Ramaseshu Infrastructure Pvt Ltd v. Indian Railways Welfare Organisation

Delhi High Court · 23 Jul 2026 · 2026:DHC:5851-DB

V. Kameswar Rao; Manmeet Pritam Singh Arora

FAO(OS) (COMM) 182/2026

2026:DHC:5851-DB

civil appeal_dismissed Significant

AI Summary

The Delhi High Court upheld the arbitral tribunal's interpretation excluding force majeure, dismissed the appellant's challenge to contract termination and forfeiture of security deposit, and rejected the unilateral appointment argument under the pre-2015 Arbitration Act.

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FAO(OS) (COMM) 182/2026
HIGH COURT OF DELHI
Date of Decision: 23.07.2026

FAO(OS) (COMM) 182/2026
RAMASETHU INFRASTRUCTURE PVT LTD .....Appellant
Through: Mr. M. Gireesh Kumar, Mr. Sanjay Singh and Ms. Sneha Mathew, Advs.

VERSUS

INDIAN RAILWAYS WELFARE ORGANISATION.....Respondent
Through: None.

CORAM:

HON'BLE MR. JUSTICE V. KAMESWAR RAO
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
V. KAMESWAR RAO, J. (ORAL)

CM APPL. 46579/2026 (Exemption)

JUDGMENT

1. Exemption is allowed, subject to all just exceptions.

2. The application stands disposed of. CM APPL. 46580/2026 (For condonation of delay in re-filing)

3. For the reasons stated in the application, the delay of the 54 days in re-filing the appeal is condoned. The same is allowed.

4. The application stands disposed of.

5. This appeal lays a challenge to the order of the learned Single Judge dated 24.03.2026, whereby the learned Single Judge has dismissed the petition filed by the appellant herein under Section 34 of the Arbitration and Conciliation Act, 1996, (“The Act”) challenging the award dated 23.12.2014 by stating in paragraph nos. 17 and 18 as under:-

“17. The learned Arbitrator has interpreted the force majeure clause and has come to the conclusion that the present event on which reliance is placed by the Petitioner will not fall within the four corners of force majeure clause. This Court is in agreement with the view taken by the learned Arbitrator. Even otherwise, as repeatedly held by the Apex Court, the interpretation of a contract, predominantly, is in the domain of the Arbitrator. An award cannot be set aside just because another view is possible or sometimes is even more preferable. 18. In the opinion of this Court, the challenge does not fall within the parameters of Section 34 of the Arbitration & Conciliation Act. The fact that another conclusion is possible will not persuade this Court to substitute its own conclusion to the one arrived at by the Arbitral Tribunal unless it is said to be so perverse that it shocks the conscience of the Court.”

6. Some of the relevant facts necessary for the purpose of deciding this appeal are primarily that the appellant herein is a private limited company engaged in business of development of infrastructure and other allied activities. The appellant being a successful bidder of tender with regard to project of construction of 140 dwelling units, was awarded the work vide letter dated 27.12.2011. The time period for completion the project was 24 months. The appellant had deposited an earnest money of Rs.5,00,000/-, which had been retained by the respondent and converted into security deposit. It is the case of the appellant that immediately after the commencement of the tender work, the local residents started raising objections and obstructing the work of the project site. The appellant sent communications dated 05.03.2012 and 05.04.2012 respectively to the respondent, expressing its inability to continue the work due to the hostile attitude of the local public and non-availability of an unencumbered land.

7. It is noted that the respondent after taking into account the communications of the appellant, met the District Collector and was advised that the construction could be started. The same was informed to the appellant by the respondent. It is also noted that the appellant herein wrote a letter to the respondent, requesting for termination of the contract and also sought for return of the bank guarantees given by the appellant, which is part of the contract conditions. The respondent did not agree with the said request of the appellant and asked the appellant to remain on the site.

8. The appellant thereafter invoked force majeure clause in the contract and requested the closure of the contract vide communication dated 28.06.2012. In the meantime, the local residents had filed a petition before the Madras High Court which had granted a stay on the project. In any case, the petition was dismissed by the Madras High Court thereby vacating status quo order dated 03.12.2012. Inability on the part of the appellant to carry out the work resulted in termination of the work by the respondent. The only case set up by the appellant before the learned Single Judge, was whether the action of the appellant in discontinuing the work and demanding foreclosure of the work and applications was justified and claim for bank guarantees was justified or not.

9. The said issue was decided by the learned Single Judge by referring to clause 6.2.25 of the tender document, which is the force majeure clause, which we reproduced as under:- “6.2.25 Force Majeure Clause i) If at any time during the continuance of this contract the performance in whole or part by either party of any obligation under this contract shall be prevented or delayed by reasons of any war, hostility, acts of Public enemy, Civil commotion, sabotage, serious losses or damage by fire, explosion, epidemic, strike, lock-out or acts of God (hereinafter referred to as 'Event') provided notice of the happening of any such event is given by either party to the other within 10 days from the date of occurrence thereof, neither party shall by reasons of such events be entitled to terminate this contract, nor shall either party have any claim for damages against the other in respect of such non performance or delay in performance, and works under the contract shall be resumed as soon as practicable after such event has come to an end or ceased to exist and decision of the engineer as to whether the works have been so resumed or not shall be final and conclusive; provided further that if the performance, in whole or in part of any obligation under this contract is prevented or delayed by reasons of any such event for a period exceeding 90 days, either party may at its option terminate the contract by giving notice to other party. ii) In case of such event for which the Contractor has given timely written notice thereof to the Engineer, Engineer shall make a fair and reasonable extension of time for completion of the contract works. The Contractor shall nevertheless constantly use his endeavour to prevent delays and shall do all that may reasonably be required to the satisfaction of the Engineer. iii) The contractor's right to an extension of time limit for completion of the work in the above mentioned cases is subject to the following procedures. a) That within 10 days after the occurrence of case of FORCE MAJEURE but before the expiry of the stipulated date of completion, he informs the Engineer and IRWO in writing that he considers himself entitled to an extension of the time limit. b) That, he produces evidence of the date of occurrence and the duration of the FORCE MAJEURE in an adequate manner by means of documents drawn up by reasonable authorities. c) That, he proves that the said conditions have actually interfered with the carrying out of the contract. d) That, he proves that the delay incurred is not due to his own action or lack of action. In the cases mentioned above for delays in completion of the works, such failures or delays shall in no way affect or vitiate the contract or alter the character thereof or entitle the contractor to damage or compensation thereof but the contractor shall apply for extension of time at least 45 days before the completion of the contract period and IRWO shall grant such extension or extension of the completion dates as shall appear to the Engineer reasonable in the circumstances and his decision in the matter will be final and binding on the contractor. e) In all other cases, IRWO may grant extension of time with levy of compensation against legitimate of damages as per clause 6.2.25 (a) and (b) and without escalation (i.e. original quoted rates will be paid.)”

10. The conclusion of the Tribunal on the force majeure clause can be seen from paragraph no.9 of the order of the learned Single Judge, which we reproduce as under:-

“9. The Arbitral Tribunal has gone into the definition of force majeure by referring to various dictionary meanings. The Tribunal has concluded as under:- “5.3.4 Event of "Hostility" and "Public Enmity-The term hostility is defined in Black's law dictionary as

state of enmity between individuals or nations. An act or series of acts displaying antagonism, hostile act or state acts of war. The AT is of the opinion that there was no enmity between the Respondents and the R.W.A. as such. The action of nuisance, threats and disruption of work by R.W.A was not by enmity but motivated simply to scare away the contractor so that no construction could take place on the plot and they continue to use the plot as playground. Even in this the R.W.A did not succeed as the work continued as per Claimant's own admission (Para 5.2.[4] above). Hence the event of Hostility is not attracted. Similarly the R.W.A, being a private body, cannot be termed as "Public Enemy". Thus the AT is of the view that the Force Majeure clause is not attracted. 5.3.[5] Notwithstanding the conclusion that the Force Majeure clause is not attracted, even if it is assumed that the event of Hostility did exist, it lasted only for 40 days i.e. from 22-03-2012 to 05-05-2012. After 05- 05- 2012 the work was stayed as per the order of H.C. The Claimant's argument of the period of 90 days has been arrived at by adding 40 days of hostility and 50 days (from 05-05-2012 to 25-06-2012) of the Stay order and asked for termination of the contract. For the 50 days period from 05-05-2012 to 25-06-2012 there was neither any hostility nor the period under stay order from the Court is covered as an event under Force Majeure clause. 5.3.[6] Thus the request of termination of the contract by the Claimant was rightly rejected by the Respondent. 5.3.[7] The stay by the High Court was vacated on 03- 12-2012 and the Respondent advised the Claimant to restart the work. The claimant advised the Respondent, vide its letter dated 24-12-2012, that after examining the matter in detail they have apprehension that the miscreants are planning to attack again for stoppage of work. Hence they regret to inform that they are not in a position to carry out work (Para 5.2.13). The Respondent, treating the refusal to restart work as amounting to abandoning the work by the Claimant, proceeded to determine / terminate the Contract as per Clause 6.[8] of the Tender conditions and forfeited the security deposit of Rs. 5 Lakh and P.B.G of Rs. 83.62 Lakh by encashing the same. 5.3.[8] The AT is of the view that the apprehension of the Claimant was a mere presumption which had no basis, nor based on any evidence or hard facts and the Respondent was within its right to terminate the contract and forfeit the security deposit & encash the Performance Guarantee. 5.3.[9] In regard to discharge of reciprocal obligation, we uphold the contention of the Respondent that the ownership of land by them was never disputed and that has also been confirmed by the High Court of Chennai when they dismissed the writ petition filed by the RWA. The land was handed over to the Claimant free of all encumbrances for starting the work and when the disturbance took place the Respondent was fully involved in getting it removed with the help Executive & Judicial authorities.

53.10 Thus the Claims of the Claimant are rejected and the award is Nil.”

11. The learned Single Judge by referring to the judgement of the Supreme Court in the case of National Highways Authority of India v. ITD Cementation India Ltd., (2015) 14 SCC 21, has concluded that it cannot be said that the interpretation given by the Arbitral Tribunal is so perverse that it shocks the conscience of the Court. The learned Single Judge has also held that the Arbitral Tribunal has applied literal construction of the contract which cannot be faulted with as the same is permissible.

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12. We have already produced the final conclusion drawn by the learned Single Judge in paragraphs no. 17 and 18. The submission of learned counsel for the appellant is that the impugned order of the learned Single Judge fails to correctly appreciate: i. that the award ignores vital evidence on record rendering it perverse; ii. that the conclusion of the Tribunal that no force majeure condition existed is contrary to the documented status quo order; iii. that the right to encash the bank guarantee and forfeit Ernest Money Deposit was wrongly invoked in the absence of an executed agreement; and iv.that the award suffers from patent illegality warranting interference under Sections 34 and 37 of the Act.

13. Suffice to state that the Tribunal has held notwithstanding the conclusion that the force majeure clause is not attracted even if it were to be assumed that hostility existed, the same lasted only for around 40 days i.e., from 22.03.2012 to 03.05.2012. Post 05.05.2012, the work stopped as per the order dated 03.05.2012 of the High Court of Madras. The Tribunal has also noted the arguments on behalf of the appellant, or that the period of 90 days has been arrived at by adding 40 days of hostility and 50 days of the stay order and as such, the appellant had rightly sought termination of the contract, cannot be accepted.

14. Suffice to state, the said submission was not agreed to by the learned Arbitral Tribunal for the simple reason that the period of 50 days when stay granted by the Court was in operation, the same cannot be construed to be a hostility nor an event defined as force majeure in terms of the contract.

15. It is this conclusion of the Arbitral Tribunal which has been upheld by the learned Single Judge. Hence, the plea of the learned counsel for the appellant that the finding of the Tribunal that there was no cause to invoke the force majeure clause is unsustainable, is unmerited.

16. One of the arguments of the learned counsel for the appellant is that the appointment of the Arbitral Tribunal was unilateral. Suffice to state that the said argument does not hold ground, as in this case the Arbitrator was appointed on 20.06.2013 whereas the amendment to the Act was brought on 23.10.2015, whereby sub-section 5 was inserted into Section 12 of the Act. The plea of unilateral appointment would not aid the case of the appellant as this is a case governed by the Act which preceded the 2015 amendment, wherein there was no statutory ground to seek dissolution of an Arbitral Tribunal which comprised of unilaterally appointed Arbitrators. The Supreme Court had highlighted the prospective applicability of the 2015 amendment of the Act in its judgment in the case of Board of Control for Cricket in India v. Kochi Cricket Private Limited and Others, (2018) 6 SCC 287.

17. Hence, we are of the view that the present appeal is without any merit and is liable to be dismissed. We order accordingly.

V. KAMESWAR RAO, J

MANMEET PRITAM SINGH ARORA, J JULY 23, 2026 sr

Ramaseshu Infrastructure Pvt Ltd v. Indian Railways Welfare Organisation

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