M/S Pragati Construction Consultants vs Northern Railways on 11 August, 2025

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Delhi High Court - Orders

M/S Pragati Construction Consultants vs Northern Railways on 11 August, 2025

1. This is a petition filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an Arbitrator for adjudication of disputes between the parties arising out of the Letter of Acceptance dated 20.02.2020 and the Agreement dated 22.06.2020 executed between the parties.

2. The facts are that the petitioner participated in the tender for execution of work of "Construction of a two-lane Road Over Bridge in lieu of existing Level Crossings No. 75 at KM 156/7-8, 78 at KM 163/13- 14, 79 at KM 165/5-6, 84 SPL at KM 175/12-14, and 84-AC at KM 177/13-15, with Bow String Girder/Bow Shaped Truss, along with the construction of LHS by the pushing method and other allied works on This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/08/2025 at 22:22:44 the GZB-SRE section" and vide Letter of Acceptance dated 20.02.2020 was awarded the project. Thereafter, the parties executed the Agreement on 22.06.2020, incorporating the terms and conditions of the GCC, which contained an Arbitration Clause, being Clause No. 64, which reads as under: -

"64.(3) : Appointment of Arbitrator:

64.(3)(a) : Appointment of Arbitrator where applicability of section 12 (5) of Arbitration and Conciliation Act has been waived off:

64.(3)(a)(i): In cases where the total value of all claims in question added together does not exceed ₹ 1,00,00,000/-

(Rupees One Crore), the Arbitral Tribunal shall consist of a Sole Arbitrator who shall be a Gazetted Officer of Railway not below Junior Administrative Grade, nominated by the General Manager. The sole arbitrator shall be appointed within 60 days from the day when a written and valid demand for arbitration is received by General Manager."

3. The respondent subsequently issued a Completion Certificate dated 02.09.2024, acknowledging the satisfactory execution and completion of the project by the petitioner.

4. Thereafter, the petitioner vide letter dated 21.10.2024 invoked Arbitration and sought the resolution of disputes arising out of the Agreement dated 22.06.2020, on account of the non-resolution of This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/08/2025 at 22:22:44 multiple claims, despite repeated assurances by the respondent over the preceding two years. Since the Arbitrator was not appointed to resolve the disputes, the present petition has been filed before this Court.

5. Mr. Garg, learned counsel for the petitioner states that the petitioner was subjected to financial and economic coercion/duress, being compelled to issue "No Claim Letters" on 21.06.2024, and the respondent procured the petitioner's signatures on blank formats of Final Bills and Supplementary Agreements as a condition precedent for processing and releasing admitted dues, thereby vitiating the petitioner's consent.

6. It is further stated that the respondent, by letter dated 27.02.2025, acknowledged the disputes and agreed to refer the matter to arbitration, but made it conditional on the petitioner waiving Sections 12(5) and 31(5) of the Arbitration and Conciliation Act. The petitioner, by letter dated 04.03.2025, rejected this waiver, citing the Supreme Court's judgment in Central Organisation for Railway Electrification v. EC/SPIC SMO MCML (JV) (2024 SCC OnLine SC 3219), which invalidated such unilateral appointment mechanisms. Despite this, the respondent, on 01.04.2025, proposed a panel of retired Railway Officers for selection by its General Manager. Thus, no consensus could be reached on the appointment of the arbitrator.

7. Mr. Mishra, learned counsel for the respondent, has handed over a supplementary agreement dated 30.07.2024 in Court today, which reads as under:-

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8. He states that in the present case, as per the Supplementary Agreement, the petitioner has accepted the entire payment made by the respondent in full and final settlement of its claims and has stated that the agreement stands finally discharged and all terms and conditions, including the Arbitration Clause, stand rescinded. He also states that the petitioner has intentionally and malafidely not mentioned the said Supplementary Agreement as entered between the parties dated 30.07.2024.

9. He further states that there are no disputes between the parties and assuming that the petitioner has any grievance, his remedy lies in filing a civil suit.

10. I have heard learned counsels for the parties.

11. The purported date of the Supplementary Agreement is 30.07.2024.

12. Even though the respondent, in the aforementioned supplementary agreement, stated that "the arbitration clause contained in the said principal agreement shall cease to have any effect and/or shall be deemed to be non-existent for all purposes," it nevertheless issued a letter dated 27.02.2025 seeking the petitioner's waiver of Sections 12(5) and 31(5) of the Arbitration and Conciliation Act, 1996. This clearly demonstrates the respondent's intention to proceed with arbitration and its acknowledgment of the continued existence of the arbitration clause, namely Clause 64 of the GCC.

13. In response to the aforesaid letter, the petitioner, vide letter dated 04.03.2025, stated that it did not agree with the appointment procedure prescribed under Clause 64 of the GCC, as it required the appointment of an Arbitrator from the panel maintained by the This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/08/2025 at 22:22:44 Railways/Respondent. The petitioner stated in the letter that this procedure is no longer valid, given the settled position of law that an independent and impartial Arbitral Tribunal must be constituted, placing reliance on the judgment of Central Organisation for Railway Electrification (supra). The petitioner further declined to waive the applicability of Sections 12(5) and 31(5) of the Arbitration and Conciliation Act, 1996, and insisted on the appointment of an independent arbitral tribunal.

14. To the above-stated letter of the petitioner, the respondent replied, vide letter dated 01.04.2025, requesting the petitioner to suggest at least two names out of the panel nominated for selection of the petitioner's nominee, out of a panel of four retired Railway officers.

15. The letters dated 27.02.2025 and 01.04.2025 are reproduced as under: -

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/08/2025 at 22:22:44 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/08/2025 at 22:22:44

16. The petitioner, vide letter dated 04.03.2025, had also stated that it had raised an objection regarding the respondent coercing the petitioner to sign various documents under duress.

17. Prima facie, I am of the view that the Supplementary Agreement dated 30.07.2024 is one such kind of document.

18. The very fact that the petitioner states that there are disputes between the parties which have not been settled is a reason enough for this Court to refer the parties to Arbitration. Additionally, even if there is an allegation of economic coercion or duress raised by the petitioner, the mere execution of a full and final settlement receipt/discharge voucher in favour of the respondent would not by itself operate as a bar to arbitration, when the validity of such a receipt or voucher is challenged on the grounds of fraud, coercion, undue influence or economic duress. Reliance is placed on SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754, more particularly on paragraphs 57 and 58 which read as under:

"57. The position that emerges from the aforesaid discussion is that there is no rule of an absolute kind which precludes arbitration in cases where a full and final settlement has been arrived at. In Boghara Polyfab (supra), discussing in the context of a case similar to the one at hand, wherein the discharge voucher was alleged to have been obtained on ground of coercion, it was observed that the discharge of a contract by full and final settlement by issuance of a discharge voucher or a no-dues certificate extends only to those vouchers or certificates which are This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/08/2025 at 22:22:44 validly and voluntarily executed. Thus, if the party said to have executed the discharge voucher or the no dues certificate alleges that the execution was on account of fraud, coercion or undue influence exercised by the other party and is able to establish such an allegation, then the discharge of the contract by virtue of issuance of such a discharge voucher or no dues certificate is rendered void and cannot be acted upon.

58. It was further held in Boghara Polyfab (supra) that the mere execution of a full and final settlement receipt or a discharge voucher would not by itself operate as a bar to arbitration when the validity of such a receipt or voucher is challenged by the claimant on the ground of fraud, coercion or undue influence. In other words, where the parties are not ad idem over accepting the execution of the no-claim certificate or the discharge voucher, such disputed discharge voucher may itself give rise to an arbitrable dispute."

19. For the said reasons, the petition is allowed and the following directions are issued: -

i) Ms. Justice Rekha Palli (Former Judge, Delhi High Court) (Mobile No 9810012120) is appointed as a Sole Arbitrator to adjudicate the disputes between the parties.

ii) The arbitration will be held under the aegis and rules of the Delhi International Arbitration Centre, Delhi High Court, Sher Shah Road, New Delhi (hereinafter, referred to as the This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/08/2025 at 22:22:44 'DIAC').

iii) The remuneration of the learned Arbitrator shall be in terms of DIAC (Administrative Cost and Arbitrators' Fees) Rules, 2018.

iv) The learned Arbitrator is requested to furnish a declaration in terms of Section 12 of the Act prior to entering into the reference.

v) It is made clear that all the rights and contentions of the parties, including as to the arbitrability of any of the claim, any other preliminary objection, as well as claims/counter-claims and merits of the dispute of either of the parties, are left open for adjudication by the learned arbitrator.

vi) The parties shall approach the learned Arbitrator within two weeks from today.

20. The present petition is disposed of in the aforesaid terms.

JASMEET SINGH, J AUGUST 11, 2025 / (MS) This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/08/2025 at 22:22:44

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