2026:BHC-OS:2407 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMMERCIAL ARBITRATION APPLICATION NO. 688 OF 2025 M/s. Sowil Limited …..APPLICANT : VERSUS :

Deputy Chief Engineer (Construction) Bhusawal ….RESPONDENT Mr. Shardul Singh with Mr. Smeet Savla & Ms. Priyal Gandhi i/b M/s. SHS Chambers, for Applicant Mr. Narayan Bubna with Ms. Pooja Malik, for Respondent CORAM : SANDEEP V. MARNE, J.

Digitally signed by NEETA NEETA SHAILESH SHAILESHSAWANT Reserved On :14 January 2026.

SAWANT Date:

2026.01.28

18:55:26 +0530 Pronounced On : 28 January 2026.

Judgment:

1) This is an application under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) for appointment of arbitrator for adjudication of disputes and differences between the parties arising out of contract dated 7 May 2018. While there is no dispute between the parties about existence of arbitration agreement, the clause contains a restrictive condition for arbitration. The relevant clause in the contract provides for resolution of disputes by arbitration only to the extent of 20% of the value of the contract. The value of the contract was Rs.84,52,157.61/- whereas the estimated claim amount is Rs.3 crores and accordingly Railways have opposed appointment of arbitrator.

2) A tender notice was issued by the Respondent-Central Railways on 10 November 2017 for execution of work of preparation of design and structural drawings for major and important bridges for the upcoming Manmad- Jalgaon 3^rd line project. The Applicant participated in the tender process and was a successful bidder. Letter of Acceptance dated 12 February 2018 was issued in favour of the Applicant which indicated that the total value of the contract as Rs.84,52,157.61/-. Under the contract, the Applicant was supposed to complete the entire scope of work by provision of detailed designs and drawings for 22 bridges within 9 months. Various extensions were granted in favour of the Applicant for completion of the work. The contract has been terminated by the Respondent on 23 December 2021 and the Applicant was debarred from executing the remaining scope of work. Applicant challenged termination by filing Writ Petition No.2887/2023, which was disposed of on 11 June 2025 granting liberty to the Applicant to file application under Section 11 of the Arbitration Act. Accordingly, the Applicant has filed the present Application under Section 11 of the Arbitration Act.

3) Mr. Singh, the learned counsel appearing for the Applicant submits that the parties have agreed to resolve the disputes and differences by arbitration and that the contract contains Clause-39 providing that the stipulations under Clauses-63 and 64 of the General Conditions of Contract (GCC) would be applicable for settlement of claims of the contractor. He would therefore submit that unreasonable condition is put in Clause 39 of the contract that provisions of Clauses 63 and 64 of the GCC are applicable only for settlement of claims of disputes between the parties for value less than or equal to 20% of the value of the contract. He submits that imposition of this condition is both arbitrary, as well as discriminatory. That there is no cap for the Respondent-Railways to have its claims/counterclaims decided through arbitration and the maximum cap is arbitrarily and selectively applied to the Applicant. He would then take me through Clause-64 of the GCC in support of his contention that no restriction is imposed for decision of counterclaims by the Railways.

4) Mr. Singh further submits that the restriction of non- arbitrability of claims exceeding 20% of the value of contract is aimed at discouraging the Contractors from raising full claims and to restrict them within the limit of 20%. That such unfair bargain between the parties cannot be permitted to operate and that therefore the restriction of 20% claim value is required to be invalidated while preserving the balance part of arbitration agreement.

5) Mr. Sin