Full Judgment Text
2025 INSC 1073
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No(s)……….. OF 2025
(Arising out of SLP (C) No(s).7161-7162/2018)
BHAYANA BUILDERS PVT.
LTD. APPELLANT(S)
VERSUS
ORIENTAL STRUCTURAL ENGINEERS
PVT. LTD. & ETC. RESPONDENT(S)
J U D G M E N T
MANOJ MISRA, J.
1. Leave granted.
2. These appeals arise from an order dated
21.02.2018 passed by the High Court of Delhi at New
1
Delhi whereby the petition(s) (i.e., O.M.P. (T) (COMM)
No.101 of 2017 and O.M.P. (T) (COMM) No.105 of 2017)
filed by the appellant, under Section 14(2) of the
Signature Not Verified
Digitally signed by
Nirmala Negi
Date: 2025.09.04
16:20:02 IST
Reason:
1 The High Court
SLP (C) No.7161-7162/2018 Page 1 of 5
2
Arbitration and Conciliation Act, 1996 , for termination of
the mandate of the sole arbitrator appointed by the
Managing Director of the respondents was rejected.
3. Arbitration agreement under which the sole
arbitrator was nominated by the Managing Director of the
respondents reads thus:
“ 9.03 – Settlement of Disputes - Any dispute
arising of this sub-contract work shall be settled in
terms of this work order. In case of failure to settle
amicably, the dispute shall be finally resolved in
accordance with the Arbitration and Conciliation
Act, 1996 by Sole Arbitrator to be nominated
(including nomination of replacement of Arbitrator, if
necessitated by vacancy of the post caused by any
reason whatsoever) by the Managing Director of the
First Party, New Delhi. The venue shall be New
Delhi. This Work Order is governed as per the Law of
India and the jurisdiction of New Delhi Courts shall
apply.”
4. By relying upon the judgment of this Court in
3
TRF Ltd. vs. Energo Engg. Projects Ltd . , petitions were
filed before the High Court to terminate the mandate of
the sole arbitrator nominated by the Managing Director in
terms of the aforesaid arbitration clause and for
appointment of an arbitrator by the Court.
2 1996 Act
3 (2017) 8 SCC 377
SLP (C) No.7161-7162/2018 Page 2 of 5
5. The High Court rejected the petitions against
which these appeals have been filed.
6. The learned counsel for the appellant submits
that now there is a Constitution Bench decision of this
Court in
Central Organization for Railway
Electrification (for short ‘CORE’) vs. ECI SPIC SMO
4
MCML (JV) A Joint Venture Company , which has
affirmed the law laid down in TRF (supra) and Perkins
5
Eastman Architects DPC vs. HSCC (India) Ltd. ,
declaring that a clause which 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 appointment process of arbitrators.
7. Accordingly, it has been prayed that the appeals
be allowed, the mandate of the sole arbitrator nominated
by the Managing Director in terms of Clause 9.03 be
terminated and an arbitrator be appointed.
4 (2025) 4 SCC 641
5 (2020) 20 SCC 760
SLP (C) No.7161-7162/2018 Page 3 of 5
8. The learned counsel for the respondents could not
dispute that the instant case is squarely covered by
Constitution Bench decision of this Court in ‘ CORE
(supra) .
9. We have considered the submissions.
In , this Court had held that if a
10. TRF (supra)
person cannot be appointed an arbitrator being ineligible
by operation of law, he cannot nominate another as a sole
arbitrator. The Constitution Bench has upheld the view
taken in TRF (supra) . In such circumstances, since
managing director of a company would be ineligible for
being appointed as an arbitrator in view of Section 12 (5)
read with paragraph 5 in the Fifth Schedule to the 1996
Act, he would be ineligible to nominate a sole arbitrator.
Accordingly, we allow the appeals and terminate the
mandate of the sole arbitrator nominated by the
Managing Director of the respondents. In consequence,
we refer the matter to the Delhi International Arbitration
Centre for nominating a suitable Arbitrator for resolution
of the dispute inter se the parties.
SLP (C) No.7161-7162/2018 Page 4 of 5
11. Pending applications, if any, stand disposed of.
…................................... J.
(Manoj Misra)
................................................ J.
(Ujjal Bhuyan)
New Delhi;
August 18, 2025
SLP (C) No.7161-7162/2018 Page 5 of 5
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No(s)……….. OF 2025
(Arising out of SLP (C) No(s).7161-7162/2018)
BHAYANA BUILDERS PVT.
LTD. APPELLANT(S)
VERSUS
ORIENTAL STRUCTURAL ENGINEERS
PVT. LTD. & ETC. RESPONDENT(S)
J U D G M E N T
MANOJ MISRA, J.
1. Leave granted.
2. These appeals arise from an order dated
21.02.2018 passed by the High Court of Delhi at New
1
Delhi whereby the petition(s) (i.e., O.M.P. (T) (COMM)
No.101 of 2017 and O.M.P. (T) (COMM) No.105 of 2017)
filed by the appellant, under Section 14(2) of the
Signature Not Verified
Digitally signed by
Nirmala Negi
Date: 2025.09.04
16:20:02 IST
Reason:
1 The High Court
SLP (C) No.7161-7162/2018 Page 1 of 5
2
Arbitration and Conciliation Act, 1996 , for termination of
the mandate of the sole arbitrator appointed by the
Managing Director of the respondents was rejected.
3. Arbitration agreement under which the sole
arbitrator was nominated by the Managing Director of the
respondents reads thus:
“ 9.03 – Settlement of Disputes - Any dispute
arising of this sub-contract work shall be settled in
terms of this work order. In case of failure to settle
amicably, the dispute shall be finally resolved in
accordance with the Arbitration and Conciliation
Act, 1996 by Sole Arbitrator to be nominated
(including nomination of replacement of Arbitrator, if
necessitated by vacancy of the post caused by any
reason whatsoever) by the Managing Director of the
First Party, New Delhi. The venue shall be New
Delhi. This Work Order is governed as per the Law of
India and the jurisdiction of New Delhi Courts shall
apply.”
4. By relying upon the judgment of this Court in
3
TRF Ltd. vs. Energo Engg. Projects Ltd . , petitions were
filed before the High Court to terminate the mandate of
the sole arbitrator nominated by the Managing Director in
terms of the aforesaid arbitration clause and for
appointment of an arbitrator by the Court.
2 1996 Act
3 (2017) 8 SCC 377
SLP (C) No.7161-7162/2018 Page 2 of 5
5. The High Court rejected the petitions against
which these appeals have been filed.
6. The learned counsel for the appellant submits
that now there is a Constitution Bench decision of this
Court in
Central Organization for Railway
Electrification (for short ‘CORE’) vs. ECI SPIC SMO
4
MCML (JV) A Joint Venture Company , which has
affirmed the law laid down in TRF (supra) and Perkins
5
Eastman Architects DPC vs. HSCC (India) Ltd. ,
declaring that a clause which 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 appointment process of arbitrators.
7. Accordingly, it has been prayed that the appeals
be allowed, the mandate of the sole arbitrator nominated
by the Managing Director in terms of Clause 9.03 be
terminated and an arbitrator be appointed.
4 (2025) 4 SCC 641
5 (2020) 20 SCC 760
SLP (C) No.7161-7162/2018 Page 3 of 5
8. The learned counsel for the respondents could not
dispute that the instant case is squarely covered by
Constitution Bench decision of this Court in ‘ CORE
(supra) .
9. We have considered the submissions.
In , this Court had held that if a
10. TRF (supra)
person cannot be appointed an arbitrator being ineligible
by operation of law, he cannot nominate another as a sole
arbitrator. The Constitution Bench has upheld the view
taken in TRF (supra) . In such circumstances, since
managing director of a company would be ineligible for
being appointed as an arbitrator in view of Section 12 (5)
read with paragraph 5 in the Fifth Schedule to the 1996
Act, he would be ineligible to nominate a sole arbitrator.
Accordingly, we allow the appeals and terminate the
mandate of the sole arbitrator nominated by the
Managing Director of the respondents. In consequence,
we refer the matter to the Delhi International Arbitration
Centre for nominating a suitable Arbitrator for resolution
of the dispute inter se the parties.
SLP (C) No.7161-7162/2018 Page 4 of 5
11. Pending applications, if any, stand disposed of.
…................................... J.
(Manoj Misra)
................................................ J.
(Ujjal Bhuyan)
New Delhi;
August 18, 2025
SLP (C) No.7161-7162/2018 Page 5 of 5