Jammu Kashmir High Court Appoints Arbitrator In 17-Year-Old Bunker Construction Dispute
The case is related to the construction of 10 above-ground bunkers, an open WP ammunition shed and allied infrastructure.
Published : February 28, 2026 at 5:16 PM IST
Srinagar: The High Court of Jammu & Kashmir and Ladakh has appointed a sole arbitrator to resolve a long-pending contractual dispute between an Akhnoor-based construction firm and the defence establishment over alleged unpaid dues and claims arising from a bunker construction project completed nearly 17 years ago.
Pronouncing the judgment, Justice Rajnesh Oswal held that the legal requirements for appointment of an arbitrator under the Arbitration and Conciliation Act were satisfied after the government authorities failed to act on the contractor’s request for arbitration.
The dispute stems from a contract awarded in October 2006 to M/s Sharma Construction Company, an engineering and contracting firm located on Jourian Road in Akhnoor, Jammu. The firm was represented through its partner Mangu Ram Sharma, 76, son of late Ram Chand.
The respondents in the case included the Union of India through the Ministry of Defence, the Engineer-in-Chief’s Branch of the Army Headquarters, the Chief Engineer of Northern Command, the Chief Engineer of Udhampur Zone and the Garrison Engineer (North) Akhnoor.
According to the petition, the contractor was allotted the work of constructing 10 above-ground bunkers, an open WP ammunition shed and allied infrastructure at 102 AP 10 INF DOU in Sunderbani by the Udhampur Zone engineering authorities through an acceptance letter dated October 30, 2006.
The firm claimed it completed the work on May 23, 2009 within the stipulated time and received a completion certificate from the Garrison Engineer, Akhnoor, on May 29, 2009.
However, the contractor alleged that the department failed to provide key measurement documents and statements needed to prepare the final bill despite repeated requests.
The situation became complicated in 2010 when a retaining wall constructed during the project collapsed. A court of inquiry was initiated by the department to examine the incident.
The contractor maintained that the collapse occurred because of a defective design supplied by the department and asserted that every stage of the construction had been inspected and approved by the engineer in charge.
Even as the inquiry continued, the firm repeatedly sought finalization of its bill and release of payments and fixed deposit receipts. The petition stated that no adverse findings were eventually recorded against the contractor in the inquiries.
The firm later issued a notice in July 2019 demanding payment and warning that arbitration would be invoked if dues were not cleared. When no response came, it formally invoked the arbitration clause under the contract in February 2020. Despite this, the authorities did not appoint an arbitrator.
Instead, in May 2021 a Board of Officers was convened to determine a devaluation statement relating to alleged defective work. The contractor objected to the move and termed it harassment.
In June 2022 the department rejected the request for appointment of an independent arbitrator, stating that the claim was time-barred and that the contractor had signed the final bill without protest.
The defence authorities argued before the court that the petition filed in April 2023 was barred by limitation because the cause of action arose when the work was completed in 2009 and when the final bill should have been paid in 2010.
They also contended that the contractor had signed a “no claim certificate” and an undertaking in 2019 stating that no interest would be claimed on delayed payment.
The government further alleged that the retaining wall collapsed due to poor workmanship and use of substandard material, and said a recovery of Rs 41.51 lakh had been proposed based on the findings of the Board of Officers.
Justice Oswal rejected the argument that arbitration had been invoked in July 2019, observing that the communication was only a demand for payment.
"Crucially, vide letter dated 26.07.2019, no actual request was made for referral of the claims to an arbitrator; it was only through the communication dated 19.02.2020 that the petitioner formally invoked the arbitration clause," the judgment noted.
Addressing the issue of limitation, the court observed that the respondents had not clarified when the notice invoking arbitration was actually received.
"This omission is significant, as the limitation for filing a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 was triggered only upon the expiry of 30 days from the receipt of the invocation notice," the judgment added.
The court further noted that even if limitations were calculated from February 2020, the period coincided with the Covid-19 pandemic, during which the Supreme Court had excluded certain periods from limitation calculations.
"In view of the above, this Court is of the considered view that, given the existence of a valid arbitration agreement and the respondents' failure to appoint an arbitrator despite due notice, the jurisdictional requirements under Section 11(6) of the Arbitration and Conciliation Act, 1996, stand fully satisfied," Justice Oswal said.
The court added that the disputes between the parties arise directly from execution of the contract and are arbitrable. The court appointed Satish Chandra, a retired Additional Director General of the Military Engineering Services residing in Greater Kailash, Jammu, as the sole arbitrator to adjudicate the claims and counterclaims between the parties.
He will begin proceedings after submitting the statutory disclosure required under the Arbitration and Conciliation Act.
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