Supreme Court Stays Arbitration In ₹36.53 Crore AP E-Challan Dispute Involving Digi Yatra Developer

The Supreme Court recently stayed further arbitration proceedings in a Rs. 36.53 crore dispute between the Andhra Pradesh government and Dataevolve Solutions Pvt. Ltd., the developer of the Digi Yatra app, over settlement of accounts under an e-challan software contract.

A Bench led by Chief Justice Surya Kant and comprising Justice Joymalya Bagchi and Justice Vipul M. Pancholi issued notice on the State's special leave petition challenging the Andhra Pradesh High Court's order appointing a sole arbitrator, as well as on its applications seeking condonation of delay. The Court directed that further arbitration proceedings shall remain stayed and listed the matter for May 25, 2026.

The dispute arises from a Work Order dated December 17, 2018, under which Dataevolve was engaged by the Andhra Pradesh Police to supply and maintain an e-challan software system across district police units for a period of three years, ending December 31, 2021.

According to the company, it continued providing services even after the expiry of the contract on an ad hoc basis on a 50:50 revenue-sharing arrangement pursuant to instructions from State authorities. It later sought reconciliation of accounts, alleging that the State raised a demand of Rs. 36.53 crore without accounting for amounts payable to it.

The State, in its counter before the High Court, did not dispute that services continued on an ad hoc basis but alleged that the company had failed to transfer the software's source code to the Andhra Pradesh Police as required under the contract, resulting in continued dependence on the existing system.

Invoking Clause 20 of the General Conditions of Contract, which contains the arbitration clause, Dataevolve approached the Andhra Pradesh High Court under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator.

By its order dated February 20, 2025, the High Court observed that a dispute existed between the parties requiring adjudication through arbitration and appointed Justice A.V. Sesha Sai, a former judge of the High Court, as the sole arbitrator to decide the claims and counter-claims.

Challenging this order, the State moved the Supreme Court. Upon hearing the State's counsel, the Court issued notice on the special leave petition as well as on the delay applications and directed that further arbitration proceedings shall remain stayed.

The matter is now listed for further hearing on May 25, 2026.

For Petitioner (State of Andhra Pradesh): Advocates Prerna Singh, Dhruv Yadav, and Guntur Pramod Kumar.

Click here to Read/Download the High Court's Order Dated 20.02.2025