Supreme Court of India Stays Arbitration in Andhra Pradesh Traffic Challan Fraud Case Involving Digi Yatra Developer
TL;DR
- The Supreme Court of India has stayed arbitral proceedings between Andhra Pradesh and Dataevolve Solutions.
- The dispute arises from alleged unauthorized operation and diversion of funds after contract expiry.
- The case will next be heard on May 25.
Overview
On April 2, 2026, the Supreme Court of India stayed arbitration between the State of Andhra Pradesh and Dataevolve Solutions, the developer of Digi Yatra, in relation to an alleged ₹37 crore traffic challan fraud. The State alleges that Dataevolve continued to operate an e-challan system without contract renewal, leading to funds diversion.
What Happened
The original 2018 contract between Andhra Pradesh Police and Dataevolve Solutions was for a three-year term to supply and maintain an e-challan software system, expiring December 31, 2021.
The State alleges Dataevolve continued operating the system post-expiry, collecting large sums through traffic challans, which were allegedly siphoned, prompting criminal proceedings.
Dataevolve sought arbitration, claiming the State orally requested continued service and disputes arose over payments; the Andhra Pradesh High Court appointed a sole arbitrator without addressing the merits.
The State challenged jurisdiction, arguing there was no valid arbitration agreement post-contract and the claims were not arbitrable due to serious allegations involving public money. The Supreme Court stayed the proceedings pending further hearing.
Context
Disputes under public contracts may be referred to arbitration if an agreement exists. However, courts often assess arbitrability, particularly where allegations concern fraud or public funds.
Dataevolve is also involved in a separate legal dispute in Delhi regarding intellectual property rights over Digi Yatra.
Why It Matters
- The Supreme Court's intervention highlights the judiciary's role in determining the scope of arbitrable disputes, especially when allegations involve significant public interest or fraud.
- The case addresses questions about the survival of arbitration agreements after contract expiry and arbitrability of fraud-related claims.