[Cites 9, Cited by 0]
Calcutta High Court
Mina Roy vs General Manager on 29 January, 2026
Author: Shampa Sarkar
Bench: Shampa Sarkar
OCD 8
ORDER SHEET
AP-COM/1015/2025
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
MINA ROY
VS
GENERAL MANAGER, SOUTH EASTERN RAILWAY,
KHARAGPUR AND ORS.
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date: 29th January, 2026.
Appearance:
Mr. Shashwat Nayak, Adv.
Ms. Akanksha Mukherjee, Adv.
Mr. Sumit Biswas, Adv.
Ms. Rajashree Bhowmick, Adv.
...for the petitioner
Mr. Siddhartha Bhattacharyya, Adv.
Mr. Srikumar Chakraborty, Adv.
...for the respondent
The Court:
1. The petitioner prays for appointment of an Arbitrator for adjudication of
the dispute which arose out of an e-tender process and alleged
termination of the said work order. The petitioner participated in a
tender process and was declared as the L-1 bidder. The Letter of
Acceptance was issued by the respondents on August 30, 2024. The
total contract value was Rs.36,00,781.4/-. On the same date, the work
order was issued, for execution of the work mentioned in the said tender
under the KGP Division.
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2. The petitioner duly furnished a performance guarantee vide Demand
Draft No.689239 dated September 17, 2024 for an amount of
Rs.1,80,040/-. The petitioner's specific contention is that the petitioner
was always ready and willing to execute and complete the work in terms
of the work order, but the respondents failed to comply with their
contractual obligations, inter alia, by not providing site clearance and
by not making available the requisite materials that were necessary for
execution of the work. The petitioner contends to have issued various
representations calling upon the respondents to discharge their
obligations.
3. On June 16, 2025, the petitioner submitted a representation seeking
extension of the validity period of the contract beyond June 30, 2025.
Instead, to the utter shock and surprise of the petitioner, the
respondents issued a termination letter dated September 12, 2025
purporting to unilaterally and illegally terminate the contract without
assigning any reasons. According to the petitioner, the said termination
was de hors the provisions of the GCC and was ex facie illegal and
unsustainable in law. By a reply dated September 18, 2025, the
petitioner pointed out that the purported termination was unlawful,
arbitrary, unilateral and in flagrant violation of the contractual
provisions. Another termination notice was issued on September 26,
2025 calling upon the petitioner to reply within ten days. The petitioner
alleges that the reply of the petitioner was not considered in its proper
spirit.
3
4. The tender document contains an arbitration clause which has been
embodied in Clause 64(1) of the General Conditions of Contract (GCC),
2022. It provides that in the event of any dispute or difference between
the parties as to the construction or operation of the contract, or the
respective rights and liabilities of the parties arising out of the contract,
the contractor shall demand in writing for reference of the dispute to
arbitration. The clause also provides that if the contractor had
approached the General Manager or any other person who performed
the duties of the General Manager under the GCC, then the contractor
may demand reference to arbitration in writing after the period of 120
days had expired and no resolution of the dispute had taken place.
5. Mr. Nayak, learned advocate for the petitioner submits that
determination of contract in this case is not an excepted matter,
inasmuch as, Clause 61(1) provides that the respondents shall be
entitled to determine and terminate the contract if the respondents are
of the opinion that the cessation of the work became necessary owing to
paucity of funds or from any other cause whatsoever. In such a
situation, the value of the approved materials at site and the work done
by the contractor would be paid in full and at the rates specified in the
contract. In the first termination letter dated September 12, 2025, the
railway authorities relied on the said clause and determined the
contract. Thus, the petitioner submits that the consequence of such
determination is arbitrable, as the petitioner has not been paid the
value of the approved materials which were already stocked for the
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purpose of execution of the work. Moreover, the petitioner also has a
claim in liquidated damages for the inability of the railway authorities to
deliver the site on time and for sudden determination without any
consultation with the petitioner. The petitioner had submitted a
performance guarantee, which was not returned.
6. The learned advocate for the railway authorities submits that the last
notice invoking arbitration was received on December 30, 2025 and the
application has been filed before this Court before the expiry of the
thirty days from receipt thereof. He further submits that the GCC
provides that the Arbitral Tribunal will be constituted by a particular
officer of the railways. Thus, adequate time was not given to the
railways to perform their role under the said GCC by constituting the
Arbitral Tribunal from the panel maintained by the respondents.
7. With regard to the issue as to whether the dispute falls within excepted
matter, this Court finds that apart from the challenge to the termination
of the contract, the petitioner has other claims towards non-payment of
the value of the approved materials which had been mobilized by the
petitioner for execution of the work. In this case, the termination was
not for non-performance or for any breach committed by the petitioner,
but in exercise of power conferred upon the railways under Clause 61(1)
of the GCC. The petitioner has claims in damages and for return of the
performance guarantee. Thus, these disputes have to be resolved by an
Arbitrator. Whether the dispute falls under excepted matters, will also
fall within the domain of the arbitrator. Secondly, the petitioner
5
approached the Senior Divisional Electrical Engineer and made various
representations for resolution of the dispute by a conciliation. The
authorities did not take any steps and did not respond to the request of
the petitioner for withdrawal of the termination and continuation of the
project.
8. Under such circumstances, this Court does not hesitate to hold that the
chances of conciliation never existed and referring the matter back for
conciliation will be an empty formality. Reference is made to the
decisions of Demerara Distilleries Private Limited and Anr. vs.
Demerara Distillers Limited : (2015) 13 SCC 610 and Visa
International Limited vs. Continental Resources (USA) Limited :
(2009) 2 SCC 5.
9. With regard to the contention of the railways that the petitioner
approached this Court without waiting for thirty days, this Court finds
that the last notice invoking arbitration was issued on November 5,
2025 and the same was sent by email on the same day. The application
was filed before this Court on December 23, 2025. However, records
reveal that the first notice invoking arbitration was issued on October
23, 2025 and the same was received by the railway authorities.
Pursuant to the said notice, the railway authorities asked the petitioner
to submit certain details and item wise claim, inter aila, stating that the
demand was not valid as per GCC.
10. Under such circumstances, the objection that this application is
premature, is not accepted. The other contentions of the railway
6
authorities that the demand was not made in proper form and that the
authority did not have the opportunity to constitute the tribunal are
also not accepted. The law is well settled that, unilateral appointment
of an arbitrator by a person or authority who himself cannot act as an
arbitrator is prohibited under the law.
11. Reference is made in this regard to Perkins Eastman Architects
DPC and Another vs. HSCC (India) Ltd. reported in 2019 SCC
OnLine SC 1517; and Central Organisation for Railway
Electrification vs. ECI SPIC SMO MCML (JV) A joint Venture
Company reported in 2024 SCC OnLine SC 3219. Unilateral
appointment of an arbitrator by one of the parties from its own panel of
arbitrators or from its own employees is contrary to law.
12. The Hon'ble Apex Court in Central Organization for Railway
Electrification (supra), held thus:-
"73. The 2015 amendment has introduced concrete standards
of impartiality and independence of arbitrators. One of the
facets of impartiality is procedural impartiality. Procedural
impartiality implies that the rules constitutive of the decision-
making process must favour neither party to the dispute or
favour or inhibit both parties equally.137 Further, a
procedurally impartial adjudication entails equal participation
of parties in all aspects of adjudication for the process to
approach legitimacy.138 Participation in the adjudicatory
process is meaningless for a party against whom the arbitrator
is already prejudiced.139 Equal participation of parties in the
process of appointment of arbitrators ensures that both sides
have an equal say in the establishment of a genuinely
independent and impartial arbitral process.
74. Under Sections 12(1) and 12(5), the Arbitration Act
recognises certain mandatory standards of independent and
impartial tribunals. The parties have to challenge the
independence or impartiality of the arbitrator or arbitrators in
terms of Section 12(3) before the same arbitral tribunal under
Section 13.140 If the tribunal rejects the challenge, it has to
7
continue with the arbitral proceedings and make an award.
Such an award can always be challenged under Section 34.
However, considerable time and expenses are incurred by the
parties by the time the award is set aside by the courts. Equal
participation of parties at the stage of the appointment of
arbitrators can thus obviate later challenges to arbitrators.
75. Independence and impartiality of arbitral proceedings and
equality of parties are concomitant principles. The
independence and impartiality of arbitral proceedings can be
effectively enforced only if the parties can participate equally at
all stages of an arbitral process. Therefore, the principle of
equal treatment of parties applies at all stages of arbitral
proceedings, including the stage of the appointment of
arbitrators.
***
124. The doctrine of bias as evolved in English and Indian law
emphasizes independence and impartiality in the process of
adjudication to inspire the confidence of the public in the
adjudicatory processes. Although Section 12 deals with the
quality of independence and impartiality inherent in the
arbitrators, the provision's emphasis is to ensure an
independent and impartial arbitral process."
In Perkins Eastman (supra), the Hon'ble Apex Court held thus :-
..."20. We thus have two categories of cases. The first, similar
to the one dealt with in TRF Ltd. [TRF Ltd. v. EnergoEngg.
Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] where
the Managing Director himself is named as an arbitrator with
an additional power to appoint any other person as an
arbitrator. In the second category, the Managing Director is not
to act as an arbitrator himself but is empowered or authorised
to appoint any other person of his choice or discretion as an
arbitrator. If, in the first category of cases, the Managing
Director was found incompetent, it was because of the interest
that he would be said to be having in the outcome or result of
the dispute. The element of invalidity would thus be directly
relatable to and arise from the interest that he would be having
in such outcome or decision. If that be the test, similar
invalidity would always arise and spring even in the second
category of cases. If the interest that he has in the outcome of
the dispute, is taken to be the basis for the possibility of bias,
it will always be present irrespective of whether the matter
stands under the first or second category of cases. We are
conscious that if such deduction is drawn from the decision of
this Court in TRF Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd.,
(2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] , all cases having
clauses similar to that with which we are presently concerned,
a party to the agreement would be disentitled to make any
appointment of an arbitrator on its own and it would always be
available to argue that a party or an official or an authority
having interest in the dispute would be disentitled to make
appointment of an arbitrator.
21. But, in our view that has to be the logical deduction from
TRF Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd., (2017) 8 SCC
377 : (2017) 4 SCC (Civ) 72] Para 50 of the decision shows that
this Court was concerned with the issue, "whether the
Managing Director, after becoming ineligible by operation of
law, is he still eligible to nominate an arbitrator" The
ineligibility referred to therein, was as a result of operation of
law, in that a person having an interest in the dispute or in the
outcome or decision thereof, must not only be ineligible to act
as an arbitrator but must also not be eligible to appoint
anyone else as an arbitrator and that such person cannot and
should not have any role in charting out any course to the
dispute resolution by having the power to appoint an
arbitrator. The next sentences in the paragraph, further show
that cases where both the parties could nominate respective
arbitrators of their choice were found to be completely a
different situation. The reason is clear that whatever advantage
a party may derive by nominating an arbitrator of its choice
would get counter-balanced by equal power with the other
party.But, in a case where only one party has a right to
appoint a sole arbitrator, its choice will always have an
element of exclusivity in determining or charting the course for
dispute resolution. Naturally, the person who has an interest
in the outcome or decision of the dispute must not have the
power to appoint a sole arbitrator. That has to be taken as the
essence of the amendments brought in by the Arbitration and
Conciliation (Amendment) Act, 2015 (3 of 2016) and recognised
by the decision of this Court in TRF Ltd. [TRF Ltd. v.
EnergoEngg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC
(Civ) 72]
...
24. In Voestalpine [VoestalpineSchienen GmbH v. DMRC,
(2017) 4 SCC 665 : (2017) 2 SCC (Civ) 607] , this Court dealt
with independence and impartiality of the arbitrator as under :
(SCC pp. 687-88 & 690-91, paras 20 to 22 & 30)
"20. Independence and impartiality of the arbitrator are the
hallmarks of any arbitration proceedings. Rule against bias is
one of the fundamental principles of natural justice which
applied to all judicial and quasi-judicial proceedings. It is for
this reason that notwithstanding the fact that relationship
between the parties to the arbitration and the arbitrators
themselves are contractual in nature and the source of an
arbitrator's appointment is deduced from the agreement
entered into between the parties, notwithstanding the same
non-independence and non-impartiality of such arbitrator
(though contractually agreed upon) would render him ineligible
to conduct the arbitration. The genesis behind this rational is
that even when an arbitrator is appointed in terms of contract
and by the parties to the contract, he is independent of the
parties. Functions and duties require him to rise above the
partisan interest of the parties and not to act in, or so as to
further, the particular interest of either parties. After all, the
arbitrator has adjudicatory role to perform and, therefore, he
must be independent of parties as well as impartial. The
United Kingdom Supreme Court has beautifully highlighted
this aspect in Hashwani v. Jivraj [Hashwani v. Jivraj, (2011) 1
WLR 1872 : 2011 UKSC 40] in the following words : (WLR p.
1889, para 45)
'45. ... the dominant purpose of appointing an arbitrator or
arbitrators is the impartial resolution of the dispute between
the parties in accordance with the terms of the agreement and,
although the contract between the parties and the arbitrators
would be a contract for the provision of personal services, they
were not personal services under the direction of the parties.'
21. Similarly, Cour de Cassation, France, in a judgment
delivered in 1972 in Consorts Ury [Fouchard, Gaillard,
Goldman on International Commercial Arbitration, 562
[Emmanuel Gaillard & John Savage (Eds.) 1999] {quoting Cour
de cassation [Cass.] [Supreme Court for judicial matters]
Consorts Ury v. S.A. des Galeries Lafayette, Cass.2e civ., 13-4-
1972, JCP, Pt. II, No. 17189 (1972) (France)}.] , underlined
that:
'an independent mind is indispensable in the exercise of
judicial power, whatever the source of that power may be, and
it is one of the essential qualities of an arbitrator'.
22. Independence and impartiality are two different concepts.
An arbitrator may be independent and yet, lack impartiality, or
vice versa. Impartiality, as is well accepted, is a more
subjective concept as compared to independence.
Independence, which is more an objective concept, may, thus,
be more straightforwardly ascertained by the parties at the
outset of the arbitration proceedings in light of the
circumstances disclosed by the arbitrator, while partiality will
more likely surface during the arbitration proceedings.
***
30. Time has come to send positive signals to the international
business community, in order to create healthy arbitration
environment and conducive arbitration culture in this country.
Further, as highlighted by the Law Commission also in its
report, duty becomes more onerous in government contracts,
where one of the parties to the dispute is the Government or
public sector undertaking itself and the authority to appoint
the arbitrator rests with it. In the instant case also, though
choice is given by DMRC to the opposite party but it is limited
to choose an arbitrator from the panel prepared by DMRC. It,
therefore, becomes imperative to have a much broadbased
panel, so that there is no misapprehension that principle of
impartiality and independence would be discarded at any stage
of the proceedings, specially at the stage of constitution of the
Arbitral Tribunal. We, therefore, direct that DMRC shall
prepare a broadbased panel on the aforesaid lines, within a
period of two months from today..."
13. Clause 64(1)(i) provides as follows:
"64(1)(i): In the event of any dispute or difference between the
parties hereto as to the construction or operation of this
contract, or the respective rights and liabilities of the parties on
any matter in question, dispute or difference on any account or
as to the withholding by the Railway of any certificate to which
the Contractor may claim to be entitled to, or if the Railway
fails to make a decision within 120 days, then and in any such
case, but except in any of the "excepted matters" referred to in
Clause 63.1 of these Conditions, the Contractor, after 120 days
but within 180 days of his presenting his final claim on
disputed matters shall demand in writing that the dispute or
difference be referred to arbitration."
14. The expression 'or' in the 7th line should be read as disjunctive and
as such, there is no bar for the petitioner to approach the authority, by
demanding reference to arbitration even without approaching any other
authority, or waiting for a decision from the conciliator.
15. In Vidya Drolia and Others Vs. Durga Trading Corporation
reported in (2021) 2 Supreme Court Case 1, the Hon'ble Apex Court
was of the opinion that issues arising out of the contract, its existence,
validity and non-arbitrability would be connected and intertwined with
the issues underlying the merits of the respective disputes/claims.
Whether the disputes fell within exempted or excluded matters were
also questions touching the arbitrability of the dispute and the
jurisdiction of the learned arbitrator. Those should be decided at the
appropriate stage.
16. Further reference is made to the decision of National Insurance
Company Limited Vs. Boghara Polyfab Private Limited reported in
(2009) 1 Supreme Court Cases 267, on the same proposition.
17. Under such circumstances, this application is allowed. The objection
of the respondents are left open, and to be decided by the learned
Arbitrator.
18. Accordingly, the Court appoints Mr. Sourojit Dasgupta, learned
Advocate (Mob. No.8697542775), as the Arbitrator, to arbitrate upon the
disputes between the parties. This appointment is subject to compliance
of Section 12 of the Arbitration and Conciliation Act, 1996. The
learned Arbitrator shall fix his own remuneration as per the Schedule of
the Act.
19. AP-COM/1015/2025 is, accordingly, disposed of.
(SHAMPA SARKAR, J.)
B.Pal
