Matrix Badambadi Private Limited has its registered office and primary place of business in the state of

Manchester.
As a part of the new policy of the Manchester Government to encourage and incentivize information
technology infrastructure in the state, Matrix proposed to develop an IT park in Manchester.
The Manchester Government, considering the experience of Matrix in developing IT Parks in other parts of
the country, gave the nod to Matrix to establish the IT Park.
Matrix in turn contracted out various streams of work to different service providers.
One of the service contracts was executed with DigiPro Mahanadi Private Limited (“DigiPro”) dated 21
February 2020, whereby the scope of the work was to establish and install the ‘internet fiber optic cable’
(“IFOC”) throughout the IT Park for hi-speed internet connectivity.
DigiPro, has its registered office and primary place of business in Liverpool. DigiPro is a technology solutions
company whereby it allocates its mandate to various IT vendors depending on the nature of work. DigiPro
has in the past conducted substantial amount of business with Matrix.
The total value of the contract was INR 30,00,00,000.
The terms of the contract provided that the payment for the installation of IFOC to DigiPro was contingent
on the successful completion of work within 2 (two) years from the date of the contract and adherence
to the minimum quality standards.
DigiPro in turn entered into a contract with Kathajodi Innovation Private Limited (“KIPL”) dated 14 June
2020, sub-contracting a part of the mandate received from Matrix for supply of electrical equipment,
installation, acceptance and verification testing and commissioning of servers for facilitating IFOC in
the IT Park (“Sub-contract Work”).
The total value of the sub-contract was INR 8,00,00,000. Stipulated commencement date of the sub-contract
work was 16 August 2020. The terms of the sub-contract required KIPL to successfully complete the Sub-
contract Work within 15 (fifteen) months from the commencement date.
KIPL initiated the Sub-contract Work on the commencement date without any delay.
During the course of the Sub-contract Work, KIPL duly communicated to DigiPro the status of supply,
installation of the server equipment from time to time.
Till the stage of supply and storage of server equipment, KIPL did not face any supply chain issues and the
Sub-contract Work was progressing within the required timelines.
However, during the installation process, due to the shortage of skilled manpower in Manchester, the
completion timelines were delayed.
These issues were duly communicated to DigiPro along with a proposed progress recovery plan to
expedite the installation and complete the pending works within the stipulated timelines. This was
acknowledged by DigiPro via an email communication.
Accordingly, DigiPro in-turn communicated the delay to Matrix in relation to the installation of IFOC servers.
Matrix, noting the delay instructed DigiPro to ensure that no further delays are caused on this
workstream and that the entire mandate is completed within the agreed timelines of the contract.
Corresponding necessary instructions were subsequently issued by DigiPro to KIPL to complete the Sub-
contract Work within the stipulated timelines of the sub-contract.
In any case, the manpower supply issues continued to persist and the installation of the IFOC servers could
only be completed with a delay of 1 month.
As soon as the installation was complete, KIPL approached DigiPro to initiate the acceptance and verification
tests.
However, DigiPro informed KIPL that due to the delay of 1 month, DigiPro’s engineers have been
commissioned on other projects and will only be available after a period of 1 month. Consequently, the
acceptance and verifications tests could start only after a delay of 2 months.
The acceptance and verifications test were completed without any defects being noted by DigiPro.
Immediately after the completion of the acceptance and verification test, commissioning of the IFOC servers
were initiated.
However, the entire Sub-contract Work could only be completed with an overall delay of 3 months. Post
this, The Sub- contract Work was officially handed over to DigiPro in accordance with the sub-contract.
On 01 July 2022, DigiPro handed over the entire mandate to Matrix as part of their contract. However,
shortly after the handover Matrix wrote an email dated 10 July 2022 to DigiPro communicating that due to
the delays occurred primarily in the IFOC server works, the entire mandate was handed over to Matrix
with a substantial delay of more than 4 months.
It was also stated in the email that the delay was not attributable to Matrix on any account and substantial
losses were incurred by Matrix due to the delayed handover of the works.
Consequently, the competent authority of Matrix has decided to withhold INR 5,00,00,000 crores of the
entire consideration amount of the Contract.
As per Matrix, the said decision was taken in terms of the Contract dated 21 February 2020.
On 18 July 2022 DigiPro wrote an email to KIPL communicating that due to the delays especially in IFOC
server works, there were substantial delays in the handing over of the entire mandate to Matrix under
Contract dated 21 February 2020.
Consequently, Matrix has withheld certain amount of consideration of the contract released to DigiPro. As a
result of such withholding, DigiPro released an amount of only INR 1,33,36,000 out of the entire
consideration amount of the Sub-Contract dated 14 June 2020.
DigiPro clarified that a reduced amount was released to KIPL in a proportionate pro-rata manner
corresponding the proportional amount withheld by the Matrix as part of the main contract.
KIPL immediately, on 20 July 2022 replied to DigiPro’s email registering protest against receiving a lower
amount than what was agreed in the sub-contract and requested for a meeting with DigiPro at their earliest
convenience to discuss and resolve the issues.
However, despite repeated reminders, DigiPro refused to enter into any kind of negotiation on the ground
that it has successfully completed all its obligations under the terms of the sub-contract. DigiPro further
suggested that KIPL should consult with Matrix for their grievance regarding the balance payments.
Consequently, on 25 August 2022, KIPL sent a demand notice cum notice involving arbitration under the
sub-contract for release of the unpaid consideration along with interest at the rate of 25% per annum from the
handover date.
KIPL also informed that as part of the sub-contract they will be appointing Retd. Justice Mr. Christiano Dhoni
as one of the arbitrators on the tribunal.
DigiPro did not respond to the demand cum notice invoking arbitration for 30 (thirty) days and refused to
appoint any arbitrator.
Noting the non-cooperation from DigiPro on the issue, KIPL filed a petition in the Hon’ble High Court of
Liverpool under section 11 of the Arbitration and Conciliation Act 1996 for the appointment of an arbitrator
for constitution of the arbitral tribunal.
The Hon’ble High Court allowed the petition and appointed Retd. Justice Mr. Kylian Pandya as the second
arbitrator. Retd. Justice Mr. Christiano Dhoni and Retd. Justice Mr. Kylian Pandya jointly appointed Retd.
Justice Mr. Lionel Kohli, former Chief Justice of India as the third arbitrator.
On the first hearing, KIPL provided an overview of its claims which were noted by the arbitral tribunal as
follows:
• Direct DigiPro to release the balance payment of INR 1,33,36,000, as consideration under the sub-
contract;
• Direct DigiPro to pay interest at the rate of 18% per annum from the handover date, on such balance
amount claimed at (i) above; and
• pass any other order as the arbitral tribunal deems fit and proper.
DigiPro, in its defense, provided its following preliminary overview of its arguments, which were noted by
the arbitral tribunal:
• Declare and hold that the current arbitral proceedings are liable to be terminated and dismissed, since
there has been no dispute under the sub-contract;
• Declare and hold that dispute, if any is between KIPL and Matrix and accordingly Matrix may be
impleaded as a necessary/ proper party in the arbitral proceedings; and
• Notwithstanding anything stated in point (i) and (ii), Direct and hold that KIPL is not entitled to any
further payments in view of the back-to-back payment terms of the subcontract.
Pursuant to the preliminary submission made by the parties, the arbitral tribunal decided to frame the
following issues and requested the parties to provide detailed written submissions to support their arguments:
(i) Whether there exists a ‘dispute’ between KIPL and DigiPro under the terms of the Sub-contract? If yes,
would Matrix be a necessary / proper party to the dispute?
(ii) Whether KIPL is entitled to the balance payments and interests, as claimed under the Sub-contract?
The parties are free to decide upon and accordingly frame sub-issues; however, the parties must restrict their
arguments within the ambit of the abovementioned two issues only.
The relevant clauses of the sub-contract have been reproduced below:
“PREAMBLE
WHEREAS DigiPro is engaged in the development of information technology products and services and is
providing internet solutions, including but not limited to supply of servers, storage devices, optic wires,
routers etc.
WHEREAS KIPL is also in the business of providing information technology infrastructure services,
including installation and commission of severs for internet connectivity.
WHEREAS Matrix has offered to the Government of Manchester to set up an IT Park in Sector 13 and
contracted some parts of the IT Park infrastructure development in relation to commissioning of servers for
facilitating IFOC in the IT Park by procuring the solutions from DigiPro.
WHEREAS DigiPro in turn would like to engage the sub-contractor, KIPL to provide to it, certain services
as detailed in Annexure 1, to meet the aforesaid requirements of Government of Manchester on terms and
conditions set forth herein.
WHEREAS DigiPro expects that KIPL will be a reliable, punctual and world class subcontractor, and that
KIPL will continuously and throughout the project meet and exceed DigiPro's expectations (e.g. regarding
quality and performance precision).
Now, therefore, in consideration of the mutual promises set forth below, the Parties agree as follows:
Clause 4 - Payments
4. Unless otherwise specifically stated below, KIPL shall have the right to invoice DigiPro the agreed price
in accordance with the Agreement subject to the achievement of the completion of Sub-contract Work.
DigiPro shall pay to KIPL the agreed Price, for the undisputed invoices within 30 (thirty) days from the date
of receipt of the corresponding amount from Matrix as per agreed back to back payment terms for this project.
All amounts payable under this Agreement shall be made in INR.
Clause 11 - Governing Law
11. This Agreement shall be governed ·by and construed in accordance with the substantive laws of India.
Clause 12 - Arbitration
12.1. All disputes, differences or questions between the Parties with respect to any matter arising out of or
relating to the Agreement shall to the extent it cannot be resolved by escalation to the executive management
of the Parties will be finally settled through Arbitration in India by 3 (three) arbitrators appointed in
accordance with the Arbitration. and Conciliation Act, 1996 and the Rules thereunder and the proceedings
shall be conducted in the English language. All awards may if necessary be enforced by any court having
jurisdiction in the same manner as a judgement in such court.
12.2. The Parties undertake and agree that all arbitral proceedings conducted under this article shall be kept
strictly confidential, and all information, documentation, materials in whatever form disclosed in the course
of such arbitral proceeding shall be used solely for the purpose of those proceedings.
12.3. The arbitration shall be governed by the provisions of the Arbitration and Conciliation Act, 1996 or
any statutory modification or enactment thereof for the time being in force and the seat and the venue of the
proceedings shall be Liverpool, India.
Annexure 1
1. a) This Agreement concerns KIPL undertaking as subcontractor for supply of electrical equipment,
installation, acceptance and verification testing and commissioning of servers for facilitating IFOC
in the IT Park and related Services.
2. b) DigiPro's relationship with Matrix and in turn Matrix’s relationship with the Government of
Manchester will have an impact on KIPLs obligations under this Agreement. Therefore, KIPL
undertakes to use its best efforts to fulfill such requirements as specified under this Agreement.”