1 CGHC010091732026 2026:CGHC:27732 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ARBR No. 12 of 2026 M/s B P Agrawal Civil Engineers, Builders and Transporters, Agrasen Marg, Korba 495678, Chhattisgarh, Through Its Proprietor, Namely Shri Sourabh Agrawal, S/o Late Shri Balbir Prasad Agrawal, Aged About 42 Years, Resident of Agrasen Marg, Korba, Distt. Korba, Chhattisgarh. ... Applicant versus 1. Union of India Through Its General Manager, South East Central Railways, Bilaspur, Chhattisgarh. 2. Chief Administrative Officer (Const.) South East Central Railways, Nirman Bhawan, New Construction Building, Near RTS Colony, Bilaspur, Chhattisgrh. 3. Chief Engineer (Const) South East Central Railways, Bilaspur, Chhattisgarh. 4. Chief Engineer (Const) III South East Central Railways, Bilaspur, Chhattisgarh. ... Respondents For Applicant : Mr. Manoj Paranjpe, Senior Advocate assisted by Mr. Abhishek Vinod Deshmukh, Advocate. For Respondents : Mr. Ramakant Mishra, Deputy Solicitor General. Hon’ble Mr. Ramesh Sinha, Chief Justice Order on Board 06.07.2026 1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator. 2. The facts, in brief, as projected by the applicant are that the applicant is a PREETI KUMARI Digitally signed by PREETI KUMARI Date: 2026.07.09 11:52:50 +0530 2 proprietorship firm and is inter-alia, engaged in the business of Civil Engineering construction, builders and Transporters. Respondent No.1 is a zone of Indian Railways situated in the Central India and is serving the states of Chhattisgarh, Orissa, Madhya Pradesh and Maharashtra. Respondent Nos. 2 to 4 are its officers. Respondent No. 2 invited a bid for the work of "Execution of earthwork in cutting and bank, construction of bridges, supply of ballast, track linking, construction of buildings and platforms and other allied and miscellaneous works in connection with construction of Champa - Bye Pass Railway Line connecting Balpur - Champa Station to Champa - Baradwar section. The applicant had also participated in the tender and upon becoming the successful bidder, the Letter of Acceptance was issued on 06.03.2009 for the Contract Value of Rs. 5,66,83,077/-. The work was to be completed within the period of 8 months i.e. on or before 05.11.2009. Subsequently, the Contract Agreement was signed between the applicant and the respondent on 09.07.2009. Since the inception of the Contract, the work was being delayed due to the reasons not attributable to the applicant, but attributable to Railways, however, the respondent sanctioned the extension with penalties amounting to Rs. 13 lakhs and finally terminated the contract on 03.02.2012, in gross violation of the terms of contract as well as in gross violation of law. Time and again, the applicant requested the respondent to resolve the claims, however, the respondent failed to pay heed to same. Accordingly, the applicant vide its notice of Demand for Arbitration dated 25.07.2014 submitted various claims for settlement and for arbitration. The respondent upon receipt of this letter informed the applicant vide its letter dated 04.08.2014 that the matter has been forwarded the executive and PHOD of concerned department for their remarks in connection with the appointment of Arbitrator and the views of the Railway Administration on the request of the applicant for appointment of arbitrator will be informed to the 3 applicant accordingly. The respondent thereafter proposed 4 names from the panel of Railway officials vide its letter dated 27.10.2014, both serving as well as retired and requested the applicant to choose two out of which one would be selected by the respondent as nominee of applicant. In furtherance to the letter dated 27.10.2024, the applicant vide its letter dated 21.11.2014 indicated the name of two officers out of which the nominee of applicant was to be appointed by General Manager. Vide letter dated 28.11.2014, the office of respondent No. 1 constituted the Arbitral Tribunal comprising Shri R. S. Poonia, Presiding Arbitrator, Shri T. K. Biswas, Co-Arbitrator & Contractor's nominee and Shri Gaithaorei, Co-Arbitrator, for adjudication of disputes between the parties. The Office of respondent No. 1 vide its letter dated 05.08.2015 substituted one of the Arbitrator and appointed Shri L. S. Meena in place of Shri Gaithorei. The Office of respondent No. 1 vide its letter dated 21.04.2016 substituted presiding Arbitrator and appointed Shri Sanjay B. Naghbhidkar in place of Shri R. S. Poonia. The Office of respondent No. 1 vide its letter dated 23.10.2019 again substituted presiding Arbitrator and appointed Shri Naveen Babu in place of Shri Sanjay B. Naghbhidkar. The Office of Respondent No. 1 vide its letter dated 24.11.2020 again substituted Co-Arbitrator and appointed Shri Zaigham Ali Khan in place of Shri S. Vivekanand. The Office of Respondent No. 1 vide its letter dated 24.02.2022 again substituted Co-Arbitrator and appointed Shri Manzarul Hasan in place of Shri Zaigham Ali Khan. Despite lapse of about more than 9 years from the invocation of Arbitration Clause, the arbitration claim of the applicant was not decided. Thereafter, the office of respondent No. 1 vide its letter dated 12.02.2025 sought opinion of the applicant as to whether the applicant wish to pursue the case any further or not, considering that the case has been under adjudication for a long time. It was also proposed to explore the possibility of appointment of Arbitral Tribunal comprising retired Railway 4 Officers. The applicant vide its letter dated 30.03.2025 informed the respondent that the applicant wish to pursue the matter to its logical end. The office of respondent No. 1 vide its letter dated 17.06.2025 informed the applicant that Arbitral Tribunal comprising 03 SAG Railway Officers were formed, however, due to frequent transfer of the Officers, the Arbitral Tribunal Could not complete the proceedings. It was deliberated that a fresh Tribunal comprising of retired Railway officers may be formed so that dispute can be adjudicated. Accordingly, a panel of 4 retired officers was given to the applicant to select two out of which the Contractor's nominee would be appointed by respondent No. 1. 3. In furtherance to the letter dated 17.06.2025, the applicant vide its letter dated 15.10.2025 indicated the name of two officers out of which the nominee of applicant was to be appointed by General Manager. The Office of Respondent No. 1 then, constituted the fresh Arbitral Tribunal vide letter dated 26.11.2025 comprising Shri V. K. Agrawal, as Presiding Arbitrator; Shri Ashok Kumar Das, Co-Arbitrator (Contractor's nominee) and Ms. Rashmi Goel, Co-Arbitrator (Finance Member). All the members of the Arbitral Tribunal including the Presiding Arbitrator are retired officers of Railways. The said Arbitral Tribunal has entered upon the reference on 11.12.2025 and fixed the matter on 18.12.2025 for the first hearing for which the Order-sheet was issued on 19.12.2025. The office of Respondent No. 1 ought not have constituted the Arbitral Tribunal comprising retired officers of Railways as there was no such clause in the Agreement between the parties and as such the appointment is non-est. 4. The constitution of the Arbitral Tribunal by the respondent is contrary to the law laid down by the Hon'ble Supreme Court in as much as the when the General Manager i.e. respondent No. 1 himself is ineligible to act an arbitrator, the Arbitral Tribunal ought not to have been constituted by 5 respondent No. 1. Reliance in this regard is placed upon the decision of Hon'ble Supreme Court in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), reported in (2025) 4 SCC 641 has held as under: “116. Section 12(5) automatically disqualifies any person whose relationship with the parties or counsel or subject- matter of the dispute falls under any of the categories mentioned under the Seventh Schedule. The categories listed in the Seventh Schedule in essence denote situations where an arbitrator might have a pecuniary, proprietary, or cause-based interest in the arbitration. For instance, employees of either of the parties are barred from acting as an arbitrator because they have an immediate financial and cause-based interest in the arbitration. If such an employee is appointed as an arbitrator, they would be sitting as a Judge in their cause because they have a pecuniary interest in the outcome of the case. 120. The categories mentioned under the Seventh Schedule are such that it is difficult to distinguish the interests of an arbitrator from those of a party to which an arbitrator is connected. In such cases, the issue is whether the outcome of the arbitration will realistically affect the arbitrator's interests. The law prioritises the objective criterion of independence over the subjective criterion of impartiality. Once it is established that an arbitrator falls under any of the categories mentioned in the Seventh Schedule, they are automatically disqualified without any investigation into whether or not there is any real likelihood of bias. Since the ineligibility envisaged under Section 12(5) goes to the root of the appointment, an application may be filed under Section 14(2) of the Arbitration Act to the Court to decide on the termination of the arbitrator's mandate. (HRD Corpn. v. GAIL (India) Ltd., (2018) 12 SCC 471, para 12: (2018) 5 SCC (Civ) 401] 128. If a person having a financial interest in the outcome of the arbitral proceedings unilaterally nominates a sole arbitrator, it is bound to give rise to justifiable doubts on the independence and impartiality of the arbitrator. The possibility of bias by the arbitrator is real because the person who has an interest in the subject-matter of the dispute can chart out the course of the entire arbitration proceeding by unilaterally appointing a sole arbitrator. A party may select a particular person to be appointed as a sole arbitrator because of a quid pro quo arrangement between them. Moreover, the fact that the sole arbitrator owes the appointment to one party may make it difficult to decide against that party for fear of displeasure. It is not possible to determine whether the sole arbitrator will be prejudiced, but the circumstances of the appointment give rise to the real possibility of bias. 133. Many PSUs are regularly involved in arbitration disputes and constantly need the services of arbitrators. 6 Such institutions often maintain a pool of potential arbitrators with the sole object of having a ready pool of qualified professionals who have committed their time and consented to act as arbitrators for fixed fees. The Arbitration Act does not prohibit parties to an arbitration agreement from maintaining a curated panel of potential arbitrators. However, the problem arises when the PSUs make it mandatory for other parties to select their nominees from the curated panel of arbitrators. When a PSU exercises its discretion to curate a panel, the very factor that the PSU is choosing only a certain number of persons as potential arbitrators and not others will raise a reasonable doubt in the mind of a fair-minded person. The PSUs may conceivably have nominated a person on the panel of potential arbitrators because they have a certain predisposition in favour of the former. This doubt is reinforced when the other party is given no choice but to select its arbitrator from the curated panel. 134. In CORE (Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV), (2020) 14 SCC 712], the three-member tribunal was sought to be constituted in the following manner: (i) the Railways would suggest at least four names of retired railway officers; (ii) the contractor would select two names out of the panel for appointment as their arbitrator; (iii) The General Manager (of the Railways) would thereafter choose at least one person out of the two to be appointed as the contractor's arbitrator; and (iv) The General Manager would proceed to appoint the balance arbitrators from the panel or outside the panel and also indicate the presiding arbitrator. 135. Such an arbitrator-appointment clause is likely to give rise to justifiable doubts as to the independence and impartiality of arbitrators for two reasons: (i) the contractor is restricted to choosing its arbitrator from the panel of four arbitrators nominated by the party who is a disputant; and (ii) the contractor's choice is further constrained because it is made subject to the decision of the General Manager who will choose one among the two persons suggested by the party. Since the contractor has to select its arbitrator from a curated panel, the arbitration clause does not allow the contractor equal participation in the appointment of their arbitrator. Moreover, the clause allows the General Manager to appoint the balance arbitrators from either the panel or outside the panel. Thus, the process of appointing the arbitrators is unequal because the General Manager can go beyond the panel of four potential arbitrators, while the contractor is bound by the names enlisted in the panel. 136. In a three-member tribunal, the independence and impartiality of a third or presiding arbitrator are prerequisites to the integrity of the arbitral proceedings. In CORE (Central Organisation for Electrification v. ECI-SPIC-SMO-MCML (JV), (2020) 14 Railway SCC 712), the arbitration clause allowed the General Manager to unilaterally nominate the Presiding Officer out of the panel of three arbitrators. The clause does not countenance any participation from the contractor in the process of appointing or nominating the 7 Presiding Officer. Thus, the process of appointing and nominating the Presiding Officer is unequal and prejudiced in favour of the Railways. The fact that the General Manager is nominating the Presiding Officer gives rise to reasonable doubt about the independence and impartiality of the entire arbitration proceedings. 5. The purported constitution of the Arbitral Tribunal is non-est as the office of respondent No. 1 has constituted the Arbitral Tribunal in gross violation of the provisions of the Section 12 (5) of the Arbitration & Conciliation Act, 1996 and admittedly there is no waiver of applicability of said provision in the prescribed format, as required expressly under the law. Reliance in this regard is placed upon the decision of Hon'ble Supreme Court in Bharat Broadband Network Ltd. v. United Telecoms Ltd., reported in (2019) 5 SCC 755 wherein it has been held as under: 20. This then brings us to the applicability of the proviso to Section 12(5) on the facts of this case. Unlike Section 4 of the Act which deals with deemed waiver of the right to object by conduct, the proviso to Section 12(5) will only apply if subsequent to disputes having arisen between the parties, the parties waive the applicability of sub-section (5) of Section 12 by an express agreement in writing. For this reason, the argument based on the analogy of Section 7 of the Act must also be rejected. Section 7 deals with arbitration agreements that must be in writing, and then explains that such agreements may be contained in documents which provide a record of such agreements. On the other hand, Section 12(5) refers to an "express agreement in writing". The expression "express agreement in writing" refers to an agreement made in words as opposed to an agreement which is to be inferred by conduct. Here, Section 9 of the Contract Act, 1872 becomes important. It states: "9. Promises, express and implied -Insofar as the proposal or acceptance of any promise is made in words, the promise is said to be express. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied." It is thus necessary that there be an "express" agreement in writing. This agreement must be an agreement by which both parties, with full knowledge of the fact that Shri Khan is ineligible to be appointed as an arbitrator, still go ahead and say that they have full faith and confidence in him to continue as such. The facts ofthe present case disclose no such express agreement. The appointment letter which is relied upon by the High Court as indicating an express agreement on the facts of the case is dated 17-1-2017. On this date, the Managing Director of the appellant was certainly 8 not aware that Shri Khan could not be appointed by him as Section 12(5) read with the Seventh Schedule only went to the invalidity of the appointment of the Managing Director himself as an arbitrator. Shri Khan's invalid appointment only became clear after the declaration of the law by the Supreme Court in TRF Ltd. (TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377: (2017) 4 SCC (Civ) 72) which, as we have seen hereinabove, was only on 3-7-2017. After this date, far from there being an express agreement between the parties as to the validity of Shri Khan's appointment, the appellant filed an application on 7-10-2017 before the sole arbitrator, bringing the arbitrator's attention to the judgment in TRF Ltd. (TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377: (2017) 4 SCC (Civ) 72) and asking him to declare that he has become de jure incapable of acting as an arbitrator. Equally, the fact that a statement of claim may have been filed before the arbitrator, would not mean that there is an express agreement in words which would make it clear that both parties wish Shri Khan to continue as arbitrator despite being ineligible to act as such. This being the case, the impugned judgment is not correct when it applies Section 4, Section 7, Section 12(4), Section 13(2) and Section 16(2) of the Act to the facts of the present case, and goes on to state that the appellant cannot be allowed to raise the issue of eligibility of an arbitrator, having itself appointed the arbitrator. The judgment under appeal is also incorrect in stating that there is an express waiver in writing from the fact that an appointment letter has been issued by the appellant, and a statement of claim has been filed by the respondent before the arbitrator. The moment the appellant came to know that Shri Khan's appointment itself would be invalid, it filed an application before the sole arbitrator for termination of his mandate. 6. In view of the forgoing compelling circumstances, there is no effective remedy to the applicant except approaching this Hon'ble Court for appointment of an independent Sole Arbitrator under Section 11 (6) of the Arbitration and Conciliation Act, 1996. In the above backdrop, the applicant are constrained to approach this Hon'ble Court invoking powers conferred upon it under Section 11(6) for appointment of a sole arbitrator to resolve all disputes and differences between the parties between the Parties. This Hon'ble Court has jurisdiction to entertain the instant petition as the Agreement was executed in Bilaspur and as such this Hon'ble Court has jurisdiction to entertain the present application. The cause of action to file the present application had arisen when respondent No. 1 who himself is an 9 interested party, has constituted the Arbitral Tribunal that too in gross violation of the terms and conditions of the Contract read with the provisions of the Arbitration & Conciliation Act, 1996. Accordingly, the applicant is filing the present application to with the prayer to this Hon'ble Court to appoint an independent person as Arbitrator, under Clause 64 of the General Conditions of Contract and under section 11(6) of the Arbitration and Conciliation Act, in view of the inability on the part of respondent No. 1 to appoint the Arbitral Tribunal for adjudication of dispute in view of the mandate of Section 12 (5) of the Arbitration & Conciliation Act, 1996. 7. Mr. Ramakant Mishra, learned Deputy Solicitor General, appearing for the respondents relying on the return filed on behalf of the respondents, opposes the present arbitration request application, however he submits that the respondent shall have no objection if this Court appoints any Arbitrator for resolving the dispute between the parties. 8. I have heard learned counsel appearing for the parties, perused the pleadings and documents appended thereto. 9. A query was put to learned counsel appearing for the parties as to whether they are agreeable for a common name who can be appointed as Arbitrator, learned counsel for the parties submitted that they would have no objection if any retired Judge of this High Court is appointed as the Sole Arbitrator. They further submit that Hon'ble Mrs. Justice Rajani Dubey, who is a retired Judge of this High Court may be appointed as the Sole Arbitrator. 10. In view of the above consensus between the learned counsel for the parties, Hon'ble Mrs. Justice Rajani Dubey, a retired Judge of this High Court is appointed to act as the Sole Arbitrator to resolve the dispute involved in this arbitration request between the parties. 11. The Registry is directed to communicate this order to Hon’ble Mrs. Justice Rajani Dubey in the proper address. 10 12. The remuneration of the Arbitrator shall be settled with the mutual consent of the parties. 13. The arbitration request petition, accordingly, stands allowed. Sd/- (Ramesh Sinha) Chief Justice Preeti