Indian Railways Cannot Be Forced into Arbitration with Subcontractor Despite Direct Payments for Hospital Project

The SC held that the second respondent, appointed by M/s Pratibha Industries Limited to perform electrical work on a hospital construction project for the appellant, was not a party to the arbitration agreement. Direct payment by the appellant to the second respondent did not make the latter a beneficiary under the contract containing the arbitration clause. The High Court erred in its determination. The SC ordered that any amounts deposited by the second respondent toward arbitration costs with the Delhi International Arbitration Centre should be refunded upon proof of payment being furnished. The application was disposed of accordingly. .....

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