Govt Of Nct Of Delhi vs M/S Tewatia Construction Pvt Ltd

$~25
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 29.04.2026
+ O.M.P. (COMM) 118/2024 & I.A. 5677/2024 (Stay)
GOVT OF NCT OF DELHI .....Petitioner
Through: Mr. Lalltaksh Joshi and Ms.
Minu Kumari, Advocates.

versus

M/S TEWATIA CONSTRUCTION PVT LTD .....Respondent
Through: Mr. Avinash Trivedi, Mr. Rahul
Aggarwal and Mr. Rhythem
Nagpal, Advocates.

CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR

% JUDGEMENT (ORAL)
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Petition has been filed under Section 34 of the
1
Arbitration and Conciliation Act, 1996 , seeking to challenge the
2
Arbitral Award dated 14.10.2023 , rendered by the learned
Arbitrator, Mr. Kamlesh Kumar (Former ADG, CPWD), in arbitral
proceedings titled “M/s Tewatia Construction Private Limited and
Union of India”.
2. By way of the Impugned Award, the Government of NCT of
Delhi, through Executive Engineer (C), Edu, Maint. Divn., North-
3
Wast Division, Public Works Department [ “PWD” ], Delhi , has

1
Act
2
Impugned Award
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Petitioner
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been directed to pay to M/s Tewatia Construction Private Limited ,
an amount of approximately Rs. 2.5 Crore along with interest.
3. Learned counsel appearing on behalf of the Petitioner, at the
outset, raises a primary and foundational issue that strikes at the very
root of the validity and subsistence of the arbitral proceedings and the
resultant Award.
4. It is submitted by the learned counsel for the Petitioner that the
appointment of the learned Arbitrator, who subsequently entered upon
the reference and rendered the Impugned Award, was void ab initio ,
as it was effected through a unilateral appointment mechanism in clear
contravention of the mandatory provisions of Section 12(5) of the Act.
Consequently, it is contended that such an appointment is legally
unsustainable, thereby vitiating the entire arbitral process and
rendering the Impugned Award liable to be set aside.
5. Learned counsel for the Petitioner, in support of the aforesaid
proposition, places reliance upon the decision of the Hon‟ble Supreme
Court in Bhadra International (India) Pvt. Ltd. & Ors. v. Airports
5
Authority of India , to submit that any appointment of an Arbitrator
by an interested party, PWD herein, or its controlling authority stands
vitiated in law, and any Award rendered pursuant thereto is rendered
unsustainable and liable to be set aside.
6. Learned counsel appearing on behalf of the Petitioner, to
substantiate the plea of unilateral appointment, draws the attention of
this Court to Paragraph No. 1 of the Impugned Award, to submit that
the learned Arbitrator himself records therein that the appointment
was made by the Chief Engineer (Projects), PWD, Government of

4
Respondent
5
(2026) SCC OnLine SC 7
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N.C.T. Of Delhi , thereby leaving no ambiguity as to the source and
nature of appointment.
7. Learned counsel for the Petitioner further draws the attention of
7
this Court to the letter dated 22.04.2022 , whereby the Chief
Engineer addressed a communication to, inter alia, the Respondent,
appointing Mr. Kamlesh Kumar as the Arbitrator to adjudicate upon
the disputes inter se the parties. Learned counsel submits that the said
communication itself demonstrates that the appointment emanated
solely from the designated authority of the Petitioner Department.
8. Learned Counsel for the Petitioner, while summing up the
contention that the appointment of the learned Arbitrator was
unilateral, further draws the attention of this Court to Clause 25 of the
8
General Conditions of Contract , particularly Sub-clause (ii)
thereof, to submit that the power exercised by the Chief Engineer vide
the Letter of Appointment traces its origin entirely to the contractual
stipulation contained in the GCC.
9. Learned counsel for the Petitioner, in light of the aforesaid
submissions, contends that once the appointment of the learned
Arbitrator is shown to be unilateral and contrary to the statutory
mandate of Section 12(5) of the Act, the very constitution of the
Arbitral Tribunal stands vitiated.
10. Learned counsel for the Petitioner thus submits that the
Impugned Award cannot be permitted to stand and is liable to be set
aside on this ground alone.
11. Per contra , learned counsel appearing on behalf of the

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Chief Engineer
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Letter of Appointment
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GCC
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Respondent opposes the contentions of the learned counsel for the
Petitioner. He contends that the appointment of the learned Arbitrator
cannot be said to be in contravention of Section 12(5) of the Act.
12. Learned counsel for the Respondent further submits that the
Respondent had itself forwarded a list of names for consideration, out
of which the appointing authority, i.e. , the Chief Engineer, selected
Mr. Kamlesh Kumar, and such participation by the Respondent
constitutes consent, or in the alternative, a waiver within the meaning
of the proviso to Section 12(5) of the Act.
13. Learned counsel for the Respondent further submits that where
one party suggests names and the appointing authority, designated
under the Arbitration clause, selects one therefrom, the appointment
partakes the character of a consensual appointment rather than a
unilateral one.
14. Learned counsel for the Respondent therefore, contends that in
such circumstances, the arbitral proceedings do not stand vitiated, nor
can the Impugned Award be assailed on the ground of ineligibility of
the learned Arbitrator under Section 12(5) of the Act.

ANALYSIS:
15. This Court has heard learned counsel appearing on behalf of the
parties and, with their able assistance, perused the material on record
and the documents and Judgements passed across the bar.
16. At the outset, it is apposite to emphasise that the Petitioner has
consciously confined the present challenge to the Impugned Award
within a narrow compass, namely , the legality of the appointment of
the learned Sole Arbitrator on the ground of unilateral constitution of
the Arbitral Tribunal. Learned counsel for the Petitioner has fairly
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stated that the other grounds raised in the pleadings, touching upon the
merits, as adjudicated by the learned Arbitrator, are not being pressed
into service in the present proceedings. The controversy before this
Court, therefore, stands restricted to the issue of jurisdictional validity
of the arbitral constitution under Section 34 of the Act.
17. In the aforesaid backdrop, this Court is therefore not called
upon to undertake any examination of the merits of the present
Petition, reasoning accorded to the findings therein, or the correctness
of factual findings returned in the Impugned Award. The enquiry
stands confined to the anterior and foundational issue as to whether
the Arbitral Tribunal was constituted in accordance with the
mandatory requirements of the Act. If the constitution of the Arbitral
Tribunal itself is found to be contrary to law, the consequential
Impugned Award would be rendered vulnerable, irrespective of the
merits of the adjudication undertaken therein.
18. At this juncture, it is necessary to observe that the Arbitration
9
and Conciliation (Amendment) Act, 2015 , brought about a marked
shift in the statutory framework governing arbitral appointments.
Independence and impartiality of the Arbitral Tribunal, which always
formed part of the concept of fair adjudication, were elevated into a
binding legislative mandate under Section 12(5) of the Act.
19. Section 12(5) of the Act, read with the Seventh Schedule,
renders certain categories of persons ineligible to act as Arbitrators
and equally proscribes appointment mechanisms that permit an
interested party, directly or indirectly, to unilaterally constitute the
Arbitral Tribunal. The objective is rather clear; arbitral justice must

9
2015 Amendment
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not only be done, but must manifestly appear to be done.
20. At this juncture, this Court deems it apposite to reproduce
Section 12 of the Act, which reads as follows:
“ 12. Grounds for challenge. - (1) When a person is approached in
connection with his possible appointment as an arbitrator, he shall
disclose in writing any circumstances—
(a) such as the existence either direct or indirect, of any past or
present relationship with or interest in any of the parties or in
relation to the subject-matter in dispute, whether financial,
business, professional, or other kind, which is likely to give rise to
justifiable doubts as to his independence or impartiality; and
(b) which are likely to affect his ability to devote sufficient time to
the arbitration and in particular his ability to complete the entire
arbitration within a period of twelve months.
Explanation 1.- The grounds stated in the Fifth Schedule shall
guide in determining whether circumstances exist which give rise
to justifiable doubts as to the independence or impartiality of an
arbitrator.
Explanation 2.- The disclosure shall be made by such person
in the form specified in the Sixth Schedule.
(2) An arbitrator, from the time of his appointment and throughout
the arbitral proceedings, shall, without delay, disclose to the parties
in writing any circumstances referred to in sub-section (1) unless
they have already been informed of them by him.
(3) An arbitrator may be challenged only if—
(a) circumstances exist that give rise to justifiable doubts as to his
independence or impartiality; or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in
whose appointment he has participated, only for reasons of which
he becomes aware after the appointment has been made.
(5) Notwithstanding any prior agreement to the contrary, any
person whose relationship, with the parties or counsel or the
subject-matter of the dispute, falls under any of the categories
specified in the Seventh Schedule shall be ineligible to be
appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen
between them, waive the applicability of this sub-section by an
express agreement in writing.”

21. Further, the decision of the Hon‟ble Supreme Court in
Bhadra International (supra) , relied upon by the Petitioner, reiterates
the settled principle that unilateral appointments by an interested party
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or its instrumental mechanism cannot be sustained in law. The ratio
flowing therefrom reinforces the legislative objective that arbitral
tribunals must be constituted through neutral processes, free from
unilateral dominance and specifically that there can be no deemed
waiver or waiver by conduct of the parties. The relevant portion of the
said decision is reproduced herein under for ready reference:

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introduced as it reflects awareness and a conscious intention to
waive the right to object under sub-section (5) of Section 12. A
clear manifestation of the expression of waiver assumes greater
importance in light of the fact that the parties are overcoming a
restriction imposed by law.
80. It is in the same breath we say that appointment of an arbitrator
with the consent of both parties is the general rule, while unilateral
appointment is an exception. When one party appoints an arbitrator
unilaterally, even if its own consent is implicit, the consent of the
opposite party stands compromised, and the choice of the former is
effectively imposed upon the latter.
81. It is only through an express agreement in writing, waiving the
bar under sub-section (5) of Section 12, that the other party can be
said to have voluntarily consented to the unilateral appointment of
such an arbitrator. The proviso conveys that the arbitrator, although
ineligible to be appointed, yet can continue to perform his
functions, as it is oriented towards facilitating party autonomy.
Thus, the proviso reinforces party autonomy and equal treatment of
parties in arbitration.
82. In other words, even though the appointment had been made by
one of the parties, by the act of entering into an agreement in
writing, the other party expresses its consent. The manner of the
agreement prescribed by the statute demonstrates voluntariness by
the parties.
83. In a case of unilateral appointment, the waiver mentioned in the
proviso is an indication of party autonomy in two ways: first , that
the parties, by entering into an agreement, are waiving the bar
under Section 12(5). Secondly , by the act of entering into an
agreement, the parties, more particularly, the non-consenting party,
are expressing their consent for appointment of the proposed
arbitrator.
84. Undoubtedly, the statute does not prescribe a format for the
agreement. However, the absence of a prescribed format cannot be
construed to mean that the waiver may be inferred impliedly or
through conduct. We say so because the legislature has consciously
prefaced the term “ agreement ” with the word “ express ” and
followed it with the phrase “ in writing ”. This semantics denote the
intention of the legislature that the waiver under the proviso to
Section 12(5) must be made only through an express and written
manifestation of intention.
85. The conscious use of the prefatory expression also serves to
differentiate such waiver from „deemed waiver‟ as stipulated under
Section 4 of the Act, 1996. We must be mindful of the fact that if
the legislature intended that waiver under Section 12(5) could
similarly arise by implication or conduct as mentioned under
Section 4, it would have refrained from introducing a heightened
and mandatory requirement, more particularly, in light of the
rigours of the Seventh Schedule. The statutory design therefore
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makes it evident that the bar under Section 12(5) can be removed
only by a clear, unequivocal, and written agreement executed after
the dispute has arisen, and not by any form of tacit acceptance or
procedural participation.
86. The mandate of an express agreement in writing in the present
case may looked at from one another angle. The unilateral
appointment of an arbitrator is assessed from the viewpoint of the
parties. However, when the parties later execute an express written
agreement waiving the ineligibility of the proposed arbitrator, the
position gets altered. Such written waiver supplies the very consent
that was previously missing, thereby placing the appointment on
the same footing as a mutually agreed appointment and addresses
concerns regarding neutrality and fairness.
87. In Bharat Broadband (supra), this Court categorically held that
the expression “ express agreement in writing ” refers to an
agreement made in words and cannot be inferred by conduct. The
word “express” denotes that the agreement must be entered into
with complete knowledge that although the proposed arbitrator is
ineligible to be appointed as an arbitrator, yet they express their
confidence in him to continue as the arbitrator. The relevant
observations read thus:-
“20. This then brings us to the applicability of the proviso
to Section 12(5) on the facts of this case. Unlike Section 4
of the Act which deals with deemed waiver of the right to
object by conduct, the proviso to Section 12(5) will only
apply if subsequent to disputes having arisen between the
parties, the parties waive the applicability of sub-section
(5) of Section 12 by an express agreement in writing. For
this reason, the argument based on the analogy of Section
7 of the Act must also be rejected. Section 7 deals with
arbitration agreements that must be in writing, and then
explains that such agreements may be contained in
documents which provide a record of such agreements. On
the other hand, Section 12(5) refers to an “express
agreement in writing”. The expression “express
agreement in writing” refers to an agreement made in
words as opposed to an agreement which is to be inferred
by conduct. Here, Section 9 of the Contract Act, 1872
becomes important. It states:
“9. Promises, express and implied. - Insofar as
the proposal or acceptance of any promise is
made in words, the promise is said to be express.
Insofar as such proposal or acceptance is made
otherwise than in words, the promise is said to be
implied.”
It is thus necessary that there be an “express” agreement
in writing. This agreement must be an agreement by which
both parties, with full knowledge of the fact that Shri Khan
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for doubt that the appointment of the learned Sole Arbitrator in the
present case emanated from the authority of the Chief Engineer
(Projects), PWD, Government of NCT of Delhi, acting under Clause
25 of the GCC, which reads as follows:
“ CLAUSE 25- Settlement of Disputes & Arbitration
Except where otherwise provided in the contract, ail questions and
disputes relating to the meaning of the specifications, design,
drawings and instructions here-in before mentioned and as to the
quality of workmanship or materials used on the work or as to any
other question, claim, right, matter or thing whatsoever in any way
arising out of or relating to the contract, designs, drawings,
specifications, estimates, instructions, orders or these conditions or
otherwise concerning the works or the execution or failure to
execute the same whether arising during the progress of the work
or after the cancellation, termination, completion or abandonment
thereof shall be dealt with as mentioned hereinafter:

(ii) Except where the decision has become final, binding and
conclusive in terms of Sub Para (1) above, disputes or difference
shall be referred for adjudication through arbitration by a sole
arbitrator appointed by the Chief Engineer, CPWD, in charge of the
work or if there be no Chief Engineer, the Additional Director
General of the concerned region of CPWD or if there be no
Additional Director General, the Special Director General or the
Director General, CPWD. If the arbitrator so appointed is unable or
unwilling to act or resigns his appointment or vacates his office due
to any reason whatsoever, another sole arbitrator shall be appointed
in the manner aforesaid. Such person shall be entitled to proceed
with the reference from the stage at which it was left by his
predecessor.
It is a term of this contract that the party invoking arbitration shall
give a list of disputes with amounts claimed in respect of each such
dispute along with the notice for appointment of arbitrator and
giving reference to the rejection by the Chief Engineer of the
appeal.
It is also a term of this contract that no person, other than a person
appointed by such Chief Engineer CPWD or Additional Director
General or Special Director General or Director General, CPWD,
as aforesaid, should act as arbitrator and it for any reason that is not
possible, the matter shall not be referred to arbitration at all.
It is also a term of this contract that if the contractor does not make
any demand for appointment of arbitrator in respect of any claims
in writing as aforesaid within 120 days of receiving the Intimation
from the Engineer-in-Charge that the final bill is ready for
payment, the claim of the contractor shall be deemed to have been
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waived and absolutely barred and the Government shall be
discharged and released of all liabilities under the contract in
respect of these claims.
The arbitration shall be conducted in accordance with the
provisions of the Arbitration and Conciliation Act, 1996 (26 of
1996) or any statutory modifications or re-enactment thereof and
the rules made thereunder and for the time being in force shall
apply to the arbitration proceeding under this clause.
It is also a term of this contract that the arbitrator shall adjudicate
on only such disputes as are referred to him by the appointing
authority and give separate award against each dispute and claim
referred to him and in all cases where the total amount of the
claims by any party exceeds Rs. 1,00,000/-, the arbitrator shall give
reasons for the award.
It is also a term of the contract that if any fees are payable to the
arbitrator, these shall be paid equally by both the parties. It is also a
term of the contract that the arbitrator shall be deemed to have
entered on the reference on the date he issues notice to both the
parties calling them to submit the statement of claims and counter
statement of claims. The venue of the arbitration shall be such
place as may be fixed by the arbitrator in his sole discretion. The
fees, if any, of the arbitrator shall, if required to be paid before the
award is made and published, be pay half and half by each of the
parties. The cost of the reference and of the award (including the
fees, if any, of the arbitrator) shall be in the discretion of the
arbitrator who may direct to any by whom and in what manner,
such costs or any part thereof shall be paid and fix or settle the
amount of costs to be so paid.”
(emphasis supplied)

23. Further, perusal of Paragraph No. 1 of the Impugned Award
makes it manifest that the learned Arbitrator came to be appointed in
pursuance of the aforesaid contractual authority, designated upon the
Chief Engineer, under the GCC. Paragraph No. 1 of the Impugned
Award reads as follows:
“ 1. I was appointed as sole Arbitrator by the Chief Engineer
(Projects), PWD, GNCTD, I.P,ESTATE, New Delhi vide his letter
no. 55(37)/CE(proj)./PWD/Arb./FO/313-E dated 22.04.2022 to
decide and make the reasoned award on the 11 nos. of claims/
disputes as listed by the claimant contractor and two counter
claims/ dispute as listed by the respondent Executive Engineer
PWD Delhi.”
(emphasis supplied)

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24. The Letter of Appointment dated 22.04.2022 further establishes
that the constitution of the Arbitral Tribunal flowed solely from the
exercise of power vested in the said departmental authority according
to Clause 25(ii) of the GCC. The relevant portion of the said letter
reads as follows:
“ Sub:- In the matter of arbitration between M/s Tewatia
Construction Pvt. Ltd. and UOI (through E.E., PWD, Edu. Maint.
Divn. North-West for the work C/o 200 Additional Class Rooms in
08 school buildings under EO Zone 11 & 13 of DDE North West
(Priority-1) (SH: C/o SPS type rooms, labs, MP halls i/c internal &
External water supply, sanitary installation and electrical
installation, development of site and Fire Fighting System etc. in
SKV Ashok Vihar Phase-II, SKV Wazirpur J.J. Colony, SV
Wazirpur Village (Zone-11 Package-A).
Agrement No.:- 04/EE/PWD/Edu. (M) NW/2015-16

Whereas M/s Tewatia Construction Pvt. Ltd. has written to
Chief Engineer, vide their letter dated 08.04.2022 that certain
disputes have arisen between them & UOI in respect of the above
noted work. I, M.K Mallick, Chief Engineer (Projects), PWD
(GNCT), in exercise of the powers conferred on me, under Clause
25 of the said agreement, hereby appoint Sh. Kamlesh Kumar,
ADG, CPWD, Retd. as Sole Arbitrator to decide & make his award
regarding claims/disputes given by the claimant, as shown in the
statement enclosed, subject always to their admissibility under
Clause 25 of the aforesaid agreement.
However, this reference is further without prejudice to the
defense that may be raised by the Department regarding the
tenability of the claim on all necessary and available grounds
including those in limitation.
The amount of the claims/ disputes being more than Rs.
1,00,000/, the arbitrator shall give reasoned award according to
Clause 25 of the agreement.
The Arbitrator's fee and other conditions will be as per letter
no. E-in-C/PWD/Works/Arb./2022/276 dated 03.02.2022 from
Director (Works) (copy enclosed).
Sd/-
(M.K. Mallick)
Chief Engineer (Projects)”


25. In view of the abovementioned factual backdrop, it is
manifestly clear that the source of appointment in the present case was
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not a mutually evolved process between the parties after disputes had
arisen, nor was an appointment through an independent institution or
judicial forum. It was an appointment made by an authority, which is
itself one of the contesting parties to the dispute. Once that position
emerges from the record, the nomenclature of the clause or the slightly
varied procedural form adopted becomes immaterial.
26. Further, the contention urged on behalf of the Respondent
that certain names were suggested from the side of the Respondent
and one amongst them came to be appointed, making the process of
appointment consensual, does not inspire the confidence of this Court
since it does not alter the legal character of the process of appointment
of the learned Arbitrator. A mere forwarding of names, participation
in correspondence, or absence of immediate protest cannot sanctify a
process which, in essence, preserves the decisive power of constitution
of the arbitral tribunal with one party or its controlling authority.
27. A consent, to constitute a valid waiver under the proviso to
Section 12(5), must be an “ express agreement in writing ” after
disputes have arisen, evincing a clear and informed relinquishment of
the statutory safeguard. A casual exchange of names or participation
in the mechanics of appointment of the Arbitrator in slightly varied
form cannot be elevated to the status of such a waiver. The
determinative test, therefore, is not the form of participation, but the
locus of final authority in the constitution of the Arbitral Tribunal.
28. In this regard, the decision of the Hon‟ble Supreme Court in
10
Bharat Broadband Network Ltd. v. United Telecoms Ltd. calls for
reliance, wherein it was held that the proviso to Section 12(5) of the

10
(2019) 5 SCC 755
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Act requires “an express agreement in writing ” after disputes have
arisen, and waiver of statutory ineligibility cannot be lightly inferred.
29. The said decision makes it abundantly clear that the issue of
unilateral appointment is not a mere technical objection, but one that
goes to the legitimacy of the arbitral forum itself. The relevant
paragraphs of the Bharat Broadband (supra) casting light upon the
interpretation of the term “ an express agreement in writing ” in terms
of Section 12(5) of the Act, are reproduced herein under for ready
reference:
“ 15. Section 12(5), on the other hand, is a new provision which
relates to the de jure inability of an arbitrator to act as such. Under
this provision, any prior agreement to the contrary is wiped out by
the non obstante clause in Section 12(5) the moment any person
whose relationship with the parties or the counsel or the subject-
matter of the dispute falls under the Seventh Schedule. The sub-
section then declares that such person shall be “ineligible” to be
appointed as arbitrator. The only way in which this ineligibility can
be removed is by the proviso, which again is a special provision
which states that parties may, subsequent to disputes having arisen
between them, waive the applicability of Section 12(5) by an
express agreement in writing. What is clear, therefore, is that
where, under any agreement between the parties, a person falls
within any of the categories set out in the Seventh Schedule, he is,
as a matter of law, ineligible to be appointed as an arbitrator. The
only way in which this ineligibility can be removed, again, in law,
is that parties may after disputes have arisen between them, waive
the applicability of this sub-section by an “express agreement in
writing”. Obviously, the “express agreement in writing” has
reference to a person who is interdicted by the Seventh Schedule,
but who is stated by parties (after the disputes have arisen between
them) to be a person in whom they have faith notwithstanding the
fact that such person is interdicted by the Seventh Schedule.

20. This then brings us to the applicability of the proviso to Section
12(5) on the facts of this case. Unlike Section 4 of the Act which
deals with deemed waiver of the right to object by conduct, the
proviso to Section 12(5) will only apply if subsequent to disputes
having arisen between the parties, the parties waive the
applicability of sub-section (5) of Section 12 by an express
agreement in writing. For this reason, the argument based on the
analogy of Section 7 of the Act must also be rejected. Section 7
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deals with arbitration agreements that must be in writing, and then
explains that such agreements may be contained in documents
which provide a record of such agreements. On the other hand,
Section 12(5) refers to an “express agreement in writing”. The
expression “express agreement in writing” refers to an agreement
made in words as opposed to an agreement which is to be inferred
by conduct. Here, Section 9 of the Contract Act, 1872 becomes
important. It states:
“ 9. Promises, express and implied.- Insofar as the
proposal or acceptance of any promise is made in words,
the promise is said to be express. Insofar as such proposal
or acceptance is made otherwise than in words, the
promise is said to be implied.”
It is thus necessary that there be an “express” agreement in writing.
This agreement must be an agreement by which both parties, with
full knowledge of the fact that Shri Khan is ineligible to be
appointed as an arbitrator, still go ahead and say that they have full
faith and confidence in him to continue as such. The facts of the
present case disclose no such express agreement. The appointment
letter which is relied upon by the High Court as indicating an
express agreement on the facts of the case is dated 17-1-2017. On
this date, the Managing Director of the appellant was certainly not
aware that Shri Khan could not be appointed by him as Section
12(5) read with the Seventh Schedule only went to the invalidity of
the appointment of the Managing Director himself as an arbitrator.
Shri Khan's invalid appointment only became clear after the
declaration of the law by the Supreme Court in TRF
Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 which, as
we have seen hereinabove, was only on 3-7-2017. After this date,
far from there being an express agreement between the parties as to
the validity of Shri Khan's appointment, the appellant filed an
application on 7-10-2017 before the sole arbitrator, bringing the
arbitrator's attention to the judgment in TRF Ltd. v. Energo Engg.
Projects Ltd., (2017) 8 SCC 377 and asking him to declare that he
has become de jure incapable of acting as an arbitrator. Equally,
the fact that a statement of claim may have been filed before the
arbitrator, would not mean that there is an express agreement in
words which would make it clear that both parties wish Shri Khan
to continue as arbitrator despite being ineligible to act as such. This
being the case, the impugned judgment is not correct when it
applies Section 4, Section 7, Section 12(4), Section 13(2) and
Section 16(2) of the Act to the facts of the present case, and goes
on to state that the appellant cannot be allowed to raise the issue of
eligibility of an arbitrator, having itself appointed the arbitrator.
The judgment under appeal is also incorrect in stating that there is
an express waiver in writing from the fact that an appointment
letter has been issued by the appellant, and a statement of claim has
been filed by the respondent before the arbitrator. The moment the
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appellant came to know that Shri Khan's appointment itself would
be invalid, it filed an application before the sole arbitrator for
termination of his mandate.

22. We thus allow the appeals and set aside the impugned judgment
[ Bharat Broadband Network Ltd. v. United Telecoms Ltd.,
2017 SCC OnLine Del 11905 ]. The mandate of Shri Khan having
been terminated, as he has become de jure unable to perform his
function as an arbitrator, the High Court may appoint a substitute
arbitrator with the consent of both the parties.”
(emphasis supplied)

30. The aforesaid decision also leads this Court to yet another
significant aspect which merits notice. The reliance placed by the
learned counsel for the Respondent upon the communication dated
08.04.2022, suggesting a list of Arbitrators, is wholly misplaced. The
said communication admittedly precedes the actual appointment of the
learned Sole Arbitrator, which came to be made only on 22.04.2022.
31. The statutory scheme, as also the law declared by the Hon‟ble
Supreme Court, contemplates that any waiver under the proviso to
Section 12(5) of the Act must be post-dispute and post-awareness of
the disqualification, and must arise after the occasion for appointment
has crystallized. Therefore, a mere communication, particularly one
that does not „expressly‟ consent to appointment of a related person,
pre-dating to the appointment itself, cannot, by any stretch, be
elevated to the status of a waiver, let alone a valid waiver, of the
statutory protection available under proviso to Section 12(5) of the
Act.
32. In light of the foregoing discussion, this Court is of the
considered view that the proviso to Section 12(5) is an exception to a
rule founded upon public policy. Such an exception must, therefore,
receive strict construction. Waiver of a statutory safeguard intended to
secure neutrality of adjudication cannot be inferred by implication,
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acquiescence or silence. It must be explicit, conscious and
unequivocal.
33. In the present case, no material has been placed before this
Court demonstrating any express written agreement executed after
disputes had arisen and after the appointment process matured,
whereby the Petitioner expressly waived the applicability of Section
12(5) of the Act and consented to unilateral appointment by the
departmental authority.
34. The legal position concerning the appointment of an arbitrator,
particularly in circumstances where one party enjoys a position of
dominance or an undue advantage in the constitution of the arbitral
tribunal, has been authoritatively and comprehensively examined by
the Constitution Bench of the Hon‟ble Supreme Court in Central
Organisation for Railway Electrification v. ECI SPIC SMO MCML
11
(JV) .
35. In the aforesaid decision, the Hon‟ble Supreme Court undertook
an exhaustive and authoritative analysis of the statutory framework
governing arbitration under the Act, with particular emphasis on the
scheme and object of Sections 11, 12 and 18, read in conjunction with
the Fifth and Seventh Schedules. The Court also traced the evolution
of judicial precedents on the issue, while simultaneously examining
the constitutional underpinnings of the arbitral process, including the
principles of fairness, impartiality, and equality before the law.
36. Upon a comprehensive and holistic consideration of these
facets, the Hon‟ble Supreme Court in the said judgement clarified and
restated the governing principles relating to unilateral appointments,

11
(2025) 4 SCC 641
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delineating the permissible limits of party autonomy in the
constitution of arbitral tribunals. The conclusions arrived at in the said
decision are succinctly set out as follows:
“ J. Conclusion
170. In view of the above discussion, we conclude that:
170.1. The principle of equal treatment of parties applies at all
stages of arbitration proceedings, including the stage of
appointment of arbitrators;
170.2. The Arbitration Act does not prohibit PSUs from
empanelling potential arbitrators. However, an arbitration clause
cannot mandate the other party to select its arbitrator from the
panel curated by PSUs;
170.3. A clause that allows one party to unilaterally appoint a sole
arbitrator gives rise to justifiable doubts as to the independence and
impartiality of the arbitrator. Further, such a unilateral clause is
exclusive and hinders equal participation of the other party in the
appointment process of arbitrators;
170.4. In the appointment of a three-member panel, mandating the
other party to select its arbitrator from a curated panel of potential
arbitrators is against the principle of equal treatment of parties. In
this situation, there is no effective counterbalance because parties
do not participate equally in the process of appointing arbitrators.
The process of appointing arbitrators in Central Organisation for
Railway Electrification v. ECI-SPIC-SMO-MCML (JV) , (2020)
14 SCC 712 is unequal and prejudiced in favour of the Railways;
170.5. Unilateral appointment clauses in public-private contracts
are violative of Article 14 of the Constitution;
170.6. The principle of express waiver contained under the proviso
to Section 12(5) also applies to situations where the parties seek to
waive the allegation of bias against an arbitrator appointed
unilaterally by one of the parties. After the disputes have arisen, the
parties can determine whether there is a necessity to waive
the nemo judex rule; and
170.7. The law laid down in the present reference will apply
prospectively to arbitrator appointments to be made after the date
of this judgment. This direction applies to three-member tribunals.
171. The reference is answered in the above terms.”

37. Further, the recent decision of the Hon‟ble Supreme Court in
Bhadra International (Supra ) reiterates that unilateral appointments
are per se unsustainable in the absence of an explicit waiver. The legal
position is thus no longer res integra that any appointment traceable to
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a unilateral mechanism controlled by an interested party is void ab
initio , and any award rendered pursuant thereto stands vitiated at its
very inception.
38. In view of the foregoing discussion, the facts of the present case
and the judicial precedents as adverted to, this Court is of the
considered view that the appointment of the learned Sole Arbitrator by
the Chief Engineer, acting under the authority of the GCC, cannot
withstand statutory and judicial scrutiny under Section 12(5) of the
Act. The said appointment stood vitiated at inception and
consequently, the learned Arbitrator lacked the statutory competence
to enter upon reference and render the Impugned Award.
39. Once the constitution of the Tribunal is found to be contrary
to the mandatory statutory framework, the Award rendered by such
Tribunal cannot be permitted to stand. The defect is not curable by
recourse to merits, nor can it be brushed aside as a mere procedural
irregularity. It goes to the root of jurisdiction and legitimacy of the
adjudicatory process.
40. This Court reiterates that the requirement of neutrality in
arbitral appointments is not a mere procedural formality, but a
substantive guarantee of fairness embedded in the statutory
framework. Any deviation therefrom, howsoever justified on
convenience or past practice, cannot be countenanced in law.

DECISION:
41. In view of the foregoing discussion, this Court is of the
considered opinion that the Impugned Award is liable to be set aside
on the ground that the appointment of the learned Arbitrator was made
unilaterally by the Petitioner, in contravention of the law governing
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such appointments.
42. Accordingly, the present Petition is allowed, and the Impugned
Award stands set aside.
43. At this juncture, this Court takes note of the fact that a portion
of the Award amount was deposited with the worthy Registrar General
of this Court in compliance with the Order dated 29.04.2024 passed in
this case, pursuant to which a stay on the operation of the Award was
granted in the present petition.
44. In view of the fact that the Impugned Award has now been set
aside, this Court is of the considered opinion that the amount so
deposited by the Petitioner, along with any interest accrued thereon,
be released in favour of the Petitioner within a period of four weeks
from today.

45. It is, however, clarified that setting aside of the Impugned
Award shall not prevent the parties from taking recourse to such
remedies as may be available to them in law.
46. Accordingly, the present Petition, along with pending
Application(s), if any, stands disposed of in the above terms.


HARISH VAIDYANATHAN SHANKAR, J.
APRIL 29, 2026/nd/DJ

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