2026:MHC:180Arb.O.P.(Com.Div.) No.603 of 2022

1/22

In the High Court of Judicature at Madras

Reserved on

07.1.2026

Delivered on:

20.1.2026

Coram :

The Honourable Mr.Justice N.ANAND VENKATESH

Arbitration O.P.(Com.Div.) No.603 of 2022

M/s.Muthu Construction – Salem,

rep.by its Proprietor Mr.Kannan,

House No.7/119, A-6,

Devanankurichi PO,

Tiruchengode Taluk,

Namakkal District-637 209. ...Petitioner

Vs

Union of India, rep.by its

Principal Chief Engineer,

Southern Railway, through DEN/

W/Salem, Office of the Divisional

Railway Manager, Salem-635 011. ...Respondent

PETITION under Section 34 of the Arbitration and Conciliation

Act, 1996 praying to set aside the arbitral award dated 22.1.2022

passed by the Arbitral Tribunal in the matter of SSE/PW/ED and SSE/

PW/TUP Sections-Contract Agreement No.SA/279 dated 06.2.2019, to

the extent to which it is challenged and to direct the respondent to pay

the costs.

https://www.mhc.tn.gov.in/judis

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For Petitioner : Mr.Sharath Chandran

For Respondent : Mrs.V.J.Latha, SCGSC

ORDER

In this petition filed under Section 34 of the Arbitration and

Conciliation Act, 1996 (for short, the Act), the petitioner assails the

award dated 22.1.2022 passed by the Arbitral Tribunal.

2. Heard both.

3. The facts leading to filing of this case are as follows:

(i) The petitioner is a proprietary concern, which entered into a

contract with the respondent titled as repairs to the existing dily

changing corroded fittings over points and crossings/SEJs/bridges/

curves, boxing and tidying of ballast, painting of boards, etc. Two

contracts were entered into namely SA/279 and SA/280. This case

pertains to SA/279.

(ii) The petitioner participated in the tender that was floated by

the respondent and was declared as the successful bidder, pursuant to

which, they were awarded the contract. The letter of acceptance

28.11.2018 for a value of Rs.1,55,15,697/- was also issued. https://www.mhc.tn.gov.in/judis

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(iii) The claims made by the petitioner before the Arbitral

Tribunal pertained to earnest money deposit, security deposit, final bill

amount and payment for the difference as per the unit of

measurement of “track metre”. It was an admitted case that the only

issue, which became the subject matter of adjudication before the

Arbitral Tribunal, was with regard to the last component namely

payment for the difference as per the unit of measurement of “track

metre”.

(iv) Ultimately, the Arbitral Tribunal came to the conclusion that

the claim made by the petitioner under this head was found to be

untenable and hence, it came to be rejected. Aggrieved by that, the

above petition has been filed before this Court.

4. The learned counsel for the petitioner questioned the award

mainly on two grounds and they are:

(a) that it is vitiated by bias, that it violates Section 18 of the Act

and the principles of natural justice and that therefore, it is liable to be

interfered under Section 34(2)(i)(b) of the Act; and

(b) that the interpretation given by the Arbitral Tribunal to deny

the claim made by the petitioner suffers from patent illegality and https://www.mhc.tn.gov.in/judis

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hence, it is liable to be interfered under Section 34(2A) of the Act.

5. Per contra, the learned Senior Central Government Standing

Counsel appearing for the respondent submitted that the dissenting

note of one of the Arbitrators rendered in the other award in respect of

the same parties cannot automatically result in attributing bias as

against the unanimous award passed by the Arbitral Tribunal, that the

Arbitral Tribunal has rightly interpreted the relevant clause in the

agreement, that it is a possible view taken by the Arbitral Tribunal and

that it cannot be interfered by this Court while exercising its

jurisdiction under Section 34 of the Act.

6. This Court has carefully considered the submissions of the

learned counsel on either side and perused the materials available on

record and more particularly the impugned award.

7. This Court will first deal with the second issue raised with

respect to the interpretation of the expression “per track metre” and

test as to whether the view taken by the Arbitral Tribunal is a possible

view. https://www.mhc.tn.gov.in/judis

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8. The sum and substance of the contention raised on the side of

the petitioner is that Schedule B in the agreement consisted of six

categories of works, which used the expression “per track metre” as

the unit of measurement. Except with respect to item Nos.1 and 2, for

all the other items, the measurements were taken separately for each

track whereas in so far as item Nos.1 and 2 were concerned, they

were treated differently and the measurements were recorded by

clubbing two tracks (up and down) and it has been questioned by the

petitioner on the ground that these two items could not be treated/

measured differently especially when the unit of measurement was

one and the same.

9. For proper appreciation, item Nos.1 and 2 in Schedule B are

extracted as hereunder:

S.NoDescription of Work Quantity Unit Rate Amount

1 Boxing and tidying of ballast duly

cleaning and uprooting bushes all

vegetation available over the ballast

and 60 cm from edge of ballast and

cutting of other bushes grown above

cess level on either side of track on

the cess including de-weeding of

vegetation/bushes in between track

and on the cess including labours

and tools, etc. complete and as

directed by the engineer in charge at

site (in parallel track)

(Both up & down line) i. SSE/PW/TUP

72600 Per

track

metre

Rs.48/-Rs.34,84,800/-

2 ................................................

Charge at site (in parallel track)

10,000 Per

track

Rs.48/- Rs.4,80,000/- https://www.mhc.tn.gov.in/judis

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(Both up & down line) ii. SSE/PW/ED. metre

10. The Arbitral Tribunal rendered a finding that the schedule

could have been better drafted to avoid any ambiguity in the

interpretation. However, the Arbitral Tribunal also rendered a rather

curious finding that there was a mutual understanding between the

parties that in so far as item Nos.1 and 2 were concerned, the same

was understood by both parties that the measurement would be made

by clubbing two tracks (up & down). In short, when the respondent

was attempting to give a different interpretation for item Nos.1 and 2

with respect to the yardstick for computation and payment, the

Arbitral Tribunal, without assigning any reason to justify such a stand

taken by the respondent, adopted a different yardstick for item Nos.1

and 2 for the very same unit of measurement.

11. That apart, the Arbitral Tribunal, by casting aside the actual

wordings in the contract, replaced them with the supposed mutual

understanding between the parties and such a construction made by

the Arbitral Tribunal, when the terms of the contract were clear and

unambiguous, suffers from patent illegality. https://www.mhc.tn.gov.in/judis

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12. Useful reference can be made to the judgment of the Hon’ble

Apex Court in State of Chhattisgarh Vs. SAL Udyog (P) Ltd.

[reported in 2022 (2) SCC 275] wherein the relevant portion is

extracted as hereunder:

“26. To sum up, existence of Clause 6(b) in

the agreement governing the parties, has not been

disputed, nor has the application of the Circular

dated 27-7-1987 issued by the Government of

Madhya Pradesh regarding imposition of 10%

supervision charges and adding the same to cost of

the Sal seeds, after deducting the actual

expenditure been questioned by the respondent

Company. We are, therefore, of the view that

failure on the part of the learned sole arbitrator to

decide in accordance with the terms of the contract

governing the parties, would certainly attract the

“patent illegality ground”, as the said oversight

amounts to gross contravention of Section 28(3) of

the 1996 Act, that enjoins the Arbitral Tribunal to

take into account the terms of the contract while

making an award. The said “patent illegality” is not

only apparent on the face of the award, it goes to

the very root of the matter and deserves

interference. Accordingly, the present appeal is

partly allowed and the impugned award, insofar as

it has permitted deduction of “supervision charges”

recovered from the respondent Company by the https://www.mhc.tn.gov.in/judis

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appellant State as a part of the expenditure

incurred by it while calculating the price of the Sal

seeds, is quashed and set aside, being in direct

conflict with the terms of the contract governing

the parties and the relevant circular. The impugned

judgment dated 21-10-2009 is modified to the

aforesaid extent.”

13. Further reference can be made to the decision of the Hon’ble

Apex Court in Delhi Airport Metro Express (P) Ltd. Vs. Delhi

Metro Rail Corporation Ltd. [2022 (1) SCC 131] wherein the

relevant portion is extracted as hereunder:

“29. ............. The permissible grounds for

interference with a domestic award under Section

34(2-A) on the ground of patent illegality is when

the arbitrator takes a view which is not even a

possible one, or interprets a clause in the contract

in such a manner which no fair-minded or

reasonable person would, or if the arbitrator

commits an error of jurisdiction by wandering

outside the contract and dealing with matters not

allotted to them. An arbitral award stating no

reasons for its findings would make itself

susceptible to challenge on this account. The

conclusions of the arbitrator which are based on no

evidence or have been arrived at by ignoring vital

evidence are perverse and can be set aside on the https://www.mhc.tn.gov.in/judis

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ground of patent illegality. Also, consideration of

documents which are not supplied to the other

party is a facet of perversity falling within the

expression ‘patent illegality’.”

14. The interpretation given by the Arbitral Tribunal is certainly

not a possible view as it has actually wandered outside the contract by

ignoring the specific terms of the contract, which would render the

findings perverse and would have to be set aside on the ground of

patent illegality. In view of the same, this Court finds that the Arbitral

Tribunal ought to have adopted the same yardstick for item Nos.1 and

2 like it was done for the other items where the measurements were

recorded separately for each track and the amount was computed.

15. Two of the Arbitrators, who formed part of the Arbitral

Tribunal in this case were also the members in the other Arbitral

Tribunal and it formed the subject matter in Arb.O.P.(Com.Div.)

No.602 of 2022. In the other award, which was the subject matter of

challenge in Arb.O.P.(Com.Div.) No.602 of 2022, the dissenting

Arbitrator made the following observations: https://www.mhc.tn.gov.in/judis

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“1. In para 10.7 of the arbitral award, Shri

Neeraj Jain, the learned Presiding Arbitrator and

Ms.Aradhana Chak, the learned Co-Arbitrator have

stated that-

‘The Arbitrators place on record that the

Presiding Arbitrator Neeraj Jain and Co-Arbitrator

Ms.Aradhana Chak have both also acted as Co-

Arbitrators in an almost similar case conducted

almost concurrently pertaining to agreement

SA/279 dt. 06/02/2019 where the issues are

similar and the award has been declared recently.’

………

For the reasons mentioned above, my both

the learned colleague arbitrators did not discuss

this case with me with open mind and kept their

preconceived conclusions and findings in this case

too. Hence, my views were kept aside while writing

the arbitral award.

………….

(xi) Most of the above mentioned issues

were deliberated in detail in the hearing held on

08.01.2022 and also figured in the order sheet of

this hearing issued by the learned Presiding

Arbitrator under his signature as Arbitration

Notification No.7 vide communication No.NJ/Arb/

SR/Muthu/12 dt. 10.01.2022. Surprisingly the

same have been kept aside by Shri Neeraj Jain, the

learned Presiding Arbitrator and Ms.Aradhna Chak,

the learned Co-Arbitrator while drawing the https://www.mhc.tn.gov.in/judis

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conclusions, finding facts and deciding the arbitral

award.”

16. A Court, which deals with an award rendered by majority of

the Members, need not apply its mind on the findings rendered by the

dissenting Arbitrator. This is in view of the fact that the majority award

becomes the actual award that governs the particular dispute.

However, there is one exception to this rule where the dissenting

Member alleges bias against the majority Members. This issue has to

be certainly considered by the Court since bias vitiates the award for

violation of the principles of natural justice and it also goes against the

fundamental policy of the Indian Law.

17. In the other case involved in Arb.O.P.(Com.Div.) No.602 of

2022, the dissenting Arbitrator has gone on record and stated that his

colleagues on the Tribunal were openly biased and had adjudicated the

case with a preconceived notion and did not discuss the case with him.

18. At this juncture, it will be relevant to take note of the

judgment of the Hon’ble Apex Court in Central Organization for

Railway Electrification Vs. ECI SPIC SMO MCML (JV) [reported https://www.mhc.tn.gov.in/judis

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in 2025 1 MLJ 289] wherein the relevant portions read thus:

“76. The principles of natural justice

principally consist of two rules: (i) no one shall be

a judge in their own cause (nemo judex in causa

sua); and (ii) no decision shall be given against a

party without affording a reasonable opportunity

of being heard [Express Newspaper (P) Ltd. v.

Union of India, 1958 SCC OnLine SC 23 [95]; A K

Kraipak v. Union of India, (1969) 2 SCC 262 [20];

Mohinder Singh Gill v. Chief Election

Commissioner, (1978) 1 SCC 405 [52]; Swadeshi

Cotton Mills v. Union of India, (1981) 1 SCC 664

[27]] Adherence to the principles of natural justice

is a facet of procedural fairness. A decision made

by the State to the prejudice of a person must be

after following the basic rules of justice and fair

play {State of Orissa v. Binapani Dei, 1967 SCC

OnLine SC 15 [9]}. The principles of natural

justice are applied because administrative or

quasi-judicial proceedings can abridge or take

away rights {Union of India v. K P Joseph, (1973)

1 SCC 194 [10]}. Application of the principles of

natural justice prevents miscarriage of justice {A

K Kraipak (supra) [20]}. Natural justice has both

an intrinsic and an instrumental function. The

intrinsic function values natural justice as an end

in itself. It values natural justice as an essential

feature of fairness. In its instrumental element, https://www.mhc.tn.gov.in/judis

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natural justice is viewed as a means to achieving

just outcomes.

77. The principle of nemo judex is based on

the precept that justice should not only be done

but manifestly and undoubtedly be seen to be

done The King v. Sussex Justices, [(1924) 1 KB

256]. The principle of nemo judex applies to

judicial, quasi-judicial, and administrative

proceedings J Mohapatra & Co. v. State of Orissa,

{(1984) 4 SCC 103 [9]}. An adjudicator should be

disinterested and unbiased {A K Roy v. Union of

India, (1982) 1 SCC 271 [97]}. A bias is a

predisposition to decide for or against one party,

without proper regard to the true merits of the

dispute {Government of TN v. Munuswamy

Mudaliar, 1988 Supp SCC 651 [12]}.

……..

88. The principle governing the doctrine of

bias is that a member of a judicial body with a

predisposition in favour of or against any party to

a dispute or whose position in relation to the

subject matter or a disputing party is such that a

lack of impartiality would be assumed to exist

should not be a part of a tribunal composed to

decide the dispute Gullapalli Nageswara Rao v.

State of AP {1959 SCC OnLine SC 53 [6]}; relied

in Mineral Development Ltd. v. State of Bihar

{1959 SCC OnLine SC 49 [10]}. This principle is

applicable to authorities who have to act judicially https://www.mhc.tn.gov.in/judis

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in deciding rights and liabilities and bodies

discharging quasi-judicial functions. A quasi-

judicial authority empowered to decide a dispute

between opposing parties “must be one without

bias towards one side or the other in the dispute.”

{Gullapalli Nageswara Rao v. A P State Road

Transport Corporation (supra)}. A member of a

tribunal which is called upon to try issues in

judicial or quasi-judicial proceedings must act

impartially, objectively, and without bias {Manak

Lal v. Dr. Prem Chand Sighvi {1957 SCC OnLine

SC 10}.”

19. The above judgment of the Constitution Bench reiterated

that the adherence to the principles of natural justice is a facet of

procedural fairness, that bias is a pre-disposition to decide for or

against one party without proper record to the true merits of the

dispute and that this goes against the fundamental principle of

doctrine of bias since the Members of the Arbitral Tribunal are

expected to act impartially, objectively and without bias.

20. In this case, out of three Members of the Arbitral Tribunal,

two of the Members formed part of the other Arbitral Tribunal. In fact,

one of the Members in this Arbitral Tribunal was the Presiding https://www.mhc.tn.gov.in/judis

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Arbitrator in the other Arbitral Tribunal. Of course, in this case, a

unanimous view was expressed by the Arbitral Tribunal. However, two

of the Members of the Arbitral Tribunal in this case were also the

Members of the Arbitral Tribunal in the other case and bias was alleged

against them by the dissenting Arbitrator.

21. Therefore, the question is as to whether that bias on the part

of two of the Members of the Arbitral Tribunal in that case would also

vitiate the present award wherein the very same issue on the

interpretation of the relevant items namely item Nos.1 and 2 in

Schedule B were the subject matter.

22. The learned counsel for the petitioner has brought to the

notice of this Court a very interesting judgment of the Court of Appeal

for Ontario in Vento Motor Cycles Inc. Vs. United Mexican States

[reported in 2025 ONCA 82] wherein the relevant portions are

extracted as hereunder:

“44. There is no doubt that a commercial

arbitration award would properly be set aside if it

were rendered by a single arbitrator whose conduct

was found to give rise to a reasonable https://www.mhc.tn.gov.in/judis

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apprehension of bias. Does it make a difference

that Perezcano was one of three arbitrators on the

Tribunal?

45. The application judge concluded that it

did, as it affected the potential impact of what she

described as a “procedural error”. She noted that

the parties did not refer to any cases dealing with

the question but concluded, based on Wewaykum,

that the reasonable apprehension that one member

of a panel is biased does not necessarily “taint” the

award and the entire panel. It is unfortunate that

the application judge did not have the benefit of

fuller argument on the matter.

46. The decision to set aside an award does

not depend on a demonstration that the

participation of the disqualified member affected

the outcome – that the disqualified member cast

the deciding vote in a split decision. On the

contrary, the bias of one member taints the

tribunal. The rationale is plain: it is impossible to

know whether – or to what extent – the

participation of a biased member affected a panel’s

decision. It cannot be left to conjecture, nor can it

be ignored by assuming that the presumed

impartiality and independence of the other two

members of the panel rendered it harmless. The

parties to an arbitration are entitled to an

independent and impartial tribunal, not simply the

decision of a quorum of panel members who are https://www.mhc.tn.gov.in/judis

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unbiased.

47. This approach can be traced at least to

the 1963 decision of McRuer C.J.H.C. in R. v.

Ontario Labour Relations Board; Ex parte Hall

(1963), 39 D.L.R. (2d) 113 (Ont. H.C.), at pp. 117-

18, citing Frome United Breweries Co. v. Keepers of

the Peace & Justices for County Borough of Bath,

[1926] A.C. 586 (H.L.), at p. 591. The British

Columbia Court of Appeal endorsed McRuer

C.J.H.C.’s approach in R. v. B.C. Labour Relations

Board, Ex. p. International Union of Mine, Mill &

Smelter Workers (1964), 45 D.L.R. (2d) 27 (B.C.

C.A.), at p. 29, stating that it is ‘clear that the

decisions of a tribunal or board consisting of more

than one member will be vitiated if the

circumstances establish a real likelihood that any

member participating in the decision would be

biased in favour of one of the parties’.

48. This principle, sometimes described as

“poisoning the well”, was endorsed by Esson J.A. in

Haight-Smith v. Kamloops School District No. 34

(1988), 51 D.L.R. (4th) 608 (B.C. C.A.), at p. 614,

and by Rothstein J. (as he then was) in Sparvier v.

Cowesses Indian Band (T.D.), [1993] 3 F.C. 142, at

p. 166. Writing in 2001, David J. Mullan

summarized the law as follows: “[a] reasonable

apprehension of bias in one member of a tribunal is

sufficient to disqualify the whole tribunal, even

though that member merely sat at the hearing https://www.mhc.tn.gov.in/judis

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without taking an active role in either it or

subsequent deliberations. Mere presence is

generally enough”: Administrative Law (Toronto:

Irwin Law, 2001), at p. 131.

49. This principle is also well established in

English law, even where the finding of bias

concerns a member of a judicial, as opposed to an

arbitral, panel. See In re Medicaments and Related

Classes of Goods (No 2), [2001] EWCA Civ 1217,

[2001] 1 W.L.R. 700, at para. 99, endorsed by the

Judicial Committee of the Privy Council in Stubbs v.

The Queen, [2018] UKPC 30, [2019] A.C. 868, at

para. 33. As that court explained, the bias of a

single member necessarily vitiated a panel’s

decision: ‘the whole point of the appeal was that

three judges should consider the issues’, and ‘the

mutual influence of each member of the court over

the others necessarily means that if any of them

was affected by apparent bias the whole decision

would have to be set aside’.

50. Vento cites several annulment decisions

under the ICSID Convention in support of this

position. I appreciate that such decisions may be

relevant, but the citation of foreign authority from

non-common law jurisdictions is fraught with

difficulty. The court has no way of knowing whether

these decisions are representative of the law of

foreign jurisdictions or anomalous. Moreover, the

decisions are not easily accessible in any event: https://www.mhc.tn.gov.in/judis

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Some of them are not available in English while

others are cited in translated, excerpted form.

51. There is no need to rely on these cases

and I will not review them here. The principle they

are said to stand for is well established in Canadian

law: The participation of a biased member requires

the decision to be set aside regardless of the

unanimity of the panel.

52. This conclusion is not in tension with

Ontario’s responsibility as a venue for international

arbitration. On the contrary, it reinforces the

integrity of the Canadian legal system and

relatedly, the integrity of the arbitration process.

Finality and efficiency are important goals, but they

are not to be achieved at the cost of an impartial

hearing.”

23. In the above judgment, it has been held that bias of even a

single Member taints the decision of the entire Panel. This principle has

been adopted from the earlier judgments of the Court of Appeal In re

Medicaments and Related Classes of Goods (No 2), [reported in

(2001) 1 W.L.R. 700 paragraph 99] and the Privy Council in

Stubbs Vs. The Queen [reported in 2018 UKPC 30 paragraph

33].

24. This Court is in complete agreement with the said principle of https://www.mhc.tn.gov.in/judis

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law enunciated in the above judgment. This is in view of the fact that

it is impossible to know whether or to what extent the participation of

the biased Member affected the Tribunal’s decision. It cannot be

assumed that the presumed impartiality and independence of one of

the Co-Arbitrators of the Panel rendered it harmless. In other words, a

party is entitled for an independent and impartial Tribunal, which

means that all the Members of the Tribunal must be impartial and

without bias. In the absence of the same, the bias of even a single

Member will necessarily vitiate the award rendered by the Arbitral

Tribunal.

25. In the light of the above discussions, this Court also holds

that the award passed by the Arbitral Tribunal is tainted by bias/

premeditation. Hence, the principle of poisoning the well will apply and

the award will be afflicted by bias. In view of the same, it violates

Section 18 of the Act and it goes against the fundamental policy of the

Indian Law under Section 34(2)(i)(b) of the Act. https://www.mhc.tn.gov.in/judis

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26. The conspectus of the above discussions leads to the only

conclusion that the impugned award is liable to be set aside on the

ground of bias/premeditation.

27. Accordingly, the impugned award is set aside and the above

original petition stands allowed with costs of Rs.1,50,000/-

(Rupees one lakh and fifty thousand only) payable by the

respondent to the petitioner.

20.1.2026

Index : Yes

Neutral Citation : Yes

RS https://www.mhc.tn.gov.in/judis

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N.ANAND VENKATESH,J

RS

Arb.O.P.(Com.Div.) No.603 of 2022

20.1.2026 https://www.mhc.tn.gov.in/judis