Delhi High Court Slams IRCTC Over Arbitrator Panel Practice
Court says PSU‑curated panels violate fairness in arbitration
Ruling strengthens equal participation in dispute resolution
By Our Legal Reporter
New Delhi: December 18, 2025:
In a landmark decision, the Delhi High Court has reprimanded the Indian Railway Catering and Tourism Corporation (IRCTC) for insisting that private contractors select arbitrators only from a panel curated by the PSU. The Court held that this practice is contrary to settled Supreme Court law and undermines the principle of equal participation in arbitration appointments.
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The ruling came in the case of Meghalaya Hotels Pvt Ltd v. IRCTC, where disputes arose over a hotel project in Lucknow. Justice Jasmeet Singh 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).
Background of the Case
- In February 2018, IRCTC awarded Meghalaya Hotels a contract to construct, operate, and maintain a budget hotel at Gomati Nagar Extension, Lucknow.
- A supplementary agreement in October 2019 modified only the payment schedule.
- Disputes later arose, leading to arbitration proceedings.
- IRCTC insisted that the contractor select its nominee arbitrator from a PSU‑curated panel.
- Meghalaya Hotels challenged this practice under Section 11 of the Arbitration and Conciliation Act, 1996.
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Court’s Observations
Justice Jasmeet Singh made several critical points:
- Violation of Supreme Court Law: The insistence on PSU‑curated panels directly contradicts the Supreme Court’s ruling in Central Organisation for Railway Electrification.
- Equal Participation Principle: Arbitration requires both parties to have equal say in appointing arbitrators. Restricting choices to a PSU panel undermines neutrality.
- Recurring Problem: The Court noted that it was “regularly coming across” similar cases where government departments and PSUs continued to insist on panel‑based appointments despite clear judicial directions.
- Need for Reform: The judgment emphasized that PSUs must align their practices with established law to ensure fairness in dispute resolution.
Legal Significance
This ruling is significant for several reasons:
- Strengthens Arbitration Law: Reinforces the principle that arbitration must be free from bias and undue influence.
- Protects Private Contractors: Ensures that contractors dealing with PSUs are not forced into unfair arbitration arrangements.
- Sets Precedent: The judgment will guide future disputes involving PSU contracts and arbitration clauses.
- Encourages Transparency: Pushes PSUs to adopt fairer practices in contract management.
Impact on Stakeholders
- Private Contractors: Gain confidence that courts will protect their rights against unfair arbitration clauses.
- PSUs: Must revise their arbitration policies to comply with Supreme Court and High Court rulings.
- Legal Community: Welcomes clarity on the issue of panel‑based arbitrator appointments.
- Investors: Greater trust in India’s dispute resolution framework, boosting ease of doing business.
Expert Reactions
Legal experts have praised the ruling:
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- Commentators noted that the judgment is part of a broader judicial effort to ensure neutrality and fairness in arbitration involving government entities.
- Arbitration specialists believe this ruling will discourage PSUs from imposing restrictive panels in future contracts.
Broader Context
The case highlights a recurring issue in India’s arbitration landscape: government departments and PSUs often insist on panel‑based arbitrator appointments, despite repeated judicial warnings. The Delhi High Court’s strong stance signals that such practices will no longer be tolerated.
This judgment also aligns with India’s push to become a global hub for arbitration. By ensuring fairness and neutrality, courts are strengthening the country’s reputation in international dispute resolution.
Conclusion
The Delhi High Court’s ruling against IRCTC is a milestone in arbitration law. It reinforces the principle that arbitration must be fair, neutral, and free from bias. By striking down PSU‑curated panels, the Court has protected contractors’ rights and strengthened India’s legal framework for dispute resolution.
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This decision will likely influence future contracts, ensuring that arbitration clauses comply with established law and uphold the principle of equal participation.
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