Calcutta High Court Appoints Arbitrator in MHPL Infra-RITES Dispute Over Buxar Thermal Power Project Contract

The Calcutta High Court on Friday appointed a sole arbitrator to adjudicate disputes between MHPL Infra JV and RITES Ltd arising from a railway infrastructure contract connected with the Buxar Thermal Power Project at Chausa, Bihar.

Justice Gaurang Kanth appointed Advocate Sabir Ahmed as the sole arbitrator. The Court held that a valid arbitration clause existed between the parties. It also found that the petition for appointment of an arbitrator had been filed within the prescribed limitation period.

"Applying the aforesaid settled legal position to the facts of the present case, this Court finds that both the conditions precedent for exercise of jurisdiction under Section 11 of the Act are satisfied. As regards the first condition, namely the existence of a valid arbitration agreement, it is anadmitted position between the parties that an arbitration clause exists in Clause 25 of the General Conditions of Contract as amended through Correction Slip No. 3 of the agreement dated August 26, 2021,” the court ruled.

The dispute arose from a contract executed on August 26, 2021, for railway infrastructure works connected with the Buxar Thermal Power Project. The work included earthwork, RCC box culverts, buildings, structural steel works, and track linking.

MHPL alleged that delays in handing over work fronts, approval of drawings, release of payments, and other operational issues affected the progress of the project. It claimed that these issues resulted in additional expenditure and losses.

From March 2022 onwards, MHPL sought foreclosure of the contract through a series of communications. The respondents did not agree to the request. Instead, they required extensions of time for completion of the work.

According to MHPL, disputes remained unresolved despite several meetings and exchanges of correspondence. It invoked arbitration through a notice dated July 24, 2024.

MHPL had initially approached the Delhi High Court seeking appointment of an arbitrator. By an order dated February 4, 2025, the Delhi High Court granted liberty to approach the appropriate forum. MHPL thereafter filed the present petition before the Calcutta High Court.

The Court noted that neither party disputed the existence of the arbitration agreement. It also found that the petition, filed in February 2025, was well within the three-year limitation period from the date of issuance of the arbitration notice.

“No dispute has been raised by either party with regard to the existence of the arbitration agreement itself, and this Court therefore need not undertake any further examination on this aspect. As regards the second condition, namely limitation, the notice under Section 21 was issued by the Petitioner on 24.07.2024, and the present petition has been filed in February 2025, which is well within the period of three years from the date of issuance of the said notice. The petition is, therefore, not barred by limitation,” the court observed.

The court further held that the respondents' objections that the claims exceeded Rs 2 crore and that the arbitration notice was not in the format prescribed under Annexure F2 were not matters falling within the limited scope of examination under Section 11 of the Arbitration and Conciliation Act. It held that these objections could be raised before and adjudicated by the arbitral tribunal under Section 16 of the Act.

Accordingly, the court held that the respondents' objections could be raised before and decided by the arbitral tribunal. It appointed Advocate Sabir Ahmed as the sole arbitrator to adjudicate the disputes between the parties.