Madras High Court Refers Dispute Over Railway Yatri Seva Demands To Sole Arbitrator and Appoints Former Supreme Court Judge

A single-judge bench of Justice N. Anand Venkatesh heard applications by a contractor challenging multiple demand notices, deductions and a termination threat issued by Southern Railway in relation to provision of Yatri Seva Anubandh (YSA) services for six pairs of Vande Bharat trains. The petitioner sought interim relief under Order XIV Rule 8 of the O.S. Rules and Section 9(2)(D) & (E) of the Arbitration and Conciliation Act, 1996 to restrain the respondent from taking adverse action pursuant to several demand notices and a letter of deduction.

The Court directed that the dispute be placed before a sole arbitrator agreed to by both parties, appointed a former Supreme Court judge as the sole arbitrator, and ordered that the interim protection previously granted would continue pending disposal under Section 17 of the Act. The Court recorded the parties’ consent to refer all related applications to the same arbitrator and emphasized consolidation before that forum. The Court, in its reasoning, observed: “In the light of the consent given, the dispute is referred to the same Sole Arbitrator and the present applications can be placed before the Sole Arbitrator, which can be dealt with under Section 17 of the Act after affording opportunity to both sides. This process will enable the parties to deal with all the issues consummately before the same Sole Arbitrator.” The order also recorded that “Pending the final order passed under Section 17 of the Act, the present interim order shall continue.”

Background The applicant, Brandavan Food Products, contracted to provide YSA services pursuant to Tender No. SR/YSA/02/2024 and the Letter of Award dated 15.04.2024. The petitioner alleged that Southern Railway unilaterally augmented certain Vande Bharat rakes from 8 cars to 16 cars in January 2025 and then issued demand notices and a termination notice dated 30.05.2025, contending the contractor’s services were unsatisfactory. The petitioner relied on passenger feedback and inspection ratings which it said exceeded the contractual threshold of 2.00 and argued that the respondent’s demands and deductions (approximately Rs. 4.58 crore) were arbitrary and contrary to contract terms requiring mutual consent for change of scope.

The respondent maintained that adjustments and recoveries were supported by bills and accounts and denied any false representation to the Court. Earlier, the parties had engaged in multiple rounds of litigation: an arbitral tribunal was constituted in earlier proceedings, interim orders were granted in other connected applications, and a Division Bench had referred the main termination dispute to a sole arbitrator in O.S.A. (CAD) No.108 of 2025 while granting liberty to move under Section 17 of the Arbitration Act. The petitioner offered to place the present disputes before the same arbitrator; the respondent consented.

On the present motions, the Court recorded the history of interim orders and counter-affidavits concerning deduction and recovery dates, observed that no useful purpose would be served by independent adjudication by the Court when the Division Bench had already relegated the parties to the sole arbitrator, and therefore referred the present applications to the same sole arbitrator. The Court appointed Justice F.M. Ibrahim Kalifulla, Former Judge, Supreme Court of India, as Sole Arbitrator to resolve disputes relating to the Letter of Award and the specified demand notices and letter of deduction. The Court directed that the matters be placed before the Sole Arbitrator to be dealt with under Section 17 after affording opportunity to both sides, and it permitted the petitioner to file a consolidated statement of claim. The applications were disposed of on these terms, with the interim order to remain in force pending the Sole Arbitrator’s decision under Section 17.

Case Details: Case No.: Arbitration Application No. 1296 of 2025 and Original Application Nos. 907, 908 and 909 of 2025 Case Title: Brandavan Food Products v. Southern Railway Appearances: For the Petitioner(s): Mr. D. Jasmeet Singh (for Mr. T.N.C. Kaushik) For the Respondent(s): Mr. Ar. L. Sundaresan, Additional Solicitor General of India, assisted by Mr. V. Chandrasekaran (Senior Panel Counsel, UOI) & Mr. K. Aadhishankaran