ARBAPPL/161/2025 of M/s Galore Infotech Pvt. Ltd Vs M/s SEW Krishnagar Bahrampore Highways LtdAMPORE HIGHWAYS LTD on 2 April 2026

ORDER

:i-Ieard Mr- M. Govind Reddy, learned counser representing Mr. E. varun Kumar, leamed counsel fbr the Applicant on the mainrainability of the present application filed under secrion 14 read with secrions 15 and l l of the Arbitration and conciriation Act, 1996 ( fbr short, ,the Act, 1996,). 1r. 't'he present Arbitration Application arises out of disputes between the Appricant, M/s. Garore Infratech private Limited, and the Respondent, I\4/s. SfrtW I(rishnagar Bahrarnpore I-tighways [-imitec[, in relation to a work order--cum-agreement dated ( I t '".'.'.:i't#

I

KL,J AA_l6l_2025 26.09.2012 executed for the supply of aggregates in connectton with a national highwaY Project'

3. ThegenesisofthedisputetracesbacktoJune20l2,when a group company of the Applicant' namely Mls' Balajee [nfratech & Constructions Pvt' Ltd', received an enquiry from SEW lnfrastructure Limited for participation in the project concerning thefour-laningoftheKrishnagar_BaharamporesectionofNll-34 inthestateofWestBengalundertheNHDPPhase-l[IonDBFOT (Annuity)basis.Pursuanttonegotiations'aLetteroflntent(LOI) dated 13.07.2012 was issued, initially in favour of the said group company.subsequently,uponmutualunderstanding,theworkwas transferred to the Applicant company' and a fresh offer was submitted on 07.0g.2012, followed by issuance of a work order dated 26.09.2012 in favour of the Applicant'

4. Under the terms of the Work Order' the Applicant was obligated to install two crushing plants of 200 TPH capacity and to supply approximately I l '00'000 metric tons of crushed stone within a stipulated period of one year. In compliance, the Applicant mobilizedsubstantialresources,installedtherequiredmachinery, 'ii . ,.*i .

J KL.J AA l6t 2025 obtained necessary governmental permissions, and commenced produc :ion frorn September/October 201?.. j;. [t is the case of the Applicanr rhat despite fulfilling its contractual obligations, the Respondent failed Io lift the aggregates produc,ld, resulting in accumulation of stock at the site, disruption of production, and incurring of additional costs such as re-handling charges;. T'he Applicant further alleges that the Respondent default,:d in rnaking timely payments of monthly bilts, leading to substantial outstanding dues. The situation allegedly compelled the Applicant to demobilize its machinery and discontinue operations, thereby sufl-ering signifi cant financial losses. (. Subsequently, disputes arose between the parties regarding non-payment of dues and damages for breach of contrac[. I'he Applicant quantified its claim at approximately Rs.l2.2l crores towards losses suffered. Legal notices were issued demancling payrnent; however, the Respondent failed to comply.

7. [nvoking the arbitration clause contained in the work order-<:um-Agreement, the Applicant initially nominated a sole arbitrator. The Respondent, however, disputed the same and

KL,.] AA r6l '2025 unilaterally appointed another arbitraior Sri V.V. Raghavan, a retired District & Sessions Judge was appointed, according to the terms of the contractual clause vesting such power in its Managing Director. The Applicant raised objectioni regarding the independence and impartiality of the appointed arbitrator under Section 12 ofthe Act, 1996. The said arbitrator eventually recused himsell and thereafter, Respondent has appointed Sri Dasari Sambaiah, as a substitute Arbitrator'

8. The disputes between the parties were earlier subject matter of Arbitration Application No.1l0 of 2016 fited by the Applicant herein under Section 11(6) of the Act, 1996, wherein the Applicant sought appointment of an independent Arbitrator. The saidapplicationwasdismissedbythisCourtbyorderdated 09.06.2020, upholding the appointment made in terms of the contractual clause and holding that the arbitration was governed by the pre-Amendment Act, 2015 regime' g.ThesaidorderwascarriedinSpecialLeavePetition(C) No.13500 of 2020 before the Hon,ble Supreme Court, which came to be dism.issed by order dated r5.o3.zoz4, thereby affirming the { ,*l .,i:.-j.iifiil --.il*ffi

) KL,J AA r6t 2025 judgmert of this Court and rendering the issue final between the parties. l(). Aggrieved by the unilateral appointment mechanism and the continuation of arbitral proceedings, the Applicant approached this Court by filing the present arbitration under Section 14, read with Se,;tions 15 and I I of the Act, 1996, seeking appropriate reliefs including termination of the mandate of the arbitrator and appointrlent of an independent arbitrator I l. The present Arbitration Application, therefore, arises in the backdrop of the said proceedings, centering around the validity of the arbitral process, the legality ot'unilateral appointment of the arbitrator, and the consequential rights of the parties under the Arbitration and Conciliation Act, 1996. I']. CONTBNTIONS OF THB APPLICANT

i) The Applicant assails the impugned proceedings primarily on the ground that the arbitral process initiated by the Respondent is vitiated in law and contrary to the rnandate of the Act, 1996.

ii) At the outset, it is contended that the Respondent has exercisec unilateral control over the constitution of the Arbitral

K t-..1 AA_t6l_2025 Tribunal by invoking the contractual clause empowering its Managing Director to appoint sole arbitrator. According to the Applicant, such unilateral appointment strikes at the root of the principles of neutrality, independence, and impartiality of the arbitral process, which are foundational to arbitration law. The Applicant submits that once disputes had arisen between the parties, the Respondent. being an interested party, could not have retained exclusive authority to appoint the arbitrator

iii) tt is further contended that the initial appointment made by the Respondent was itself legally unsustainable, and although the said arbitrator subsequently recused, the Respondent again proceeded to appoint a substitute arbitrator unilaterally. The Applicant submits that such successive appointments by one party demonstrate a continued dominance over the arbitral process and render the proceedings inherently biased and contrary to Sections l2 and l8 of the Act.

iv) The Applicant also asserts that it had raised specific objections under Section 12(3) of the Act, 1996 regarding justifiable doubts as to the independence and impartiality of the ,:;: .

Kt...l A^ t6l 2025 arbitrator. These objections, according to the Applicant, were not adequat,:ly addressed, thereby necessitating judicial intervention under Slections 14 and 15 of the Act, for termination of the arbitratc,r's mandate. v'r Another principal contention advanced is that once the original)y appointed arbitrator recused, the Respondent forfeited its contractual right, if any, to appoint a substitute arbitrator, particularly in light of the disputes having crystallized and the Applica,rt having expressed lack of confidence in such unilateral mechanism. It is argued that, in such circumstances, the appointrnent ought to have been made through the intervention of the court under Section I I of the Act, to ensure fairness and neutrality

vi) The Applicant further submits that rhe Respondent has acted in breach of the statutory scheme introduced by the Act, 2015, ,tvhich emphasizes independence and impartiality of arbitrators and restricts party autonomy where it conflicts with these p.:inciples. The unilateral appointment procedure, it is -l

KL,J AA r6t 2025 contended, is hit by the ineligibiliry provisions and the broader doctrine against bias.

vii) [n addition, the Applicant contends that the arbitral proceedings themselves are liable to be set aside cir stayed, as they are being conducted pursuant to an invalid constitution of the Tribunal. It is argued that continuation of such proceedings would cause grave prejudice to the Applicant and defeat the very purpose of a fair adjudicatory mechanism.

viii) Lastly, the Applicant submits that the Court, white exercising jurisdiction in the present proceedings, ought to ensure that the arbitral tribunal is constituted in a manner consistent with the principles of natural .justice, equality of parties, and statutory safeguards, and accordingly seeks termination of the mandate of the unilaterally appointed arbitrator and appointment of an independent arbitrator through the Court. I3.LAW AND ANALYSE

i) The principal question that arises for consideration in the present proceedings is whether the application filed under Sections ,.J ;og:itiEil

KL.J AA_l6l_2025 [4 read with Sections ll and l5 of the Act, 1996 is maintainable in the facls and circumstances of the case

ii) At the outset, it is necessary' to advert to the prior litigatic,n between the parties, which has a direct bearing on the issue at hand. The Appticant had earlier invoked the jurisdiction of this Cc,urt by filing an Arbitration Application No.l l0 of 2016 under Section I l(6) of the Act, seeking appointment of an indepertdent arbitrator in substitution of the arbitrator appointed by the Respondent in terms of, the Work Order--cum-Agreement dated 26.09.20t2.

iii) By judgrnent dated 09.06.2020 in Arbitration l.pplication No. I l0 of 2016, this Court declined to inrerfere with the appointment so made and urpheld the contractual rnechanism of appointment. This Court, upon a detailed consideration of the statutory scheme and the lau, declared by the Hon'ble, Supreme Court, held that the arbitration agreement in question was governed by the pre-Amendment Act, Z0t5 regime and that the arbitral proceedings had cornmenced prior to the coming into force of the Amendmenl Acr. [t was further held that

KL,J AA l6t 2025 the provisions introduced by the Arbitration and Conciliation (Arnendment) Act,20l5, including Section l2(5), would not apply retrospectively so as to invalidate the agreed procedure of apporntment.

iv) The said judgnrent has attained finality. The Special Leave Petition vide SLP (C) No.13500 of 2020 preferred by the Applicant came to be disrnissed by the Hon'ble Supreme Court by order dated 15.03.2024. observing that it was not inclined to interfere with the irnpugned judgment and order passed by this Court.

v) Thus, the validity of the unilateral appointment mechanism contained in the agreement as also the applicability of the pre-amendment regime, stands conclusively determined inter partes.

vii) The Applicant, thereafter, invoked the provisions of Sections 12 and l3 of the Act, seeking recusal of the Arbitrator on the ground of alleged bias. The said application came to be rejected, and the statutory scheme, which contemplates .: ., ,,'. -,,::.":

s lt KL.J AA_l 6 r _2025 consid,:ration.

ix) Section 14 of the Act, provides tbr termination of the manda-e of an arbitrator where he becomes de jure or de facto unable to perform his functions or tails to act without undue delay lhe scope of the provision is narrow and is conlined to situations where the arbitrator suffers from a legal or t'actual incapacity which renden; continuation of the mandate irnpossible. 'I'he provision cannot be invoked as a substitute for challenging the validity of the appointment itself.

ix) Section 15 of the Act, which deals with substitution of an arbitrator, is consequential in nature and comes into operation only upon termination of the mandate under Section 14 or in circumstances expressly contemplated therein. [t does not conf'er an indepe:rdent right to seek reconstitution of the arbitral tribunal. continuation of the arbitral proceedings subject to challenge under Section 34, was reiterated. 'riii) In the aforesaid backdrop, the present proceedings under Sections 14, read with Sections I I " and 15 fall for r t2 KI-..1 AA_ l6l_202_5

x) The contention of the Applicant, though couched in the language of Sections l4 and 15, is in substance a challenge to the very appointment ol'the Arbitrator in terms of the agreement. Such a challenge, having been raised and negatived in the earlier round of litigation, cannot be permitted to be re-agitated under the guise of the present proceedings.

xi) The invocation of Section 1l of the Act, is equally misconceived. Once an arbitrator has been appointed in accordance with the agreed procedure and such appointment has been upheld by this Court, the jurisdiction under Section 1l stands exhausted and cannot be invoked repeatedly on the same grounds.

xii) In SP Singla (lonstructions Pvt. Ltd. v. State of Himachal Pradeshr, the [{on'ble Supreme Court, while dealing with the applicability of the Arbitration and Conciliation (Amendment) Act, 2015, held that the amended provisions would not apply to arbitral proceedings which had commenced prior to the coming into force of the Amendment Act, unless the parties otherwise agree. The Court emphasized that the contractual mechanism of appointment and the legal regime governing such ,(20\qI2 SCC 488

I t ! i i I i II i I I I ili fl liItrl i I I i i ; ! I i ri KI-..1 AA 161 2025 proceedings must be tested in accordance with the un-amended Act where the arbitration had already commenced.

xiii) Similarly, in M/s. Shree Vishnu Constructions v. The Engin,eer-in-Chief', the Hon'ble Supreme Court, following the decision in BCCI v. Kochi Cricket Pvt. Ltd3., elaborated upon Section 26 of the Amendment Act and held that the amendment is prospective in nature. It was held that while arbitral proceedings comrnonced prior to the Amendment Act would continue to be governed by the un-amended provisions, even court proceedings "in relation to" such arbitral proceedings must be examined in light of the stage at which they are initiated, thereby reaffirming the non-rel.rospective application of the amended provisions. ;<iv) [n Central Organization for Railway Electrification v. ECI-SPIC-SMO-MCML (JV)', the Hon'ble Supreme Court, while considering the issue of unilateral appointment of arbitrators, reiterated the importance of independence and impartiality in arbitral appointments. However, the Court recognized that the legal principles evolved under the amended regime operate prospectively :(2023) rt scc 329 '(2018) ti SCC 287 '(2025\ -t scc 641 t

it l4 KL,J AA_t6l_t025 and would not unsettle arbitral proceedings conlnenced prior to the 2015 Amendment. Thus, the decision does not invalidate appointments made under pre-amendment agreements where the arbitral process had already been set in motion. l4) To conclude while the post-amendment jurisprudence has evolved to strengthen the principles of neutrality and independence, the same cannot be applied retrospectively so as to invalidate an appointment which has already been upheld and has attained finality between the parties. The legal position in this regard is no longer res integra.

15. In the present case, the arbitration agreement is dated 26.09.2012, the arbitral proceedings had commenced prior to the 2015 Amendment; the validity of the appointment mechanism has already been upheld by this Court in Arbitration Application No.l10 of 2016; the said ltnding has attained finality upon dismissal of the Special Leave Petition (St,P) by the Supreme Court; and the Applicant has already availed the statutory remedy under Sections L2 and l3 of the Act ;;-.t:rq#

f l5 Kl...l AA l6l_202) \ : I I i l

16. No material has been placed on record to demonstrate that the arbitrator has become de jure or de /acto unable to perform his functions or has failed to act without undue delay so as to attract liection l4 of the Act.

17. In such circumstances, the present proceedings, in substance, constitute an attempt to reopen and re-agitate an issue which stands concluded between the parties and to indirectly challenge the constitution of the arbitral tribunal. Such an exercise is clearly impermissible, both on the principles ol' finality of judicial determinations and under the statutory scheme of the Act, which mandates minimal judicial interference in arbitral proceedings. [ 8. Accordingly, this Court holds that the application filed under Section 14 read with Sections I 5 and I I of the Act, 1996 is not maintainable in law. The arbitral proceedings shall, therefore, continur: in accordance with law, leaving it open to the Applicant inctuding bias and raise all the grounds and contenrions which it has rais;ed in the present Application in all the consequential proceedings.

l6 KL,J AA_r 6l-2025

19. ln the light of the aforesaid discussion, this Arbitration Application dismissed as not maintainable. No order as to costs. As a sequel thereto, miscellaneous petitions, if any, pending in this arbitration application shall stand closed. SD/. M. MANJULA JOINT REGISTRAR N OFFICER //-'--- //TRUE COPY/

1. One CC to Sri Varun Kumar. E, Advocate [OPUC]

2. Two CD Copies ABK /BA To, nr i:{

HIGH COURT DATED: 0210412026

ORDER

ARBAPPL.No.161 of 2025 DISMISSING TI{E ARBAPPL AS NOT MAINTAINABLE WITHOUT COSTS

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