Authority: Supreme Court of India

Order Date: 08 September 2026

Case Overview

  • Parties: Appellant – M/s. GVV Constructions Private Limited (a construction and infrastructure company). Respondents – The Union of India and others, including South Central Railway.
  • Background: South Central Railway invited tenders on 21‑02‑2017 for the “Doubling of track between Guntur‑Guntakal Section” work. GVV Constructions submitted a bid, which was accepted. A formal Contract Agreement was executed on 30‑11‑2017, stipulating a completion deadline of 23‑10‑2018.
  • Termination: On 10‑06‑2022 the contract was terminated under Clause 62 of the Indian Railways Standard General Conditions of Contract (GCC). The performance guarantee and security furnished by the appellant were forfeited, and the appellant was denied any compensation.
  • Initial Litigation: The appellant filed a writ petition seeking quashing of the termination order, alleging procedural violations of the GCC and invoking Clause 17 for a direction to the respondents. A Single Judge dismissed the petition on 18‑10‑2022, holding that complex factual questions were not amenable to Article 226 and noting that the appellant had already invoked the arbitration clause.
  • High Court Intervention: The appellant appealed. The Division Bench of the High Court (judgment dated 16‑12‑2025) set aside the Single Judge’s finding that there was no irregularity in the termination, granting the appellant liberty to raise all claims before the Arbitral Tribunal and directing the tribunal to decide the claims strictly in accordance with the contract terms.
  • Arbitration Proceedings: Pursuant to the High Court order, a former judge of the Supreme Court was appointed as Sole Arbitrator. Arbitration commenced on 20‑01‑2026, and twelve issues were framed, including the validity of the termination order dated 10‑06‑2022 and whether any claims are barred by limitation or fall under “excepted matters”.
  • Submissions:
  • Appellant (Mr. Gaurav Agarwal, Sr. Counsel): Argued that delay was not attributable to the appellant, the termination was illegal, and the High Court’s direction restricting the arbitrator conflicted with the Supreme Court’s decision in ABS Marine Services.
  • Respondent (Mr. Vikramjit Banerjee, Additional Solicitor General): Contended that invoking arbitration on the termination issue violated Clause 63 of the GCC, which earmarks such matters as “excepted” and non‑arbitrable, and that the High Court’s direction was misplaced.
  • Legal Analysis Presented by the Court:
  • Reviewed Clause 63 and Clause 64 of the GCC, emphasizing that “excepted matters” are excluded from arbitration but remain reviewable by courts.
  • Discussed the Arbitration and Conciliation Act, 1996, especially Sections 11, 16, and the impact of the 2015 amendment inserting Section 11(6A), which limits judicial scrutiny at the appointment stage to the existence of an arbitration agreement.
  • Cited precedents (e.g., Konkan Railway Corp. Ltd., SBP & Co., National Insurance Co. Ltd., Duro Felguera, Vidya Drolia, SBI General Insurance, Office for Alternative Architecture) to establish that questions of arbitrability of “excepted matters” fall within the arbitrator’s jurisdiction under Section 16, not the court’s.
  • Concluded that the Division Bench’s direction to the arbitrator to decide claims strictly per contract terms effectively circumscribed the arbitrator’s jurisdiction over the termination issue, which is impermissible.

Final Outcome

  • The Supreme Court clarified that the High Court’s direction does not impinge upon the arbitrator’s jurisdiction to adjudicate the termination dispute.
  • No opinion on the merits of the termination was expressed.
  • The appeal is disposed of; no order as to costs; any pending applications stand disposed of.

Topics: Judicial Review, Arbitration Jurisdiction, Railway Contract Termination