Legal & Judicial Updates (June 2025)

NOTABLE JUDGEMENTS JUNE 2025

ARBITRATION LAW

I. Case Title: West Bengal Industrial Development Corporation Ltd. v. Tata Motors Limited

Citation: AP-COM/88/2024

Court: Calcutta High Court

Decided on: 19 June 2025

Brief Facts:

• The present interlocutory application (GA No. 1 of 2025) was filed by the award- debtor, West Bengal Industrial Development Corporation Ltd. (WBIDC), in a pending proceeding under Section 36(2) of the Arbitration and Conciliation Act, 1996, seeking an unconditional stay of the arbitral award dated 30 November 2023 passed in favour of the award-holder, Tata Motors Ltd. (TML).
• During the pendency of the Section 36(2) application, WBIDC moved this interlocutory application seeking impleadment of the Presiding Arbitrator of the arbitral tribunal, Justice (Retd.) V.S. Sirpurkar, on grounds of alleged bias and non-disclosure of his association with TML during the arbitration proceedings.
• WBIDC contended that the arbitrator had attended events hosted by dealers of Tata Motors during the pendency of the arbitration, but had failed to disclose the same, thus violating disclosure obligations and rendering the award vitiated by bias and fraud, and thereby in conflict with the public policy of India.

Issues:

1. Whether an allegation of bias against a presiding arbitrator, without impleading the said arbitrator, can be a ground for unconditional stay of an arbitral award under Section 36(2) and the second proviso to Section 36(3) of the Arbitration and Conciliation Act, 1996.
2. Whether the presiding arbitrator can be impleaded in the Section 36(2) proceedings before the Court forms a prima facie view regarding the existence of fraud or corruption.
3. Whether 'bias' can be construed as a form of 'fraud' under the meaning of the second proviso to Section 36(3) of the Act.

Judgment:

The Hon'ble High Court dismissed the interlocutory application, holding as follows:

1. The scope of Section 36(2) and (3) is distinct from that of Section 34. The inquiry under Section 36 is limited to determining whether a prima facie case of fraud or corruption exists, and the same must be evident on the face of the record.
2. The allegation of bias and the plea for impleadment of the arbitrator cannot be entertained at this stage, without a prior prima facie finding of fraud or corruption.
3. The Court clarified that unless such a finding is made, impleading the arbitrator is unwarranted. The legal proposition that "the cart cannot be placed before the horse" was reaffirmed.
4. The application was therefore held to be premature, and no case was made out for impleadment at this stage.

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II. Case Title: Union of India through General Manager, Central Railway vs. PLR HC RBR JV

Citation: 2025: BHC-OS: 9305

Court: Bombay High Court

Decided on: 24 June 2025

Brief Facts:

• The dispute emanated from a works contract dated 24.09.2018, executed between the Union of India (through Central Railway) and the Respondent Contractor, PLR HC RBR JV, for earthwork, blanketing, and bridge construction between Wardha and Nanded under the South-Central Railway Zone. The total contract value was approximately ₹124.96 crores.
• Over the course of performance, the scope of work expanded, and the Contractor executed additional works valued at approximately ₹147 crores. Though extensions of time were granted owing to land acquisition delays and the COVID-19 pandemic, the Railways subsequently denied price variation, imposed penalty, withheld payment of the 7th and 8th RA Bills, and alleged abandonment of work. This led to arbitration proceedings.
• The Arbitral Tribunal passed an award in favour of the Respondent Contractor, allowing claims on multiple heads including withheld RA bills, price variation, refund of security deposit, issuance of completion certificate, and costs with interest. The present petition was filed by the Union of India under Section 34 of the Arbitration and Conciliation Act, 1996, assailing the said award.

Issues:

1. Whether the Arbitral Tribunal committed jurisdictional error or patent illegality in granting reliefs beyond the express terms of the contract, particularly in light of Clause 41 of the GCC and Article 299 of the Constitution of India.
2. Whether the award of price variation and rejection of penalty were perverse or contrary to the fundamental policy of Indian law.
3. Whether the Tribunal's findings on joint measurements, issuance of completion certificate, and refund of security deposit were liable to be set aside under Section 34 of the Act.
4. Whether the arbitral award was vitiated by any manifest error or procedural impropriety warranting interference by the Court.

Judgment:

The Hon'ble High Court dismissed the Petition and upheld the arbitral award in its entirety. The Court, inter alia, held as follows:

1. The findings of the Arbitral Tribunal were based on cogent documentary and oral evidence, particularly the RA Bills and joint measurement records prepared and endorsed by the officials of the Petitioners themselves.
2. Execution of additional work was undertaken with the knowledge, consent, and supervision of the Railway authorities; hence, objections based on Clause 41 of the GCC and Article 299 were untenable at the stage of contract execution and post-facto approval.
3. The Respondent was not in breach; rather, the delays and denials were attributable to the Petitioners. Therefore, the imposition of a penalty and withholding of payments was arbitrary and unjustified.
4. The tribunal's direction for refund of security deposit, issuance of completion certificate, and grant of interest and costs was found to be reasonable and in accordance with law.
5. No grounds under Section 34, be it patent illegality, perversity, or violation of public policy, were made out to warrant judicial interference.

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III. Case Title: Dr. S. Abhilash vs Prasanth Busaredd

Citation: Civil Miscellaneous Appeal No.692 Of 2023

Court: Telangana High Court

Decided on: 21 June 2025

Brief Facts:

• The dispute arose from a petition under Section 8 of the Arbitration and Conciliation Act, filed during an action for specific performance (O.S. No. 603 of 2022).
• Respondents (Plaintiffs) claimed execution of an agreement for sale at ₹1.85 crores, contending that the Appellants (Defendants) failed to register the sale deed despite part payment of ₹1.12 crores.
• The Appellants sought a reference to arbitration based on draft agreements exchanged via email containing arbitration clauses. The Trial Court dismissed this request at threshold, holding that no concluded contract was established

Issues:

1. Whether email drafts amounting to unsigned agreements containing arbitration clauses suffice under Section 7 of the Act.
2. Whether a Section 8 reference can proceed absent an enforceable, signed arbitration agreement.

Judgement:

The Hon'ble High Court dismissed the appeal, affirming the findings of the Trial Court. The Court held as follows:

1. Under Section 7 of the Arbitration and Conciliation Act, a valid arbitration agreement must be in writing and may arise from a signed document or a clear exchange of communications indicating mutual assent.
2. In the present case, the draft agreements remained unsigned and were never formalised. The absence of signatures and finality meant that there was no concluded contract, let alone a binding arbitration clause.
3. The Court noted that Appellants themselves had expressly described the draft agreements as "invalid and null and void" in their affidavit, thereby conceding the absence of any concluded contract containing an arbitration clause.
4. This admission fundamentally undermined the prerequisites of Section 7 for an arbitration agreement.
5. Accordingly, the Court upheld the Trial Court's finding that, absent any valid arbitration agreement, reference under Section 8 was not permissible.

6. The decisions relied upon by the Appellants (including Trimex International, Enercon, and Cox & Kings) were held to be factually distinguishable as they involved concluded contracts with sufficient evidence of mutual assent, unlike the present case.
7. The appeal was found to be devoid of merit and was accordingly dismissed

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IV. Case Title: Tarmat Ltd. v. Union of India & Ors.

Citation: 2023: JKLHC-JMU:2499

Court: High Court of Jammu and Kashmir

Decided on: 02 June 2025

Brief Facts:

• Tarmat Ltd. had a contractual dispute with the Union of India, referred to arbitration under the Jammu & Kashmir Arbitration and Conciliation Act, 1997. An arbitrator was appointed via the Engineer-in-Chief's Branch (MES) panel on 7 February 2022. As the arbitration progressed, Tarmat deposited its share of the arbitrator's fees in accordance with the Fourth Schedule of the Arbitration and Conciliation Act, 1996, introduced through Section 11(3A). However, the Centre insisted on paying substantially lower fees in line with its internal MES-prescribed structure.
• The matter reached an impasse: the arbitrator withheld issuance of the award unless the Centre paid its share of fees as per the Fourth Schedule. Consequently, the award was delayed indefinitely.

Issues:

1. Whether a government-prescribed internal fee structure can override the statutory fee scale prescribed in the Fourth Schedule under the Arbitration and Conciliation Act.
2. Whether the arbitrator is entitled to withhold the award for non-payment of the statutory fees by one party.

Judgement:

1. Section 11(3-A) and the Fourth Schedule establish a statutory entitlement to fee as "prescribed." Government-internal fee structures cannot supplant this statutory regime.
2. The Union of India was expressly bound to deposit its mandated share within 30 days. Its failure to do so prevented the arbitrator from delivering the award.
3. The Court directed the Union to deposit its share of the arbitrator's fee with the Registrar Judicial, Jammu, to be held in a fixed deposit, without prejudice to the Centre's right to contest the claim later.
4. The arbitrator was authorized to proceed with the pronouncement of the award once the fee was deposited, and to file the award on record thereafter.

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