Govt Of Nct Of Delhi vs M/S Rkmt Buildcon Pvt. Ltd
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 20.05.2026
Judgment pronounced on: 01.07.2026
+ O.M.P. (COMM) 445/2024, I.A. 42778/2024 (Stay) & I.A.
42779/2024 (Delay of 28 days in filing the application for
setting aside the impugned award dt. 22.05.2024)
GOVT OF NCT OF DELHI .....Petitioner
Through: Mr. Abhinav Sharma, Panel
Counsel for GNCTD with Mr.
Ujjwal Jain, Advocate.
versus
M/S RKMT BUILDCON PVT. LTD. .....Respondent
Through: Mr. Sanjay Bansal, Advocate.
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
J U D G M E N T
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Petition has been filed under Section 34 of the
1
Arbitration and Conciliation Act, 1996 , seeking to assail the
2
Arbitral Award dated 22.05.2024 , passed by the learned Sole
3
Arbitrator in the arbitral proceedings titled as M/s RKMT Buildcon
Pvt. Ltd. Vs. Union of India through the Executive Engineer, PWD,
Delhi .
1
A&C Act
2
Impugned Award
3
Arbitrator
Signature Not Verified
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
16:37:10
2. By the Impugned Award, the learned Arbitrator allowed several
claims of the Respondent herein while rejecting certain counterclaims
advanced by the Petitioner herein.
BRIEF FACTS:
3. A brief factual background, to the extent necessary for the
adjudication of the present Petition, is set out herein below:
(a) The Petitioner, M/s RKMT Buildcon Private Limited, and the
Respondent, GNCTD through PWD, entered into Agreement
No. 3/EE/EDU(M)NW/PWD/2015-2016 for the construction of
additional classrooms and allied works in various Government
schools situated in North-West Delhi.
(b) The stipulated date of commencement and completion of the
works was 29.02.2016 and 12.07.2016, respectively.
(c) The works were ultimately completed on 30.06.2017, and the
final bill came to be processed thereafter.
(d) Certain disputes subsequently arose between the parties, inter
alia, concerning payments under the final bill, deviation and
extra items, escalation, prolongation costs, GST and allied
claims arising out of execution of the contract.
(e) It is stated that disputes arose between the parties that could not
be resolved despite efforts undertaken by them. Consequently,
the Respondent herein requested the competent official of the
Petitioner to initiate the process for the constitution of the
Arbitral Tribunal and to appoint an Arbitrator, vide letter dated
23.12.2022.
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
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(f) Pursuant thereto, the Chief Engineer (Projects), PWD,
4
Government of N.C.T. of Delhi , on behalf of the Petitioner,
5
vide communication dated 17.01.2023 , appointed Mr. Shashi
Kant as the learned Arbitrator to adjudicate the disputes inter se
the parties.
(g) The learned Arbitrator thereafter entered upon reference and,
upon conclusion of the arbitral proceedings, rendered the
Impugned Award adjudicating the claims and counterclaims of
the parties.
(h) Aggrieved by the findings returned in the Impugned Award, the
Petitioner has preferred the present Petition under Section 34 of
the A&C Act.
SUBMISSIONS ON BEHALF OF THE PARTIES:
4. At the outset, learned counsel appearing on behalf of the
Petitioner would submit that the challenge in the present Petition
stands confined to the legality of the constitution of the Arbitral
Tribunal and that the other grounds touching upon the merits of the
Impugned Award are not being pressed.
5. It is contended that the appointment of the learned Arbitrator
goes to the very root of the validity and subsistence of the arbitral
proceedings and the resultant Impugned Award and, if found to be
contrary to law, would render the Impugned Award vulnerable
irrespective of the merits of the findings returned therein.
6. Learned counsel for the Petitioner would further submit that the
appointment of the learned Arbitrator, who subsequently entered upon
4
Chief Engineer
5
Letter of Appointment
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By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
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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
A&C Act.
7. Learned counsel for the Petitioner, in support of the aforesaid
proposition, would place his reliance upon the decision of this Court
6
in Govt. of NCT of Delhi v. M/S Tewatia Construction Pvt Ltd
wherein, while relying upon the decision of the Hon‟ble Supreme
Court in Bhadra International (India) Pvt. Ltd. & Ors. v. Airports
7
Authority of India , it was held 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.
8. Learned counsel appearing on behalf of the Petitioner, to
substantiate the plea of unilateral appointment, would draw 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, thereby leaving no
ambiguity as to the source and nature of the appointment.
9. Learned counsel for the Petitioner would further draw the
attention of this Court to the Letter of Appointment, whereby the
Chief Engineer addressed a communication to, inter alia, the
Respondent, appointing Mr. Shashi Kant as the learned Arbitrator to
adjudicate upon the disputes inter se the parties. Learned counsel
would submit that the said appointment letter itself demonstrates that
6
2026 SCC OnLine Del 2893
7
(2026) SCC OnLine SC 7
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BHATIA
Signing Date:02.07.2026
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the appointment emanated solely from the designated authority of the
Petitioner Department.
10. Learned Counsel for the Petitioner would refer to Clause 25 of
8
the 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.
11. Learned counsel for the Petitioner, in light of the aforesaid
submissions, would contend 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 A&C Act, the very constitution of the
Arbitral Tribunal stands vitiated.
12. Learned counsel for the Petitioner would thus submit that the
Impugned Award may not be permitted to stand and is liable to be set
aside on this ground alone.
13. Per contra, learned counsel appearing on behalf of the
Respondent would oppose the challenge raised by the Petitioner and
contend that the appointment of the learned Arbitrator cannot be said
to be contrary to Section 12(5) of the A&C Act.
14. Learned counsel would submit that the appointment of the
learned Arbitrator cannot be characterised as a unilateral act on the
part of the Petitioner. It would be contended that the Respondent had
actively participated in the appointment process, inasmuch as the
Petitioner had proposed a panel of names for the Respondent's
consideration, from amongst which the Chief Engineer ultimately
appointed the learned Arbitrator. It would therefore be argued that the
8
GCC
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BHATIA
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appointment was made pursuant to a consultative process involving
both parties and cannot be assailed as being unilateral in nature.
15. Learned counsel would further submit that the Impugned
Award itself records that both parties had received the disclosure
made by the learned Arbitrator under Section 12(1) of the A&C Act,
whereby both parties conjointly participated in the arbitral
proceedings without any demur . It would thus be contended that the
parties had consciously accepted the appointment of the learned
Arbitrator and thereby waived any objection founded upon Section
12(5) of the A&C Act.
16. Reliance in this regard would be placed upon some observations
contained in Bhadra International Ltd. (supra) to contend that waiver
remains permissible under the proviso to Section 12(5) of the A&C
Act and that the conduct of the parties in the present case
demonstrates their unequivocal acceptance of the appointment of the
learned Arbitrator .
17. Learned counsel for the Respondent would, therefore, contend
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 A&C
Act.
ANALYSIS:
18. 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 handed over across the bar.
19. At the outset, it is apposite to emphasise that the Petitioner has
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By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
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consciously confined the present challenge to the Impugned Award
within a narrow compass, namely , the legality of the appointment of
the learned Arbitrator on the ground of his being appointed
unilaterally. Learned counsel for the Petitioner has fairly 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 presently, since, if this Court found favour with the
submission that the award stands vitiated due to the illegality arising
out of “unilateral appointment”, there arose no need to venture into the
merits of the matter. The controversy before this Court, therefore,
stands restricted to the issue of jurisdictional validity of the arbitral
constitution under Section 34 of the A&C Act.
20. 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 A&C Act.
21. Section 12(5) of the A&C Act, read with its 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
not only be done, but must manifestly appear to be done. Section 12 of
the A&C Act reads as follows:
9
2015 Amendment
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By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
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“ 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.”
22. This Court had occasion to consider the scope and effect of the
aforesaid amendments, as well as the legal consequences flowing
therefrom, in Tewatia Constructions (supra) . While doing so, this
Court also examined and applied the principles laid down by the
Hon'ble Supreme Court in Bhadra International (supra) , which
guided the interpretation of the amended statutory framework.
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
16:37:10
23. These decisions reiterate the settled position that appointments
emanating from a unilateral appointment mechanism controlled by an
interested party cannot be sustained in law and that the statutory
safeguard engrafted under Section 12(5) of the A&C Act can be
waived only by an express agreement in writing. The ratio flowing
therefrom reinforces the legislative objective that the Arbitral Tribunal
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 Bhadra
International (supra) is reproduced herein under for ready reference:
“71. It was submitted on behalf of the appellants herein that the
appellants never waived their right to object in terms of the proviso
to Section 12(5) of the Act, 1996. The proviso to Section 12(5)
requires that the ineligibility of an arbitrator could only be waived
by an “ express agreement in writing ” between the parties, and such
agreement must be entered into after the dispute has arisen. It was
further canvassed by the appellants that no agreement was
executed, signed, or even contemplated by the parties to this effect
after the dispute arose.
72. In this regard, the respondent vociferously submitted that the
present case falls within the proviso to Section 12(5). To indicate
the same, instances like recording of “no objection” in the first
procedural order, submission of statement of claim, the joint
request to extend the mandate under Section 29A, and continued
participation in the proceedings, were highlighted to submit that the
appellants had waived their right to object. The procedural order
constitutes an “ express agreement in writing ” and satisfies the
requirement under the proviso to Section 12(5) of the Act, 1996. At
the cost of repetition, the procedural order reads thus:-
“PROCEDURAL ORDER NO. 1
With
Minutes of, and the Directions made at, the hearing on
22.03.2016 at 1 : 00 pm
[AT D-247 (Basement), Defence Colony, New Delhi-
110024]
This preliminary meeting of the Tribunal was held D-247
nd
(Basement), Defence Colony, New Delhi-110024 on 22
March, 2016 at 1 : 00 PM. None of the parties have any
objection to my appointment as the Sole Arbitrator. I
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By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
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declare that I have no interest in any of the Parties, or in
the disputes referred to the Sole Arbitrator.[…] ”
(Emphasis supplied)
73. On the aforesaid issue, the High Court, in its impugned
judgment, observed that the sole arbitrator obtained the consent of
the parties for the purpose of continuing to arbitrate in the form of
the procedural order. What weighed with the High Court was that
the appellants participated in the proceedings, which continued for
over two years, and did not they invoke Section 12(5), or object
against the jurisdiction of the arbitrator at any stage.
a. Meaning and Import of the expression “ express agreement in
writing ” used in proviso to sub-section (5) of Section 12 of the
Act, 1996
74. Sub-section (5) of Section 12 of the Act, 1996, reads thus:—
“ [(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.] ”
75. The essentials of the proviso to Section 12(5) are:-
i. The parties can waive their right to object under sub-section (5)
of Section 12;
ii. The right to object under the sub-section can be waived only
subsequent to a dispute having arisen between the parties;
iii. The waiver must be in the form of an express agreement in
writing.
76. The proviso to sub-section (5) of Section 12 stipulates that
parties, after disputes have arisen, must expressly agree in writing
to waive the ineligibility of the proposed arbitrator. This impliedly
means that the parties are waiving their right to object to the
arbitrator's ineligibility in terms of Section 12(5) of the Act, 1996.
77. Waiver means the intentional giving up of a right. It involves a
conscious decision to abandon an existing legal right, benefit,
claim, or privilege that a party would otherwise have been entitled
to. It amounts to an agreement not to enforce that right. A waiver
can occur only when the person making it is fully aware of the right
in question and, with complete knowledge, chooses to give it up.
[See: State of Punjab v. Davinder Pal Singh Bhullar , (2011) 14
SCC 770 ]
78. What flows from the aforesaid is when a right exists, i.e., the
right to object to the appointment of an ineligible arbitrator in terms
of Section 12(5), such a right cannot be taken away by mere
implication. For a party to be deprived of this right by way of
waiver, there must be a conscious and unequivocal expression of
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BHATIA
Signing Date:02.07.2026
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intent to relinquish it. Needless to say, for a waiver to be valid, it is
necessary that the actor demonstrates the intention to act, and for
an act to be intentional, the actor must understand the act and its
consequences.
79. The expression “ express agreement in writing ” demonstrates a
deliberate and informed act that although a party is fully aware of
the arbitrator's ineligibility, yet it chooses to forego the right to
object against the appointment of such an arbitrator. The
requirement of an express agreement in writing has been
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
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By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
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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
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
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BHATIA
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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
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BHATIA
Signing Date:02.07.2026
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issued by the appellant, and a statement of claim has been
filed by the respondent before the arbitrator. The moment
the 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. ”
(Emphasis supplied)
88. In CORE II (supra), this Court underscored the rationale behind
the first two essentials of the proviso . It reads thus:—
“ 121. An objection to the bias of an adjudicator can be
waived. [ Supreme Court Advocates-on-Record Assn. v.
Union of India, (2016) 5 SCC 808, para 30 ] A waiver is
an intentional relinquishment of a right by a party or an
agreement not to assert a right. [ State of Punjab v.
Davinder Pal Singh Bhullar, (2011) 14 SCC 770, para
41 ] The Arbitration Act allows parties to waive the
application of Section 12(5) by an express agreement after
the disputes have arisen. However, the waiver is subject to
two factors. First, the parties can only waive the
applicability of Section 12(5) after the dispute has arisen.
This allows parties to determine whether they will be
required or necessitated to draw upon the services of
specific individuals as arbitrators to decide upon specific
issues. To this effect, Explanation 3 to the Seventh
Schedule recognises that certain kinds of arbitration such
as maritime or commodities arbitration may require the
parties to draw upon a small, specialised pool.
[“Explanation 3.— For the removal of doubts, it is
clarified that it may be the practice in certain specific
kinds of arbitration, such as maritime or commodities
arbitration, to draw arbitrators from a small, specialised
pool. If in such fields it is the custom and practice for
parties frequently, to appoint the same arbitrator in
different cases, this is a relevant fact to be taken into
account while applying the rules set out above.”] The
second requirement of the proviso to Section 12(5) is that
parties must consciously abandon their existing legal right
through an express agreement. Thus, the Arbitration Act
reinforces the autonomy of parties by allowing them to
override the limitations of independence and impartiality
by an express agreement in that regard .”
(Emphasis supplied)
89. What can be discerned from the above discussion is that the
ineligibility of an arbitrator can be waived only by an express
agreement in writing. In the present case, there is no agreement in
writing, after the disputes arose, waiving the ineligibility of the sole
arbitrator or the right to object under Section 12(5) of the Act,
1996.
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By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
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90. The conduct of the parties is inconsequential and does not
constitute a valid waiver under the proviso . The requirement of the
waiver to be made expressly in the form of agreement in writing
ensures that parties are not divested of their right to object
inadvertently or by procedural happenstance.
91. We are not impressed by the aforesaid submission of the
respondent for all the reasons stated above. The following
decisions of this Court and the High Court of Delhi respectively
deal with the all the factual submissions made by the respondent to
submit that the present case falls within the proviso to Section
12(5) of the Act, 1996.”
24. Further, a perusal of Clause 25(ii) of the GCC leaves little room
for doubt that the appointment of the learned Arbitrator in the present
case emanated from the authority of the Chief Engineer, acting under
Clause 25(ii) of the GCC, which reads as follows:
“ii. Except where the decision has become final, binding and
conclusive in terms of Sub Para (i) 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 if 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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Digitally Signed
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BHATIA
Signing Date:02.07.2026
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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 their 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 paid 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)
25. Paragraph No. 1 of the Impugned Award makes it manifest that
the learned Arbitrator was appointed by the Chief Engineer in exercise
of the authority vested in him under the GCC. The said paragraph
unequivocally records that the appointment of the learned Arbitrator
emanated from the contractual appointment mechanism contemplated
under the Agreement. Paragraph 1 of the Impugned Award reads as
follows:
“ 1. ……I was appointed as sole Arbitrator by the Chief Engineer
(Projects), PWD, Delhi, vide no.
55(64)/CE(Proj)./PWD/ARB./FO/57(-E) dated 17.01.2023 to
decide and make award, if any, regarding 8 claims/ disputes raised
by the claimant contractor as per the list attached with aforesaid
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Digitally Signed
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BHATIA
Signing Date:02.07.2026
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letter subject to their admissibility as per clause 25 of the aforesaid
agreement.”
(emphasis supplied)
26. The Letter of Appointment further establishes that the
constitution of the Arbitral Tribunal had 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 RKMT
Buildcon Private Limited and UOI ( through E.E., PWD,
Education (North-West) Division for the work C/o of 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 G (Co-ed) SSS, Rohini
Sector- 11, SKV Karala & GGSSS, Begampur (Zone-13
Package B).
Agreement No.:- 03/EE/Edu.(M)NW/PWD/2015-16 .
Whereas M/s RKMT Buildcon Private Limited has written to
Chief Engineer, vide their letter dated 23.12.2022 that certain
disputes have arisen between them & UOI in respect of the above
noted work. I, M.K Mallick, Chief Engineer (Projects), PWD
(GNCTD), in exercise of the powers conferred on me, under
Clause 25 of the said agreement, hereby appoint Sh. Shashi Kant,
Retd. SDG & E-in-C, PWD , 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)”
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
16:37:10
27. The aforesaid fact regarding the appointment of the learned
Arbitrator by the Chief Engineer is also borne out from the
communication dated 30.01.2023 issued by the learned Arbitrator to
the parties upon entering reference. The said communication
specifically records that the learned Arbitrator had been appointed by
the Chief Engineer in exercise of the powers conferred under Clause
25 of the Agreement. The relevant extract of the communication is
reproduced herein below:
“…
Letter No.: ARB/EE(NW)/Agmt-03 of 2015-16/PWD/2023/01
Dated: 30.01.2023
IN THE MATTER OF ARBITRATION BETWEEN
M/s RKMT Buildcon Private Limited: Claimant
vs
GNCT of Delhi through EE(C), Education Maintenance Divn
(NW), PWD, Delhi: Respondent
Name of work: Construction of 200 Additional class rooms in 08
school buildings under EO Zone-11 & 13 of DDE(NW)
(Priority-I) (SH: C/o SPS Class rooms, labs and MP Hall i/c
internal & external water supply, sanitary installation and
electrical installation, development of site and fire-fighting
system etc in G(Co-ed) SSS, Rohini Sector-11, SKV Karala
& GGSSS, Begumpur (Zone-13 Package-B). [Agreement
No: 03/EE/PWD/Edu. (M)NW/2015-16/PWD/2015-16]
1.0 The Chief Engineer (Projects), PWD, GNCT of Delhi in
exercise of powers conferred on him under Arbitration
clause 25 of the abovenamed agreement has appointed me
vide his letter No.: 55(64)/CE(Proj)/PWD/Arb/FO/57 dated:
17/01/2023 as the Sole Arbitrator to decide and make the
reasoned award on the 8 Nos . of claims i/c their sub parts
also as listed in the enclosure with the appointment letter.
….”
28. 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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Digitally Signed
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BHATIA
Signing Date:02.07.2026
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not a mutually evolved process between the parties after disputes had
arisen, nor was it 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.
29. Further, the contention urged on behalf of the Respondent that
the conduct of the parties, namely , no objection having been raised to
the appointment of the learned Arbitrator during the arbitral
proceedings, constitutes a waiver within the meaning of the proviso to
Section 12(5) of the A&C Act and 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.
30. At this juncture, this Court deems it appropriate to note that,
vide Order dated 16.04.2026, the learned counsel appearing for the
Respondent was granted an opportunity to produce the relevant
records so as to establish whether there existed any express waiver, in
terms of Section 12(5) of the A&C Act, with respect to the
appointment of the learned Arbitrator in the present matter. However,
despite the said opportunity, no material has been placed on record by
the Respondent demonstrating the existence of any such waiver.
31. This Court has also independently examined the arbitral record
produced before it. Upon such examination, this Court has not come
across any document, correspondence, or other material which could
be construed as an "express agreement in writing" entered into by the
parties after the disputes had arisen, thereby waiving the applicability
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
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of Section 12(5) of the A&C Act in terms of the proviso thereto.
32. It is no longer res integra that 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. An unopposed
participation in the mechanics of appointment of the Arbitrator or in
the arbitral proceedings 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.
33. In this regard, the decision of the Hon‟ble Supreme Court in
10
Bharat Broadband Network Ltd. v. United Telecoms Ltd. bears
reference, wherein it was held that the proviso to Section 12(5) of the
Act requires “an express agreement in writing ” after disputes have
arisen, and waiver of statutory ineligibility cannot be lightly inferred.
34. 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 Bharat Broadband Network Ltd. (supra) in this regard,
are reproduced hereunder 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
10
(2019) 5 SCC 755
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Digitally Signed
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BHATIA
Signing Date:02.07.2026
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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
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.
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
16:37:10
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
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)
35. Viewed in this light, the reliance placed by learned counsel for
the Respondent upon Bhadra International (supra) to contend that
the conduct of the parties constitutes a waiver within the meaning of
the proviso to Section 12(5) of the A&C Act is wholly misplaced. Far
from advancing the Respondent's case, the said decision
unequivocally reiterates that waiver under the proviso to Section 12(5)
must be by way of an express agreement in writing executed
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Digitally Signed
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BHATIA
Signing Date:02.07.2026
16:37:10
subsequent to the disputes having arisen and cannot be inferred from
participation in the proceedings, acquiescence, silence or any other
form of conduct of the parties.
36. The statutory scheme, as elucidated by the Hon'ble Supreme
Court in Bhadra International (supra) and Bharat Broadband
Network Ltd. (supra) , leaves little room for ambiguity that any waiver
under the proviso to Section 12(5) of the A&C Act must be by way of
an express agreement in writing executed subsequent to the disputes
having arisen.
37. In the present case, no material has been placed before this
Court to demonstrate the existence of any such agreement. Therefore,
the mere fact that the parties participated in the arbitral proceedings
without raising an objection to the appointment of the learned
Arbitrator cannot, by itself, be elevated to the status of a valid waiver
of the statutory protection engrafted under Section 12(5) of the A&C
Act.
38. In light of the aforesaid backdrop, 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,
acquiescence or silence. It must be explicit, conscious and
unequivocal.
39. Moving further, 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
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BHATIA
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examined by the Constitution Bench of the Hon‟ble Supreme Court in
Central Organisation for Railway Electrification v. ECI SPIC SMO
11
MCML (JV) .
40. In the aforesaid decision, the Hon‟ble Supreme Court undertook
an exhaustive and authoritative analysis of the statutory framework
governing arbitration under the A&C 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 Apex 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.
41. Upon a comprehensive and holistic consideration of these
facets, the Hon‟ble Supreme Court in the aforesaid judgement
clarified and restated the governing principles relating to unilateral
appointments, 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
11
(2025) 4 SCC 641
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Digitally Signed
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BHATIA
Signing Date:02.07.2026
16:37:10
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.”
42. Considering 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 Arbitrator by the
Chief Engineer, acting under the authority of the GCC, cannot
withstand statutory and judicial scrutiny under Section 12(5) of the
A&C 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.
43. Once the constitution of the Arbitral 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.
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
16:37:10
44. 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.
CONCLUSION:
45. In view of the afore-stated reasons, 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
such appointments.
46. Resultantly, the present Petition is allowed, and the Impugned
Award stands set aside.
47. 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.
48. Accordingly, the present Petition, along with pending
Application(s), if any, stands disposed of in the above terms.
49. No order as to cost.
HARISH VAIDYANATHAN SHANKAR, J.
JULY 01, 2026/jk
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:02.07.2026
16:37:10