SRINAGAR: The High Court of Jammu Kashmir and Ladakh has appointed former Chief Justice Justice Ali Mohammad Magrey as sole arbitrator to adjudicate disputes between M/s Hassan Roads Construction Company Private Limited and the JK Economic Reconstruction Agency arising out of a multi-crore infrastructure contract for the construction of a Central Control Building for the Emergency Operation Centre and SCADA System at Ompora, Budgam.
The order was passed by Justice Sanjay Dhar in Arbitration Petition No. 53/2025, which was reserved on May 14 and pronounced on May 22.
The petitioner company was represented by senior advocate ZA Qureshi along with advocates Rehana, Babar Billal Malik and Muzaam Nasir, while government advocate Illyas Nazir Laway appeared for the respondents.
According to the case record, the contract was executed on August 7, 2021 after the petitioner company emerged as the lowest bidder pursuant to a Notice Inviting Tender issued by ERA. The work was allotted at a contract cost of Rs 29.88 crore along with a provisional sum of Rs 5 crore.
The contractor claimed that nearly 90 per cent of the work had been completed and alleged that delays in execution occurred due to lapses attributable to the respondents. It further submitted that electrical and mechanical items required for completion of the remaining work had been procured after approval from ERA.
The petitioner alleged that despite this, the contract was terminated, forcing it to initiate civil and arbitration-related proceedings before various courts. It also claimed unpaid dues and compensation running into several crores of rupees, including pending bills, variation claims, retention money, compensation for delayed payments, legal expenses and damages arising out of encashment of bank guarantees.
The respondents opposed the petition and contended that the contractor had failed to complete the project despite repeated extensions granted over several years. ERA submitted that the project, intended for emergency and disaster management services, was originally required to be completed within 12 months from September 2021, but remained incomplete even after four extensions up to October 2024.
The respondents further argued that the petitioner could not invoke arbitration directly without first referring the disputes to the Adjudicator or Dispute Review Expert (DRE) as contemplated under the contract conditions.
After hearing both sides, the court held that the pre-arbitration mechanism was not feasible in the facts of the case.
Justice Dhar observed that no agreement appeared to have been executed jointly with the designated Adjudicator/DRE as required under the contract.
“The forum of Adjudicator/DRE was not available to the petitioner,” the court said.
The court further held that the disputes primarily related to termination of the contract and subsequent actions taken by the employer, including encashment of bank guarantees and re-tendering of the balance work, which did not fall within the scope of matters referable to the Adjudicator/DRE.
“The arbitration clause contained in the PCC is of wide amplitude. Therefore, any dispute arising between the Employer and the Contractor, which does not fall within the realm of disputes referable to the Adjudicator/DRE, can also be referred to arbitration,” the court observed.
Referring to Supreme Court and Bombay High Court precedents favouring arbitration, Justice Dhar reiterated that courts should lean in favour of referring disputes to arbitration wherever an arbitration agreement prima facie exists.
The court quoted the Supreme Court judgment in Maharashtra State Electricity Distribution Company Limited v. RZ Malpani to observe that courts should follow the principle of “When in doubt, do refer”.
Holding that the disputes between the parties were arbitrable in nature, the court disposed of the petition by appointing Justice Ali Mohammad Magrey as sole arbitrator to adjudicate all disputes and differences arising out of the agreement between the parties.
