Calcutta High Court Dismisses Contractor's Appeal In Arbitration Dispute Over Kolkata East-West Metro Tunneling Accident

The Calcutta High Court recently dismissed an appeal filed by a contractor, affirming a single judge's decision that had set aside an arbitral award arising out of the 2019 Kolkata East-West Metro tunnel accident.

A Division Bench of Justice Debangsu Basak and Justice Md. Shabbar Rashidi held that the arbitral tribunal committed patent illegality by discarding expert evidence on the basis of its own technical assumptions drawn from personal expertise rather than material on record.

The bench observed,

"We have noted that the arbitral tribunal, while deciding the issues, imputed its personal expertise in civil engineering and concluded that the report submitted by IIT, Madras may not be conclusive and it was dependent upon several other factors. However, such findings were not based on any concrete evidence rather, it was mere assumption based on the personal knowledge and experience of the tribunal and the same was used to discard positive evidence adduced by the respondent".

The dispute arose from a contract awarded by Kolkata Metro Rail Corporation Limited (KMRC) to ITD-ITD CEM Joint Venture for design and construction of the underground section of the East-West Metro corridor between Central Station and Subhash Sarobar. Two Tunnel Boring Machines (TBMs) were deployed for execution of the project.

On August 31, 2019, water ingress into the tunnel caused damage to structures above the ground, resulting in claims by affected persons and several litigations, including public interest proceedings.

After disagreements surfaced over who should bear responsibility for the accident, the contractor, ITD-ITD CEM Joint Venture, invoked the arbitration clause in its contract with KMRC and initiated proceedings against the metro corporation.

The dispute eventually led to an arbitral award dated August 6, 2023. In that decision, the tribunal said the material placed before it did not conclusively prove negligence on the part of the contractor. It also declined to rely on certain expert reports produced by KMRC, including those prepared after the damaged Tunnel Boring Machine was retrieved from underground

KMRC challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, and a Single Judge of the High Court, by judgment dated October 31, 2025, set aside the award after finding serious defects in the tribunal's reasoning. The contractor thereafter filed an appeal under Section 37 of the Act.

Before the Division Bench, the contractor argued that the Single Judge had impermissibly re-appreciated evidence and substituted his own interpretation for that of the arbitral tribunal, which was not permissible within the limited scope of Section 34.

KMRC, on the other hand, contended that the tribunal had unjustifiably rejected expert reports, including reports prepared by IIT Madras and other expert bodies, and had instead relied on assumptions based on the arbitrators' own engineering background. It was submitted that the reports were prepared after the damaged TBM was retrieved from underground, which took nearly three years, and therefore technical inspection could not have been carried out earlier.

The High Court agreed with KMRC and held that the tribunal discarded expert reports on untenable grounds, including that they were prepared after commencement of arbitration, without considering that the delay occurred because the TBM had to be recovered from underground before any proper technical examination could be conducted.

The Court also found that the tribunal applied unequal standards while evaluating expert evidence produced by the parties, thereby violating the principle of equal treatment under Section 18 of the Act.

The bench also agreed with the Single Judge that the arbitral tribunal had failed to properly consider the contractual terms governing the project. Under Clause 4.23 of the General Conditions of Contract (GCC), the contractor was required to give a written notice if it encountered any unforeseen physical condition at the site. The Court noted that no such written report was placed on record.

Attention was also drawn to Clause 4.9 of the GCC along with Clause 5 of the Special Conditions of Contract, which made it clear that the contractor was expected to carry out its own soil investigation before bidding for the work. In terms of these clauses, the contractor was deemed to have satisfied itself about the site conditions at the time of submitting the tender.

Despite these contractual provisions, the tribunal shifted liability for third-party damage to KMRC without assigning reasons, even though the contract placed responsibility on the contractor. The Court held that the tribunal had gone beyond the contract and ignored material evidence, rendering the award patently illegal.

The bench held that there was no reason to conclude that the Single Judge had exceeded the jurisdiction under Section 34. It observed:

"We are of the opinion that the finding of learned Single Judge to the effect that the reports produced on behalf of the respondent Metro Railway were unreasonably discarded cannot be said to be perverse or beyond the scope of Section 34 of the Act of 1996".

Holding that the Single Judge had acted within the limited scope of interference permitted under the Arbitration and Conciliation Act, the Division Bench dismissed the appeal and upheld the order setting aside the arbitral award.

For Appellant (ITD-ITD CEM Joint Venture): Senior Advocate Jishnu Saha with Advocates Anal Kumar Ghosh, Hashnuhana Chakraborty, Neelina Chatterjee and Ahana Bhattacharya.

For Respondent (Kolkata Metro Rail Corporation Limited): Senior Advocate Jishnu Chowdhury with Advocates Sreya Basu Mallick, Chayan Gupta, Ankit Dey, Atri Mandal and Subhrojit Mookherjee.