and future contracts. The Court affirmed that “Whether a

16

concession agreement or any agreement by whatever name is called

constitutes a works contract must be determined by assessing whether

the essential ingredients of a works contract are satisfied—namely, that

the agreement must be in writing and must involve the execution of any

work relating to construction, repair, or maintenance of the entities listed

in the statute. The nature or label of the contract is immaterial, and any

agreement that substantively involves such work would fall within the

ambit of a works contract, regardless of additional elements that may not

be specifically enumerated.” The Court further observed that the words

“construction,” “repair,” and “maintenance” are broad in scope and may

be divided into multiple categories or subcategories, but such division

does not alter the essential nature of the work. It was also held that the

nomenclature of an agreement is irrelevant in determining its legal

character, and that procedural provisions, including those that govern

jurisdiction or forum, are retrospective in nature unless the statute

expressly provides otherwise. Reliance was also placed on the dictum of

Lord Denning in Blyth v. Blyth, 1966 (1) All ER 524, wherein it was

observed that “The rule that an Act of Parliament is not to be given

retrospective effect applies only to statutes which affect vested rights. It

does not apply to statutes which merely alter the form of procedure or

the admissibility of evidence, or the effect which the court gives to

evidence.”

14.In view of the above legal position, the Madhya Pradesh High Court in

Viva Highways (supra) categorically held that the amendment to the

definition of works contract was clarificatory, and therefore applicable to

pending and future contracts alike. Applying the aforesaid principles to

the present case, Mr. Sinha would submit that the contract at hand—

pertaining to the laying of underground pipelines for the facilitation of

17

optical fiber connectivity—is in essence a civil engineering and

infrastructure contract. The execution of such work involves trenching,

ducting, excavation, backfilling, and surface restoration across public

lands and roadways, all of which are construction-related activities that

fall squarely within the scope of “construction” under the pre-amendment

definition of a “works contract.” The 2019 amendment merely made

explicit what was already implicit in the original definition and was

introduced to dispel any doubt as to the inclusion of such public utility

works. It is, therefore, declaratory in nature. Accordingly, the contract in

question is amenable to the jurisdiction of the Madhyastham Adhikaran,

irrespective of the date of its execution.

15.Without conceding for the sake of argument that the amendment is not

clarificatory, Mr. Sinha would submit that it is a well-established principle

of law that the law in force on the date of trial or final adjudication of a suit

or proceeding is the law to be applied, particularly in matters relating to

procedural rights and jurisdiction. In Sudhir G. Angur & Ors. v. M.

Sanjeev & Ors., (2006) 1 SCC 141, the Hon’ble Supreme Court

categorically held that it is the law prevailing on the date of trial which

governs the rights and remedies available to the parties. The Court

observed that procedural provisions must be construed as retrospective

in nature, unless the statute expressly provides otherwise. Further

reliance is placed on the judgment of the Hon’ble Bombay High Court in

Bhagwan Moti Ram Saraoji v. Onkarmal Ishar Dass, AIR 1952 Bom

365, wherein it was held that no party has a vested right in the

continuation of a particular procedural mechanism or forum, and that it is

a settled principle of interpretation that procedural laws are retrospective

unless expressly stated to be prospective. The Court also held that the

law in force at the time when the matter comes up for trial or final hearing

18

must be applied, and that the court is duty-bound to take judicial notice of

changes in the law and administer justice in accordance with the law as it

stands on the date of trial. In view of the said judicial pronouncements,

without prejudice to above submissions, that even if the contract was

executed prior to the 2019 amendment, the procedural change brought in

by such amendment—particularly with regard to jurisdiction under the

Madhyastham Adhikaran Adhiniyam—would apply to the present

proceedings, as the matter is being adjudicated after the coming into

force of the amendment.

16.Mr. Sinha would next submit that change in forum is procedural in nature

and does not affect vested rights. Even if the amendment changed the

forum, the forum change is procedural. It is a well-settled principle of law

that a party has no vested right in a particular forum or procedural

mechanism. The right to be prosecuted or defended lies only in

accordance with the procedure prescribed by law for the time being in

force. As stated in Maxwell on the Interpretation of Statutes “No person

has a vested right in any course of procedure. He has only the right to

prosecution or defence in the manner prescribed for the time being by or

for the court in which the case is pending, and if, by an Act of

Parliament, the mode of prosecution is altered, he has no other right

than to proceed according to the altered mode.” The principle that

changes in the forum as a part of procedural law apply retrospectively

has been upheld by the Hon’ble Supreme Court in SEBI v. Classic

Credit Ltd., (2018) 13 SCC 1. Further, this position has been analysed

and upheld in the case by the Supreme Court in the case of Neena

Aneja v. Jai Prakash Associates Ltd., (2022) 2 SCC 161.

19

17.In the present case, no proceedings had been initiated or any remedy

availed of prior to the 2019 amendment to the Act of 1983. The dispute

arose and the remedy was sought only after the amendment came into

force. As such, the parties had no crystallised or vested right in a

particular forum, and the change introduced by the amendment is purely

procedural in nature, governing the forum of adjudication. It is therefore

submitted that the amendment merely substitutes the forum before which

disputes arising from “works contracts” are to be resolved, without

affecting any substantive or constitutional rights of the petitioner. The

same shall apply retrospectively in accordance with the established

principles of procedural law.

18.The applicability of the Act is determined by the date on which the

dispute arose, not the date of the contract execution. A bare reading of

Section 7-B(2-a) of the Act of 1983 clearly demonstrates that a reference

petition under the Act is required to be filed within three years from the

date on which the contract is terminated, foreclosed, abandoned, or

otherwise comes to an end, or from the date on which the dispute arises

during the subsistence of the contract. The legislative scheme thus

makes it evident that the determinative point for the application of the Act

is the occurrence of the dispute, and not the date of execution of the

contract. Had the legislature intended to limit the applicability of the

amended provisions to contracts executed after the amendment, it would

have expressly provided so. In the present case, the dispute arose only

after the 2019 amendment came into effect. Consequently, at the time of

filing of the reference petition, the amended definition of “works contract”

which expressly includes “all types of pipe supply and pipeline laying

work” stood incorporated in the Act. The jurisdiction of the Arbitration

Tribunal must be assessed with reference to the law as it stood on the

20

date of the dispute and filing of the reference, and not on the date of

contract execution. The reference petition is accordingly maintainable

under the amended statute. Further, in the absence of a savings and

repeal clause in the Amendment Act of 2019, the intent of the legislature

can be inferred by referring to the savings and repeal clause under the

Act of 1983. The Act of 1983 contains a narrowly tailored savings clause

that exempts only those disputes which were pending before any

arbitrator, umpire, or authority under the provisions of the Arbitration Act

or any other law relating to arbitration. In other words, the Act of 1983

created an exemption solely for matters that were already pending before

an arbitrator or other competent authority under the relevant arbitration

law. In the present case, no proceedings were pending prior to the

commencement of the 2019 Amendment. The dispute arose only after

the amendment came into force. The absence of any such pending

proceedings, coupled with the settled position of law that a change of

forum—being procedural in nature—has retrospective application,

supports the conclusion that the present dispute falls within the

jurisdiction of Madhyastham. Further, the jurisdiction is conferred by law

and cannot be conferred or waived merely by consent or agreement of

the parties. In any event, and without prejudice to the above contentions,

it is a settled principle of law that jurisdiction is conferred by statute and

cannot be assumed by mere agreement, acquiescence, or consent of the

parties. Even assuming, that the Applicant contests the retrospective

applicability of the 2019 amendment to the Act of 1983, and contends

that this Hon’ble Court has exclusive jurisdiction, such contention is

wholly untenable in law. The jurisdiction of the Madhyastham is clearly

reflected in the statement of objects and reasons of the Act of 1983. The

intent behind the legislation is to establish a Tribunal for arbitrating

21

disputes in which the State Government or a public undertaking wholly or

substantially owned by the State Government is a party, along with

matters incidental or connected thereto. The purpose of the legislation is

to provide a forum for resolving such disputes involving the State

Government. Therefore, since the present dispute arises from an

agreement involving a public undertaking, and keeping in view the intent

of the legislation, the contention that the present dispute falls outside the

jurisdiction of the Madhyastham Adhikarn is untenable. The jurisdiction of

a Court is determined by the law applicable on the date the cause of

action arises or when the suit or application is taken up for trial, and not

merely by contractual stipulation. In this regard, reliance is placed on the

judgment of the Apex Court in Harshad Chiman Lal Modi v. DLF

Universal Ltd., {(2005) 7 SCC 791} and a judgment of this High Court in

State of Chhattisgarh vs. Ram Avatar Agrawal Road Construction

Pvt. Ltd., {ARBA No. 22 of 2011}, in which the decision of the Apex

Court in Madhya Pradesh Rural Road Development Authority and

another v. L.G. Chaudhary Engineers and Contractors, {2018 (10)

SCC 826}, was taken note of.

19.Mr. Sinha would submit that the parties’ contractual agreement, if any,

regarding jurisdiction is immaterial where statutory jurisdiction has been

expressly conferred on a specific forum. The Arbitration Tribunal under

the Act of 1983, alone has jurisdiction in respect of the present works

contract. Moreover, it is a well-settled principle that a decree passed

without jurisdiction is a nullity and is non est in the eyes of law. Whether

the defect in jurisdiction is pecuniary, territorial, or subject-matter related,

it vitiates the very authority of the court or forum, and such a defect

cannot be waived or cured by the conduct or consent of the parties. This

application under Section 11(6) for the appointment of an arbitrator is not

22

maintainable, as the dispute pertains to a “works contract” and falls

exclusively under the jurisdiction of the Arbitration Tribunal constituted

under the Act of 1983. He would further submit that the Applicant itself,

in a proceedings before the learned Micro and Small Enterprises

Facilitation Council, Raipur (for short, the MSEFC) titled M/s SVS & Co.

vs Tata Projects Limited: Application No. CG / 15 / S / CGH / 00509 /

1117-18, in its reply dated 19.12.2023, on affidavit, has itself stated that

the Bharat Net Project is a works contract. In view of the said admission

by the Applicant itself, it is submitted that the instant application is not

maintainable and is liable to be dismissed.

20.Mr. Sinha would further submit that the subject matter of the dispute is

not arbitrable since the performance of the work under the agreement is

vitiated by serious fraud and ought to be tried in an open Court. Further,

the work is of national importance. The Applicant refused to participate in

the joint inventory inspection, citing baseless and unfounded grounds of

malice on the part of the Respondent No. 1. Despite the multiple

directions given by the Respondent No. 1 to secure and protect the

interest of the Applicant, the refusal of the Applicant to participate in the

joint inventory inspection was a deliberate attempt to evade a

confrontation on the fraud, forgery and cheating carried out by the

Applicant during the execution of the works under the MSA. The

Respondent No. 1, on 20.06.2025 had entered into a contract with

Telecommunications Consultant India Ltd. (for short, TCIL) a PSU under

the ownership of the Department of Telecommunications, for assessing

and evaluating performance, efficiency and operational status of the

network infrastructure established under the Bharat Net Phase II project.

TCIL has given its initial report dated 04.08.2025 to the Respondent No.

1 a perusal of which would reveal that the Applicant led consortium has

23

failed to comply with the key requisits for execution of the works under

the MSA, and have generated false and fabricated /forged reports in

connivance with the then third party auditor, to extract monies from the

Respondent No. 1 and as such, the Applicant has caused loss to the

public exchequer. The Applicant led consortium generated fake ITPs in

order to extract money without actually executing the works as per the

terms of the MSA. Apart from the same, the Applicant led consortium

engaged on Galaxy Synergy Private Ltd. to implement the project. The

Applicant led consortium has committed serious forgery, fraud and

cheating in the performance of works under the MSA and has thereby

caused a huge loss to the public exchequer at large since not a single

household as on date is connected with the internet. The investigation is

at a nascent stage and the extent of fraud that the Applicant led

consortium has committed is yet to be assessed and evaluated. In such a

scenario, where the fraud is grave and is of a nature that impacts the

public at large, the disputes between the parties cannot be adjudicated

by way of Arbitration since (i) the confidentiality/closed nature of

proceedings attached to Arbitration would not let these facts come out in

the public, thereby, restricting public participation and further disclosure

of crucial facts relating to the case, (ii) several sub-contractors engaged

by the Applicant led Consortium, who are a part of the fraud that has

been committed, would not be a party to the Arbitration proceedings, (iii)

the Arbitrators cannot go beyond the four corners of the MSA, therefore,

it would not be possible for the Respondent No. I to rely upon the extra-

contractual acts of the Applicant led Consortium, such as, engaging sub-

contractors for the purpose of liaising with the Respondent No 1; (iv)

disputes involved are not rights in personam anymore and are now rights

in rem, which are not arbitrable; (v) disputes now relate to rights and

24

liabilities which give rise to criminal offences involving public officials, (vi)

disputes relate to questions arising in the public law domain, among

others. As such, the present dispute is not arbitrable since, inter alia, the

performance of the MSA is vitiated by serious fraud and fabrication of

documents, which has a severe impact in the public domain.

21.Mr. Sinha would next submit that Applicant is not authorised to contest or

initiate legal proceedings on behalf of the other consortium members.

Further, a bare perusal of the Power of Attorney makes it evident that the

Applicant does not have the authority to unilaterally file the present

application. The Applicant lacks the requisite consent from its co-

members to file the present Application. Therefore, the Applicant does

not have any locus to file this application before this Hon’ble Court. The

Applicant has failed to complete the project within the originally stipulated

timeline of 1 year, and its implementation phase remains incomplete even

today, despite several years have passed since the MSA was signed

between the parties. It is vehemently denied that the Applicant has

encountered delays and impediments for reasons attributable to the

Respondent. It is further denied that the implementation phase was

delayed on account of the Respondent’s fault. The Applicant has not

achieved the full project Go Live even in 2023 due to its incompetence

and the Respondent No. 1 has no responsibility for these delays caused

by the Applicant. The Applicant’s default in the completion of the project

timeline is self-evident from the inception of the project. The Respondent

has made payments to the Applicant despite the continuous delays and

non-fulfilment of project milestones without even accounting for the

penalties. Therefore, the Respondent No. 1 has made payments over

and above the amount that way payable to the Applicant. The Applicant

never achieved full project go-live status within the stipulated timeline, as

25

a result, the Respondent No. 1 was entitled to cancel the Go live as per

clause 1.1.14 and clause 1.49 of the MSA. Further, he would submit that

they were compelled to withhold the work orders of O&M due to the non-

completion of implementation phase by the Applicant. It is vehemently

denied that the Respondent No. 1 has abandoned the MSA at any point

in time. Lastly, it is denied that the Applicant incurred any prolongation

costs, and the Respondent No. 1 failed to pay them. It is further

submitted that it was the Applicant who failed to achieve the prescribed

milestone timelines under the MSA. Instead of acknowledging its own

shortcomings, the Applicant attempts to shift the blame onto the

Respondent. Since the contract in question is a “works contract” the

Applicant cannot invoke Arbitration under the Act of 1996 as disputes

relating to “works contract” fall within the jurisdiction of the tribunal

constituted under the Act of 1983.

22.There is no provision under the RFP or MSA that authorises Applicant

to terminate the MSA. On the contrary, 1.32 of the MSA, expressly

vests the right to terminate solely on the purchaser, i.e. the

respondent. It is clear from the contents of the notice of termination

dated 24.04.2025 that the Applicant has shown its unreadiness and

unwillingness to execute the works under the contract. The contents

of the notice of termination dated 24.04.2025 make it clear that the

Applicant intended to breach its obligations after admittedly receiving

Rs. 1509 Crores as payments. Hence, it is stated that the termination

notice dated 24.04.2025 by the Applicant is misconceived and without

any contractual backing. Further the 7 day period stipulated therein

has no contractual backing. The notice was nothing but an attempt to

deflect accountability and fabricate the narrative. Hence, it is

26

vehemently denied that the MSA stood terminated with effect from

02.05.2025. The letter dated 19.05.2025 of the Respondent No. 1

was a reply to the Applicant’s termination notices dated 24.04.2025

and 02.05.2025. It is denied that the Respondent’s reply was a

counterblast to the termination notice and did not contain any valid

grounds. The Applicant did not have any contractual backing or

power for issuing a termination notice under the MSA. In fact, it was

the Applicant who was deflecting their responsibility of non-

performance onto the Respondent. The Applicant was attempting to

threaten the Respondent by issuing such baseless termination notice

to take unfair advantage of their shortcomings to fulfill the contractual

obligations. The Respondent at the very outset of clarified that the

present dispute is governed under the Chhattisgarh Madhyastham

Adhikaran Adhiniyam, 1983 and hence the mechanism under the

1996 Act of nominating the arbitrators will not apply to the present

dispute. Hence, the arbitration notice lacks the jurisdiction and is

devoid of any statutory backing and legal precedents. Without

prejudice to the aforementioned, the Respondent further clarified in its

response that the disputes raised by the Applicant are a consequence

of its non-performance of the contract and cannot be simply shifted

towards the Respondent by twisting the events and fabricating the

narrative. As such, the present application be dismissed.

23.Mr. S.S.Baghel, learned Government Advocate appearing for the

State/Respondent No. 2 basically reiterated the submissions advanced

by Mr. Sinha, learned Senior Advocate appearing for the Respondent No.

1 and prays for dismissal of this arbitration request application. He would

submit that the applicant lacks express authorization from the other

members of the consortium for contesting the legal proceedings and that

27

the dispute arose out of a works contract as defined under Section 2(i) of

the Act of 1983. Since the present dispute arises from an agreement

involving a public undertaking and keeping in view the intent of the

legislation, the present application would not be maintainable.

24.Mr. Ramakant Mishra, learned Deputy Solicitor General, placing reliance

on the written statement filed on behalf of the Respondent No. 3/Union of

India, would submit that the MSA was executed between the State

Implementing Agency (for short, the SIA) which is the CHiPS and the

Project Implementing Agency (for short, the PIA) which is the Applicant

herein and does not involve the Digital Bharat Nidhi (DBN) or Department

of Telecommunications (DoT) as the parties to the contract. The DBN

has already vide letter dated 28.05.2025 intimated the Applicant that

DBN (erstwhile USOF) is not a party to the MSA and therefore, the

dispute does not pertain to DBN and as such, no relief can be sought

against DoT/DBN as they are neither the party to the MSA nor

responsible for execution of obligations under the State-led Bharat Net

implementation in Chhattisgarh.

25.Mr. Cooper, placing reliance on the rejoinder to the return filed by the

Respondent No. 1, would submit that the objections raised by

Respondent No. 1 are frivolous and vexatious and merely an attempt to

avoid constitution of the arbitral tribunal for adjudication of the disputes

through arbitration proceedings as agreed between the parties. As such,

the objections raised must be rejected at the outset itself. It is settled law

that for appointment of an arbitrator under section 11 of the Act, the only

relevant issue to be decided is the ‘prima facie’ existence of an

arbitration clause. All other issues are to be decided by the arbitral

tribunal. In this regard, Mr. Cooper places reliance on the decision of the

28

Apex Court in in Vidya Drolia v. Durga Trading Corporation, (2021) 2

SCC 1, wherein it has been held that the scope of judicial review under

Section 11 of the Arbitration Act is extremely limited and restricted and

that based on the principle of severability and competence-competence,

it is the arbitral tribunal that is the preferred first authority to determine

and decide all questions of non-arbitrability. Particularly, when the facts

are contested, the Hon’ble Court must leave the issues for the arbitrator

to decide since a mini trial is not permissible under Section 11. In the

present case, Respondent No. 1 has admitted the existence of the

arbitration clause and had in fact prayed for adjudication of the disputes

through arbitration (in its Reply dated 16.12.2024 to WPC No. 3351 of

2024). Therefore, the disputes must be referred to arbitration and all

objections raised by Respondent No. 1, i.e. the nature of the contract,

applicability of Act of 1983 etc., can be decided by the arbitral tribunal.

The issues raised by Respondent No. 1 cannot be decided in

proceedings under Section 11 of the Arbitration Act as any such decision

would require a mini trial. Mr. Cooper further places reliance on the

decision of the Apex Court Aslam Ismail Khan Deshmukh v. ASAP

Fluids Pvt. Ltd., (2025) 1 SCC 502, SBI General Insurance Co. Ltd.

v. Krish Spinning, 2024 SCC OnLine SC 1754. He would further submit

that the objection of lack of authority of the Applicant to file application

under Section 11(6) of the Arbitration Act on behalf of the Consortium is

wholly misconceived and contradicted by Respondent No. 1’s own

conduct. Throughout the execution of the MSA, Respondent No. 1

exclusively dealt only with the Applicant. Even in other legal proceedings

(viz. the Writ Petitions filed before this Hon’ble Court, being WPC No.

3351 of 2024 and 2724 of 2025), the Respondent No. 1 did not raise any

such objections and accepted the Applicant’s authority to institute and

29

pursue the said proceedings. Therefore, it is wholly frivolous and

baseless for Respondent No. 1 to now contend that the Applicant does

not have the requisite authority to institute the present proceedings.

Having consistently recognised the Applicant’s authority throughout the

contract execution and in multiple legal proceedings, the said objection is

wholly frivolous and is being taken only to delay the adjudication of the

present application.

26.So far as the contention of the respondents that the present is a works

contract is denied and Mr. Cooper would submit that it does not fall under

the jurisdiction of the Act of 1983 as the Union of India is also a party to

the arbitration proceedings. The Act of 1983, being a State Act, is

applicable only to contracts concerning the State/Public Undertaking.

This is expressly set out in the Preamble and Sections 2 and7 of the Act

of 1983. However, in the present case, Respondent No. 3, viz. the Union

of India is also party to the arbitration proceedings initiated by the

Applicant. The notice of arbitration was issued to and received by

Respondent No. 3 and Respondent No. 3 is also party to the present

proceedings. Therefore, the question of applying the Act of 1983 does

not arise. It is settled law that only the arbitral tribunal can adjudicate

(after reviewing the relevant documents and evidence) whether a non-

signatory is a party to the arbitration agreement. In this regard, Mr.

Cooper places reliance on the decision of the Apex Court in Cox &

Kings Ltd. v. SAP India Pvt. Ltd, 2023 INSC 1051. Further, the

Bharat-Net Project was conceived by the Respondent No. 3 and it

participated in the negotiations of the MSA. The Respondent No. 3 also

actively participated in the performance of the MSA. Even during the

actual implementation of the MSA, the Respondent No. 3 actively

participated in the meetings, regular updates of the work progress,

30

participated in State level implementation Committee meetings, release

of funds. The Respondent No. 3 has not only been aware of the present

dispute but has been actively involved in various discussions relating to

the dispute. The Applicant issued various communications to

Respondent No. 3 to resolve the present dispute and make payment of

the Applicant’s contractual outstanding. For example, Respondent No. 3

was part of the review meeting dated 05 July 2024, for resolution of

issues and ‘Reconciliation of invoices raised by M/s TPL and payments

made so far by CHiPS’. The entire project has been financed solely by

the Respondent No. 3. Further, the order dated 30.04.2025 passed by

this Court in WPC No. 3351/2025, the Respondent No. 1 gave its no

objection to the applicability of the provisions of the Act of 1996. The

Respondent No. 1 is estopped from raising any objection relating to

applicability of Act of 1983 and has waived of his rights. Mr. Cooper

places reliance on the decision of the Apex Court in Mumbai

International Airport P Ltd. v. Golden Chariot Airport, (2010) 10

SCC 422 and Premlata v. Naseeb Bee, (2022) 6 SCC 585, to contend

that having agreed and elected to arbitration under the Act of 1996, the

Respondent No. 1 is estopped from contending that the dispute between

the parties must be resolved under the Act of 1983.

27.Mr. Cooper would further submit that the judgment of Lion Engineering

(supra) was clarified by the Apex Court in Sweta Construction v.

CSPGC (2024) 4 SCC 722; and Gayatri Projects Limited v. MPRDCL:

2025 INSC 698 and in light of what has been laid down in these case, the

Respondent No. 1’s contention that the parties cannot waive the

application of the Act of 1983 is incorrect and even assuming that the Act

of 1983 is applicable, by its reply to the first Writ Petition, the Respondent

No. 1 waived this objection in terms of Section 4 of the Arbitration Act. So

31

far as the contention of the respondents that the present is a works

contract, the same is vehemently denied as the MSA was executed for

execution of the Project in the State of Chhattisgarh, i.e., to set up an

Optical Fibre Cable Network from the Block Head Quarters to Gram

Panchayats to provide high speed broadband connectivity by connecting

85 Blocks, 5987 Gram Panchayats across the State. Therefore, the

contract is not a construction or a works contract, but a telecom contract

for providing high speed internet to Gram Panchayats. Firstly, the word

“any” is used to state any work “relating to” construction, repair or

maintenance of any building or superstructure, dam, weir, canal,

reservoir, tank, lake, road, well, bridge, culvert, factory, work-shop,

powerhouse, transformer or such other works of the State Government or

Public Undertaking as the State Government may, by notification, specify

in this behalf. Therefore, “any works” is only in relation to construction,

repair, maintenance of the 15 items specified in the definition of the works

contract. Any work not relating to construction, repair, maintenance of the

15 items obviously cannot be included in the definition of “works

contract”. Unless specifically enumerated in section 2 of the Act of 1983

or notified by the Government, a contract cannot be considered a “works

contract” irrespective of the nature of the contract. Respondent No. 1’s

contention that ‘similar’ contracts are included in definition of works

contract under the Act of 1983 is therefore incorrect. Firstly, the MSA is

not a contract for pipe supply or pipeline laying work. It is a rural telecom

project for providing broadband to rural areas by laying Optical Fibre

Cables (OFC). In the process of laying OFC, the Applicant had to lay

PLB HDPE Duct but that, by itself, would not change the basic nature of

the contract to a pipeline laying contract.

32

28.According to Mr. Cooper, reliance placed by Mr. Sinha on the decision of

the Madhya Pradesh High Court in Viva Highways (supra) in fact

supports the case of the Applicant. In the said judgment, the dispute

related to the 2017 Amendment to the definition of works contract under

the Act of 1983. The 2017 Amendment stated that since in one judgment,

courts had not considered concession agreements to be part of works

contract definition was being substituted to include concession

agreements. In the Viva Highways judgment, the court held that since

the purpose of the amendment was only clarificatory (no new liability was

fastened but for the same construction works, even concession

agreements were also clarified to be part of the definition) and since the

amendment ‘substituted’ the earlier definition, it was clarificatory in

nature. It is further added here that the 2017 Amendment does not

specify any date of applicability of said amendment, i.e., as to when the

said amendment was brought with effect from, whereas in the present

case, the section 1 (3) of the 2019 Amendment expressly mentions that it

shall come into force from the date of publication in Official Gazette. In

the present case, by the 2019 Amendment, 11 new categories of

contracts were added to the existing 15 categories of contracts contained

in the definition of works contracts under the Act of 1983 and there was

no substitution but an insertion of these new categories of works.

Therefore, the amendment was clearly substantive and therefore

prospective. It is also apposite to state here that under Clause 1.36.5 of

the MSA, the arbitral proceedings are to be governed by the substantive

laws of India. The law at the time of execution of the contract was not the

Act of 1983 since it came into force only on 05 July 2019, i.e., after the

execution of the MSA on 18 July 2018. The Respondent No. 1’s reliance

Classic Credit Ltd. (supra) and Neena Aneja (supra) for the

33

proposition that forum change is purely procedural is wholly misplaced.

The issue is whether the 2019 Amendment is prospective or

retrospective. This does not relate to any change in forum, but it adds

new categories of works in the definition of works contract as defined

under the Act of 1983.

29.Mr. Cooper would further argue that the Respondent No. 1’s contention

that the Applicant had itself admitted that Bharat-Net Project is a works

contract is fundamentally flawed and misleading. The Respondent No. 1

has made a wholly misconceived averment in para 9 of its reply claiming

that in some proceedings before the MSME Council, the Applicant has

made an admission that the Bharat Net Project is a works contract. This

averment is based on a deliberate misrepresentation and constitutes an

attempt to mislead this Hon’ble Court. In the MSME proceedings, viz.

M/s SVS & Co. v. Tata Projects, the Applicant’s reference as a “works

contract” was made specifically to establish that the MSMED Act does

not apply to such contracts. The legal position under the MSMED Act is

that it covers only “goods” and “services” contracts, not “works

contracts”. The Applicant relied on the constitutional definition under

Article 366(29A)(b) to demonstrate that the MSA falls within the genre of

works contracts that are specifically excluded from MSMED Act benefits.

Multiple High Court judgments have consistently held that MSMED Act

benefits are restricted to pure “supply” and “service” contracts and do

not extend to composite “works contracts”. This distinction is based on

the constitutional framework and the specific statutory scheme of the

MSMED Act. However, in the context of Act of 1983, Section 2(i)

provides a narrow, specific definition of works contract limited to

“construction, repair or maintenance” of enumerated items for

establishing jurisdiction of the state statutory tribunals under the Act of

34

1983. These definitions serve completely different statutory purposes and

cannot be conflated. The meaning of works contract under the

Constitution is completely different from the restricted meaning of works

contract under the Act of 1983. In the present case, the MSA is a

composite contract for supply and services. However, it is not covered

under the restricted items of work mentioned in the Act of 1983.

Therefore, Respondent No. 1’s reliance on the MSME proceedings is

wholly misplaced. The Respondent No. 1's attempt to create false

equivalence is legally impermissible. The same contract can be classified

differently under different statutes serving different purposes. The

constitutional definition for excluding MSMED benefits cannot be used to

establish the Act of 1983 jurisdiction, as these are entirely different legal

frameworks with different objectives and scope. In any event, even the

scope of works awarded to the sub-contractor before the MSME was not

the entire scope of works under the MSA. For this reason as well, the

reliance on the MSME proceedings is misplaced. As such, the assertion

of the Respondent No. 1 that the Applicant had itself admitted that the

Project is a works contract is wholly misconceived and misleading and

liable to be rejected.

30.With respect to allegations of fraud, Mr. Cooper would submit that they

are totally misconceived, baseless and without any foundation. The

Respondent No. 1 has made such irresponsible allegations merely in an

attempt to wriggle out of the binding arbitration clause between the

parties and the dispute is not rendered non-aribtrable on the allegation of

fraud. Even assuming, without admitting any fraud, the arbitration

agreement does not cease to exist on allegation of fraud and continues to

bind the parties. The Hon’ble Supreme Court, in A. Ayyasamy v. A.

Paramasivam, (2016) 10 SCC 386, has held that arbitral tribunals are

35

fully competent to adjudicate allegations of fraud, forgery, and criminal

conduct and that if an allegation of fraud can be adjudicated upon in the

course of a trial before an ordinary civil court, there is no reason or

justification to exclude such disputes from arbitration. Further, in Swiss

Timing Limited v. Commonwealth Games 2010 Organizing

Committee, (2014) 6 SCC 677, the Hon’ble Supreme Court has, inter-

alia, held that to shut out arbitration at the initial stage would destroy the

very purpose for which parties had entered into arbitration. Furthermore,

there is no inherent risk of prejudice to any party in permitting arbitration

to proceed simultaneously with criminal proceedings since findings

recorded by Arbitral Tribunal are not binding in criminal proceedings. In

an eventuality where ultimately award is rendered by arbitral tribunal and

criminal proceedings result in conviction rendering the underlying

contract void as provided for in the contract, necessary plea can be taken

on the basis of such conviction to resist execution / enforcement of

award. Conversely, if matter is not referred to arbitration and criminal

proceedings result in an acquittal and thus leaving little or no ground for

claiming that underlying contract is void or voidable, it would result in

undesirable delay in arbitration. Therefore, the Court ought to act with

caution and circumspection whilst examining the plea that the contract is

void/voidable. Further reliance is placed on the judgment of the Apex

Court in Managing Director Bihar State Food Corporation v. Sanjay

Kumar, 2025 INSC 933.

31.Placing reliance on the rejoinder to the return filed by the Respondent No.

2 and 3, Mr. Cooper would deny the submissions advanced by the

Respondent No. 2 and 3, respectively. He would submit that the

Applicant has the authority to file application on behalf of the consortium.

36

He would submit that the objections filed by the respondents are nothing

but an attempt to delay the adjudication of the dispute in any manner.

32.Lastly, Mr. Sinha, learned Senior Advocate appearing for the respondent

No. 1 would submit that in case this Court appoints any retired High

Court Judge as the Sole Aribtrator, he would have no objection. This

submission has been objected to by Mr. Cooper, learned Senior

Advocate appearing for the Applicant on the ground that the agreement

provides for appointment of one Arbitrator from each side and thereafter

the third Arbitrator with the consensus of the two Arbitrators and as such,

this Court should appoint an Arbitrator for the respondents only and

thereafter, both the Arbitrators may appoint the third Arbitrator.

33.I have heard learned counsel appearing for the parties, perused the

pleadings and documents appended thereto.

34.Clause 1.36 of the MSA contains the procedure for resolution of the

disputes which is quoted hereinbelow:

“1.36 Dispute Resolution

1.36.1 The Purchaser and the MSI shall make every effort to

resolve amicably by direct informal negotiations, any

disagreement or disputes, arising between them under or in

connection with the MSA.

1.36.2 If, after Thirty (30) days from the commencement of such

direct informal negotiations, the Purchaser and the MSI have been

unable to resolve amicably a MSA dispute, either party may

require that the dispute be referred for resolution to the formal

mechanism specified in Clause 1.37.3 and Clause 1.37.4.

1.36.3 The Arbitration and Conciliation Act 1996, the rules

hereunder and any statutory modification or reenactment thereof,

shall apply to the arbitration proceedings.

37

1.36.4 The Arbitration proceedings shall be held in Raipur,

Chhattisgarh, India.

1.36.5 The Arbitration proceeding shall be governed by the

substantive laws of India.

1.36.6 The proceedings of Arbitration shall be in English language

1.36.7 If any dispute, difference, question or disagreement arises

between the parties hereto or their respective representatives or

assignees, at any time in connection with construction, meaning,

operation, effect, interpretation or out of the MSA or breach thereof

the same shall be decided by an Arbitral Tribunal consisting of

three Arbitrators. Each party shall appoint one Arbitrator, and the

Arbitrators so appointed shall appoint the third Arbitrator who shall

act as Presiding Arbitrator.

1.36.8 In case, a party fails to appoint an arbitrator within 30 days

from the receipt of the request to do so by the other party or the

two Arbitrators so appointed fail to agree on the appointment of

third Arbitrator within 30 days from the date of their appointment

upon request of a party, the Chief Justice of High Court or any

person or institution designated by him (in case of International

commercial Arbitration) shall appoint the Arbitrators/ Presiding

Arbitrator.

1.36.9 If any of the Arbitrators so appointed dies, resigns,

incapacitated or withdraws for any reason from the proceedings, it

shall be lawful for the concerned party/ arbitrator to appoint

another person in his place in the same manner as aforesaid.

Such person shall proceed with the reference from the stage

where his predecessor had left if both parties consent for the

same; otherwise, he shall proceed de novo.

1.36.10 It is a term of the MSA that the party invoking arbitration

shall specify all disputes to be referred to arbitration at the time of

invocation of arbitration and not thereafter.

1.36.11 It is also a term of the MSA that neither party to the MSA

shall be entitled for any interest on the amount of the award.

1.36.12 The Arbitral Tribunal shall give reasonable award and the

same shall be final, conclusive and binding on the parties.

38

1.36.13 The fees of the arbitrator shall be borne by the parties

nominating them and the fee of the Presiding Arbitrator, costs and

other expenses incidental to the arbitration proceedings shall be

borne equally by the parties.

1.36.14 Subject to as aforesaid the provisions of the Arbitration

and Conciliation Act, 1996 and any statutory modifications or re-

enactment in lieu thereof shall apply to the arbitration proceedings

under this clause.”

35.The first and foremost objection raised by the Respondent No. 1 is that

the present being a ‘works contract’, the works contracts involving the

State Government or its public undertakings, valued at Rs.50,000 or

more, shall be exclusively adjudicated by the Arbitration Tribunal

constituted under Section 3 of the Act of 1983. The second objection is

with regard to the competence of the Applicant to file this present

application as the Applicant is a consortium and the Applicant has not

been authorised by other Consortium members to contest the Application

on their behalf. The next contention is that there exists element of fraud,

forgery and cheating carried out by the Applicant during the execution of

the works under the MSA which cannot be decided in arbitration

proceedings.

36.Admittedly, the MSA was executed between the Applicant and the

Respondent No. 1 on 18.07.2018 and the said MSA contains the

mechanism for resolution of the disputes at clause 1.36 which provides

that each party shall appoint one Arbitrator, and the Arbitrators so

appointed shall appoint the third Arbitrator who shall act as Presiding

Arbitrator. Further, clause 13.6.8 provides that if a party fails to appoint

an Arbitrator within 30 days from the receipt of the request to do so by

the other party or the two Arbitrators so appointed fail to agree on the

appointment of third Arbitrator within 30 days from the date of their

39

appointment upon request of a party, the Chief Justice of High Court or

any person or institution designated by him (in case of International

commercial Arbitration) shall appoint the Arbitrators/ Presiding Arbitrator.

37.Whether or not the dispute pertains to ‘works contract’ is also an issue

which can be adjudicated in the arbitration proceedings. Since the

respondents have raised an objection with regard to maintainability of

this application on the ground that the Applicant has not obtained

consent from other consortium members, that is also an issue which can

be looked into by the Arbitrator. Even otherwise, the Respondent No. 1

has been dealing with the Applicant only from the very beginning and as

such, this objection of the respondents is not of much significance.

38.In SBI General Insurance Co. Ltd. (supra), the Apex Court held as

under:

“114. In view of the observations made by this Court in In

Re: Interplay (supra), it is clear that the scope of enquiry at

the stage of appointment of arbitrator is limited to the

scrutiny of prima facie existence of the arbitration

agreement, and nothing else. …....

xxx xxx xxx

125. We are also of the view that ex-facie frivolity and

dishonesty in litigation is an aspect which the arbitral

tribunal is equally, if not more, capable to decide upon the

appreciation of the evidence adduced by the parties. We

say so because the arbitral tribunal has the benefit of

going through all the relevant evidence and pleadings in

much more detail than the referral court. If the referral court

is able to see the frivolity in the litigation on the basis of

bare minimum pleadings, then it would be incorrect to

doubt that the arbitral tribunal would not be able to arrive

at the same inference, most likely in the first few hearings

itself, with the benefit of extensive pleadings and

evidentiary material.”

40

39.In Aslam Ismail Khan Deshmukh (supra), the Apex Court held that at

Section 11 stage, the Courts must refrain from conducting a mini trial or

entering into disputed factual questions that fall within the arbitral

domain. This approach upholds the intention of the parties at the time of

entering into the agreement, to refer all disputes arising between

themselves to arbitration. Similarly, in Vidya Drolia (supra), the Apex

Court has held that the Arbitral Tribunal is the preferred first authority to

determine and decide all questions of non-arbitrability, hence, at this

stage, whether the dispute involves works contract or nor can also be

decided by the Aribtrator so appointed by this Court.

40.Further, with respect to the allegation of the Respondent No. 1 that the

Applicant has committed fraud and cheating, that aspect can also be

looked into by the Arbitrator, in view of the observations made by the

Apex Court in Deccan Paper Mills Co. Ltd. v. Regency Mahavir

Properties {(2021) 4 SCC 786}. The relevant paragraph reads as under:

“6…...If the subject matter of an agreement between

parties falls within Section 17 of the Indian Contract Act,

1872, or involves fraud in the performance of the contract,

as has been held in the aforesaid judgment, which would

amount to deceit, being a civil wrong, the subject matter of

such agreement would certainly be arbitrable. Further, we

have also held that merely because a particular

transaction may have criminal overtones as well, does not

mean that its subject matter becomes non-arbitrable. ….”

41.Since the Agreement provides for appointment one Arbitrartor from each

side and then appointment of third Arbitrator with the consent of both the

Arbitrators, this Court is of the view that in the fitness of things, it would

be more appropriate that an independent Sole Arbitrator, preferably a

retired Judge of the Hon’ble Supreme Court is appointed to resolve the

41

dispute between the parties, where both the Applicant as well as the

respondents would be at liberty to raise all the grounds as has been

raised in this petition.

42.In view of above, Hon’ble Mr. Justice S. Ravindra Bhat, a retired

Judge of the Hon’ble Supreme Court of India, is appointed to act as the

Sole Arbitrator to resolve the dispute between the parties. As clause

1.36.4 of the Agreement provides that the Arbitration proceedings shall

be held in Raipur, Chhattisgarh, the venue shall be at Raipur.

43.The Registry is directed to communicate this order to Hon’ble Mr. Justice

S. Ravindra Bhat, in the proper address.

44.The remuneration of the Arbitrator shall be settled with the mutual

consent of the parties.

45.The arbitration application, accordingly, stands disposed of. No order

as to costs.

Sd/-

(Ramesh Sinha)

CHIEF JUSTICE

Amit

42

Head Note

The scope of enquiry at the stage of appointment of Arbitrator is limited

to the scrutiny of prima facie existence of the arbitration agreement,

and nothing else. The Courts must refrain from conducting a mini trial

or entering into disputed factual questions that fall within the arbitral

domain.