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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.602 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 25.2.2022

passed by the majority of the Arbitral Tribunal in the matter of SSE/

PW/CTR-CBF and SSE/PW/E/PTJ Sections-Contract Agreement No.SA/

280 dated 06.2.2019, to the extent it rejects Claim No.4 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

majority award dated 25.2.2022 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/280.

(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

27.11.2018 for a value of Rs.2,76,83,452/- was also issued to them. 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 majority of 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

the majority award, the above petition has been filed before this

Court.

4. The learned counsel for the petitioner questioned the majority

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

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(b) that the interpretation given by the majority of the Arbitral

Tribunal to deny the claim made by the petitioner suffers from patent

illegality and 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 cannot automatically result in attributing

bias as against the remaining members of the Arbitral Tribunal, that

the majority of 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 https://www.mhc.tn.gov.in/judis

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test as to whether the view taken by the majority of the Arbitral

Tribunal is a possible view.

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.No

.

Description 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

21630 Per

track

metre

Rs.48/- Rs.10,38,240/- https://www.mhc.tn.gov.in/judis

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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

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

Charge at site (in parallel track)

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

81270 Per

track

metre

Rs.48/- Rs.39,00,960/-

10. The majority of the Arbitral Tribunal rendered a finding that

the schedule could have been better drafted to avoid any ambiguity in

the interpretation. However, the majority of 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 majority of 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. https://www.mhc.tn.gov.in/judis

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11. That apart, the majority of 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 majority of the Arbitral Tribunal, when the

terms of the contract were clear and unambiguous, suffers from patent

illegality.

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

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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

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

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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

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 majority of 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 they would have to be

set aside on the ground of patent illegality. In view of the same, this

Court finds that the majority of 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. https://www.mhc.tn.gov.in/judis

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15. In so far as the first issue regarding bias is concerned, the

dissenting Arbitrator made the following observations:

“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 https://www.mhc.tn.gov.in/judis

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same have been kept aside by Shri Neeraj Jain, the

learned Presiding Arbitrator and Ms.Aradhna Chak,

the learned Co-Arbitrator while drawing the

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 case on hand, 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. https://www.mhc.tn.gov.in/judis

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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

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

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

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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

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

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

that the majority 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.

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

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

on the ground of bias/premeditation.

22. Accordingly, the impugned majority 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

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

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N.ANAND VENKATESH,J

RS

Arb.O.P.(Com.Div.) No.602 of 2022

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