Delhi High Court raps IRCTC for insisting on PSU-curated arbitrator panel

The Delhi High Court has strongly criticised the Indian Railway Catering and Tourism Corporation Limited (IRCTC) for insisting that a private contractor select its nominee arbitrator from a panel curated by IRCTC, holding that such a practice is directly contrary to settled Supreme Court law and undermines the principle of equal participation in arbitral appointments. (Meghalaya Hotels Vs IRCTC).Justice Jasmeet Singh, while hearing a petition filed by Meghalaya Hotels Private Limited under Section 11 of the Arbitration and Conciliation Act, 1996, observed that IRCTC’s conduct was “in contravention of the law” laid down by the Supreme Court in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV)..IRCTC awarded Meghalaya Hotels a contract in February 2018 to construct, operate and maintain an IRCTC budget hotel at Gomati Nagar Extension, Lucknow. A supplementary agreement in October 2019 modified only the payment schedule. Disputes later arose between the parties. Meghalaya Hotels invoked arbitration in September 2025. IRCTC responded by forwarding a panel of three retired railway officers and asked the contractor to choose two arbitrators from the panel. Meghalaya Hotels objected, citing Supreme Court rulings against PSU-curated panels, and approached the Delhi High Court seeking appointment of an arbitral tribunal..The Court held, “I am unable to understand the stand of the respondent. Firstly, the respondent should be aware of the law as laid down by the Hon’ble Supreme Court and must act in accordance with the same,” the Court said. Justice Singh added that once the law had been expressly brought to IRCTC’s notice, there was “no reason for such high-ranking officers to ignore the mandate of law and still seek that the petitioner choose two Arbitrators from the panel of three officers provided by the respondent.”.Justice Singh noted that the Delhi High Court was “regularly coming across” cases where government departments and PSUs continued to insist on panel-based arbitral appointments despite clear judicial pronouncements to the contrary.The Court held "This Court while dealing with petitions under Section 11 of the 1996 Act is regularly coming across letters written by the respondent departments, wherein the respondent department is requiring that the petitioner appoint its nominee Arbitrator from the panel of Arbitrators provided by the respondent department. The present case is one such example.".The Court directed Vinay Kumar Pathak, General General Manager (Infrastructure), IRCTC, who had signed the October 1 letter, to file an affidavit explaining the basis on which the petitioner was asked to select arbitrators from the PSU-curated panel. The judge observed that the insistence was “in direct violation of the law” laid down by the Supreme Court and reiterated by the High Court on multiple occasions..The Court added that it was refraining from recommending further action at this stage only in view of the submissions made by IRCTC’s counsel during the hearing..During the proceedings, IRCTC’s counsel submitted that since the dispute value was approximately ₹3.5 crore, a sole arbitrator could be appointed instead of a three-member tribunal. This proposal was accepted by counsel for Meghalaya Hotels.Accordingly, with the consent of both parties, the Court appointed Mr. Sanjeev Jain, former Principal Judge, Family Courts (South-West), as the sole arbitrator to adjudicate the disputes. The arbitration will be conducted under the aegis and rules of the Delhi International Arbitration Centre (DIAC), with the arbitrator’s fees governed by the DIAC (Administrative Cost and Arbitrators’ Fees) Rules, 2018.Justice Singh clarified that all rights and contentions of the parties, including issues of arbitrability, jurisdiction, claims, counterclaims and merits, were left open for adjudication by the arbitrator. The parties have been directed to approach the arbitrator within two weeks..Although the petition was disposed of, the Court listed the matter on December 19, 2025, for filing of the affidavit by the IRCTC official..Meghalaya Hotels Private Limited was represented by Advocates Dr. Swaroop George, Abhinandan Jain, Shivam Prajapati, Abhigyan Dwivedi and Kartikey..IRCTC was represented by Advocates Lalit Chauhan, Laxmi Chauhan, Manish Yadav, Anith Johnson and Rustam Singh Chauhan..[Read Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.