A long-running power project dispute from Rayalaseema reached a crucial point on Tuesday, as the Supreme Court declined to block arbitration sought by a single consortium member against Andhra Pradesh Power Generation Corporation Limited (APGENCO). The courtroom mood was practical rather than dramatic, with the Bench repeatedly stressing restraint at the referral stage. The message was clear: courts should not conduct mini-trials when arbitration is available.
Background
The dispute arises from an EPC contract awarded by APGENCO for works at the Rayalaseema Thermal Power Plant. The contract was bagged by a consortium led initially by Tecpro Systems Ltd, along with VA Tech Wabag Ltd and Gammon India Ltd.
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Trouble surfaced during execution. Tecpro ran into financial stress, delays followed, and leadership of the consortium eventually shifted to VA Tech Wabag. Matters worsened when Tecpro entered insolvency proceedings in 2017.
Despite this, Tecpro issued notices claiming losses of nearly ₹1,951 crore and invoked the arbitration clause contained in the General Conditions of Contract. APGENCO objected, arguing that arbitration could only be invoked by the consortium as a whole, not by an individual member acting alone. The Telangana High Court rejected this objection and appointed an arbitral tribunal, prompting APGENCO to approach the Supreme Court.
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Court’s Observations
The Bench, comprising Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar, made it clear that the scope of judicial scrutiny under Section 11 of the Arbitration Act is intentionally narrow.
“The referral court is required to only see, on a prima facie basis, whether an arbitration agreement exists,” the Bench observed, adding that deeper questions about who can invoke arbitration must be examined by the arbitral tribunal itself.
The judges noted that arguments about consortium structure, authority of individual members, insolvency, and consent of partners involved detailed factual and contractual analysis. Such issues, the court said, are best left to the tribunal under the principle of kompetenz-kompetenz-in simple terms, the tribunal decides its own jurisdiction.
The court also pointed out that in a related dispute arising from the same project after the bifurcation of Andhra Pradesh and Telangana, arbitration had already been allowed to proceed. That history, though not decisive, reinforced the need for consistency.
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Decision
Holding that the High Court had done no more than what the law permits at the referral stage, the Supreme Court dismissed APGENCO’s appeals. It upheld the constitution of the arbitral tribunal and clarified that all objections on maintainability and authority remain open for consideration before the tribunal itself. No costs were imposed.
Case Title: M/s Andhra Pradesh Power Generation Corporation Limited vs M/s Tecpro Systems Limited & Others
Case No.: Civil Appeal Nos. of 2025 (arising out of SLP (C) Nos. 8998 of 2023 and 13200 of 2023)
Case Type: Civil Appeals (Appointment of Arbitral Tribunal under Arbitration and Conciliation Act, 1996)
Decision Date: December 17, 2025
