News Citation : 2026 LN (HC) 85 | 2026:CGHC:6014
Feb. 03, 2026 : The Chhattisgarh High Court has refused to appoint an arbitrator in a high-stakes dispute between Tata Projects Limited and the Chhattisgarh Infotech Promotion Society (CHiPS), holding that the controversy arises from a “works contract” that falls exclusively within the jurisdiction of the state arbitration tribunal under the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983.
The ruling was delivered by Chief Justice Ramesh Sinha on February 3, 2026, in an application filed by Tata Projects under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a second arbitrator for constitution of a three-member arbitral tribunal.
The dispute stems from a Master Services Agreement executed in July 2018 for implementation of Phase-II of the BharatNet project in Chhattisgarh, a flagship rural broadband programme of the Government of India. Under the contract, Tata Projects, acting as the lead member of a consortium, was awarded work valued at over Rs 3,056 crore for design, supply, installation, commissioning, and long-term operation and maintenance of optical fibre infrastructure across thousands of gram panchayats in the state.
Tata Projects alleged that the project suffered prolonged delays due to reasons attributable to the state authorities, including failure to provide timely right of way, delayed payments, unilateral penalties, encashment of bank guarantees, and cancellation of project milestones. Claiming fundamental breaches of the agreement, the company terminated the contract in May 2025 and issued a notice invoking arbitration. When the respondents failed to nominate an arbitrator, Tata Projects approached the High Court.
CHiPS and the State of Chhattisgarh strongly opposed the plea, arguing that the contract was predominantly a works contract involving large-scale supply and laying of underground pipelines and ducts, and therefore squarely covered by the 1983 state statute. Under that law, disputes relating to works contracts involving the state or its undertakings must be adjudicated only by the Madhyastham Adhikaran, and civil courts or arbitral tribunals under the 1996 Act lack jurisdiction.
The respondents also contended that Tata Projects had no authority to unilaterally initiate arbitration on behalf of the consortium without express consent of the other members. In addition, allegations of serious fraud, fabrication of records, and loss to the public exchequer were raised, which, according to the state, rendered the dispute non-arbitrable.
Tata Projects countered that the agreement was essentially a telecom and digital infrastructure contract, not a traditional works contract, and that the arbitration clause expressly provided for arbitration under the 1996 Act. The company also argued that issues relating to jurisdiction and arbitrability should be left to the arbitral tribunal to decide, relying on Supreme Court precedents limiting the scope of judicial scrutiny at the Section 11 stage.
After examining the contract, statutory framework, and rival submissions, the High Court sided with the respondents. The court held that the nature and substance of the agreement showed that the dominant component of the work involved civil and infrastructure activities, including large-scale supply and laying of pipelines, bringing it within the ambit of a works contract under the 1983 Act. The court further held that statutory jurisdiction cannot be overridden by contractual clauses or consent of parties.
As a result, the application seeking appointment of an arbitrator under the Arbitration and Conciliation Act was dismissed as not maintainable, leaving Tata Projects to pursue its remedies, if any, before the state arbitration tribunal constituted under the Chhattisgarh Madhyastham Adhikaran Adhiniyam.
Case Reference : ARBR No. 28 of 2025, M/s Tata Projects Ltd v. Chhattisgarh Infotech Promotion Society & Ors.; counsel for the petitioner: Mr. Tushad Cooper, Senior Advocate, assisted by Ms. Shrishti Kumar and Mr. Abhishek Vinod Deshmukh, Advocates; counsel for the respondents: Mr. Abhishek Sinha, Senior Advocate, assisted by Mr. Rishabh Garg, Advocate; for respondent no. 2: Mr. S.S. Baghel, Government Advocate; for respondent no. 3: Mr. Ramakant Mishra, Deputy Solicitor General, along with Mr. Tushar Dhar Diwan and Mr. Rishabh Deo Singh, Advocates.
