Municipal Corporation Of Greater Mumbai vs. M/S R.V. Anderson Associates Limited

REPORTABLE
2026 INSC 228
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2026
(Arising out of SLP (C) Nos. 23846-47 OF 2025)
MUNICIPAL CORPORATION
OF GREATER MUMBAI …APPELLANT

VERSUS
M/S R.V. ANDERSON
ASSOCIATES LIMITED …RESPONDENT
J U D G M E N T
J.K. MAHESHWARI, J.
1. Leave granted.
2. The instant appeal(s) are directed against the judgment dated
04.07.2025 of the High Court of Bombay (hereinafter referred to as
“ High Court ”) in Arbitration Appeal (L) No. 4339 of 2024 with
Interim Application (L) No. 7312 of 2024.
3. By the impugned judgement, the High Court dismissed the
appeal of the Appellant – Municipal Corporation of Greater
Mumbai (hereinafter referred to as “ MCGM ”) under Section 37 of
Signature Not Verified
Digitally signed by
Gulshan Kumar Arora
Date: 2026.03.11
17:30:54 IST
Reason:
the Arbitration and Conciliation Act, 1996 (hereinafter referred to
th
as “ 1996 Act ”) and confirmed the judgment and order dated 19
1


th
and 20 of October, 2022 of the learned Single Judge in
Arbitration Petition No. 84 of 2012 dismissing the application filed
under Section 34 of the 1996 Act by MCGM for setting aside the
award dated 05.06.2010 of a three-member Arbitral Tribunal.
4. The challenge made in the proceedings of Section 34 was
threefold - improper constitution of the tribunal, limitation and
interest. However, before us, the Appellant has confined their
arguments only to the question of lack of jurisdiction due to
improper constitution of the tribunal. As such, our examination of
the facts of the case is confined to the question of validity of
constitution of the tribunal.
FACTS
5. The facts shorn of unnecessary details are that the MCGM
had floated a tender and invited proposals for ‘ Consultancy
Services to Upgrade Sewerage Operations & Maintenance Services ’.
The scope of work of the contract was for providing consultancy in
upgrading the sewage and sewerage handling facilities, operations
and routine maintenance protocols. This was a World Bank funded
project and the Respondent turned out to be the successful bidder
in association with PHE Consultants, Mumbai. Pursuant thereto,
an agreement dated 18.09.1995 (hereinafter referred to as the
2


“ Agreement ”) was entered into between the MCGM and M/s R.V.
Anderson Associates Ltd., which is an engineering firm based out
of Canada.
6.
The stipulated duration for completion of the work under the
Agreement was 72 months and the contract was designed to be
implemented in stages. The work under the contract was
completed on 20.06.2001 and a final report was submitted by the
Respondent to the MCGM. At that stage, a dispute arose in respect
of payment of outstanding dues. A meeting was held on
24.10.2002 where the Respondent’s claims were discussed and
rejected by MCGM except to make partial payments on
17.02.2004.
7. When things stood as thus, on 09.08.2005, the Respondent
invoked the arbitration clause as contained in the Agreement. Vide
communication dated 09.08.2005, received by the MCGM on
14.09.2005, the Respondent invoked the arbitration clause,
particularly clause 8.3(b) of the Agreement and appointed Hon’ble
Mr. Justice S.M. Jhunjhunwala (Retd.) as their nominee
arbitrator. On 07.10.2005, the MCGM appointed Mr. Sharad
Upasani, former IAS officer as their nominee arbitrator.
3


8. On 04.11.2005, a meeting was held between the Appellant
and the Respondent, where the parties discussed about exploring
a possibility of conciliation or mediation. In reference to the said
meeting, another letter dated 08.11.2005 was sent by the
Respondent to MCGM, seeking to explore non-binding conciliation
or mediation and in the meanwhile, on confirmation by the MCGM,
the arbitration proceedings be put in abeyance. The said letter
dated 08.11.2005 was also marked to Justice Jhunjhunwala
(Retd.) and Mr. Upasani. The MCGM, by writing letter dated
07.01.2006 acknowledged the intention of the Respondent to keep
arbitration proceedings in abeyance and to start conciliation
proceedings.
9. After a while, the Respondent wrote letters dated 12.02.2006
and 27.02.2006 to the MCGM, requesting to participate in the
conciliation. It appears from the record that steps were not taken
by the parties to explore the possibility of settlement and nothing
was materialized. On 15.12.2006, MCGM addressed a letter to Mr.
Upasani, informing him that there was no conciliation pursuant to
the letter dated 08.11.2005 and that Respondent was delaying the
appointment of arbitrators.
4


10. On 08.01.2007, the Respondent wrote a letter to the MCGM
stating that since MCGM no longer seems to be inclined to explore
mediation and conciliation, the arbitration proceedings may
continue and the two arbitrators may proceed to appoint the third
arbitrator in terms of the contract.
11. The two nominee arbitrators jointly appointed Justice D.R.
Dhanuka (Retd.) as the Presiding Arbitrator by their letter dated
30.04.2007. The Presiding Arbitrator issued the notice for
preliminary meeting vide communication dated 09.05.2007.
12. At this stage, Respondent by their letter dated 28.05.2007,
objected to the appointment of Justice Dhanuka (Retd.) in
reference to Clause 8.6 of the Agreement, inter alia stating that the
presiding arbitrator must not be of Indian or Canadian nationality.
As such, Justice Dhanuka (Retd.) tendered his resignation as the
Presiding Arbitrator on 28.06.2007.
13. The two Co-Arbitrators, prior to appointing another presiding
arbitrator, then addressed a letter dated 17.09.2007 to both the
Respondent and the MCGM, seeking information as to whether the
parties are “ still interested in the conduct of the pending arbitral
”. The Respondent replied on 29.09.2007 conveying
proceedings
their intention to continue with the arbitration proceedings and
5


requested both Co-Arbitrators to proceed with the appointment of
the Presiding Arbitrator. However, the MCGM did not reply in
response to the said letter. Thereafter, the Co-Arbitrators
appointed Mr. John Savage as the Presiding Arbitrator on
24.04.2008, who also tendered his resignation on 11.08.2008.
14. On 21.10.2008, the Co-Arbitrators wrote to Mr. Anwarul
Haque of Singapore for appointment as the Presiding Arbitrator,
who conveyed his acceptance on 29.10.2008. Finally, on
12.11.2008, the learned Co-Arbitrators informed the parties that
Mr. Anwarul Haque had been appointed as the Presiding Arbitrator
and that a preliminary meeting was scheduled on 08.12.2008,
which was first rescheduled to 09.12.2008 and again rescheduled
to 09.01.2009.
15. The preliminary meeting of the Arbitral Tribunal was
conducted on 09.01.2009 which was duly attended by both the
parties as evinced from the Minutes of the Preliminary Meeting of
the Arbitral Tribunal. After the said meeting, MCGM, addressing a
letter on 20.02.2009 to the Presiding Arbitrator, alleged that the
appointment of the Presiding Arbitrator was contrary to the terms
of the Agreement, hence a ‘nullity’. It was said that the learned Co-
Arbitrators could not have made the appointment of the Presiding
6


Arbitrator beyond 30 days from the date of nomination of the
second arbitrator. It was stated that the Presiding Arbitrator,
therefore, has ‘no right’ to be an Arbitrator and requested that the
Presiding Arbitrator ought to withdraw himself from being an
Arbitrator in the matter.
16. A written objection to the letter dated 20.02.2009 was
addressed by Respondent through its letter dated 09.03.2009.
Thereafter, the Respondent submitted its statement of claim before
the Arbitral Tribunal on 20.03.2009. It was at this stage, the
MCGM filed an application under Section 16 of the 1996 Act,
challenging the appointment of the Presiding Arbitrator as a
‘nullity’ and seeking consequential reliefs.
17. The learned Arbitral Tribunal, by its order dated 17.07.2009,
(hereinafter referred to as “ Section 16 order ”) dismissed the
application by a detailed order, holding that the appointment of
the Presiding Arbitrator was valid.
18. On 05.06.2010, the Tribunal passed the final award,
directing MCGM to pay specified amounts in United States Dollars
(hereinafter referred to as “ USD ”) and in Indian Rupees (hereinafter
referred to as “ INR ”). The Tribunal, under the final award, directed
the payment as follows:
7


I. USD 2,078,349.25 and INR 14,76,736 along with
interest amount on USD 1,089,926.88 and INR 1,51,596
th
at the rate of 14% per annum calculated from 16 June,
2004 till payment or realization, whichever is earlier.
II. USD 55,217 and INR 15,57,500 along with USD 42,815
and INR 4,07,500 quantified as the cost of arbitration.
19. A corrigendum to the final award was passed on 29.06.2010,
making some corrections to the amount payable by the MCGM to
the Arbitrators. After the payments were made, the award was
finally issued and released to the MCGM on 10.08.2011.

20. The application seeking setting aside of the arbitral award
under Section 34 of the 1996 Act was filed before the High Court
on 04.11.2011. The learned Single Judge of the High Court
th
pronounced its judgement dismissing the said application on 19
th
and 20 of October, 2022. An appeal was preferred under Section
37 of the 1996 Act before the Division Bench of the High Court
which has been dismissed vide the Impugned Order. Upon filing
the present appeals by the Appellant, notice was issued vide order
dated 29.08.2025 and the operation of the impugned order was
stayed.

8


FINDINGS OF THE TRIBUNAL AND HIGH COURT
21. The main thrust of the jurisdictional challenge as raised by
the Appellant is that the Presiding Arbitrator had been appointed
after the expiration of 30 days from 07.10.2005, i.e., the day when
the MCGM had appointed its nominee arbitrator. It has been
contended by the Appellant throughout that as per Clause 8.3(b)
of the Agreement, once period of 30 days had expired, the Arbitral
Tribunal was rendered coram non judice and the Co-Arbitrators
had no power to appoint the Presiding Arbitrator, who could have
only been appointed by the Secretary General of the International
Centre for Settlement of Investment Disputes, Washington D.C.
(hereinafter referred to as “ ICSID ”).
Tribunal’s findings
22. The learned Arbitral Tribunal, while dismissing the challenge
laid out to its jurisdiction in the application filed under Section 16
of the 1996 Act, found that the provision to approach the Secretary
General of the ICSID for appointment of the Presiding Arbitrator
was merely an enabling provision, which did not denude the power
of the Co-Arbitrators to appoint the Presiding Arbitrator. It was
found that in this case, admittedly, neither party has made a
reference to the Secretary General of ICSID and as such, the power
9


of the Co-Arbitrators to appoint the Presiding Arbitrator cannot be
said to be ousted. The Tribunal observed that since arbitral
proceedings were kept in abeyance on the request of the parties,
hence, no fault can be found with the decision of the Co-Arbitrators
to appoint the Presiding Arbitrator. It was held that the conduct of
MCGM in participating in the arbitral process amounts to waiver
under Section 4 of the 1996 Act and the decision to challenge the
appointment of the Presiding Arbitrator was barred by limitation.
Findings of the High Court in the Section 34 order
23. Learned Single Judge dismissed the application vide order
th th
dated 19 and 20 October, 2022. On the question of jurisdiction,
it was found that the interpretation of Clause 8.3(b) made by the
Tribunal is not just a possible or plausible or reasonable view, but
rather it is the only reasonable view, therefore, interference by
‘setting aside’ the award under Section 34 is not warranted. The
Court observed that in case the clause is interpreted in a manner
that once the 30-day period had expired, the Co-Arbitrators had
no power to appoint the Presiding Arbitrator and had to wait
indefinitely for the parties to approach the ICSID, it will lead to
absurdity and incongruity since there was no time limit for the
parties to approach the ICSID. In such a situation, the Arbitrators
10


could not be said to be completely powerless after their
appointment.
Findings of the High Court in the Section 37 order
24.
The High Court, while dismissing the appeal under Section
37 of the 1996 Act vide the Impugned Order has approved the
interpretation of Clause 8.3(b) as made by the learned Single Judge
and the Arbitral Tribunal. The Court observed that while exercising
appellate power under Section 37, the Court cannot sit in appeal
over interpretation of the contractual clauses by the Arbitrator
merely because a different interpretation of the said clause is
possible. Since the appointment of the arbitrator is in line with the
provisions of Clause 8.3(b) of the Agreement, no interference is
warranted.
ARGUMENTS ADVANCED
25. Learned Senior Counsel Mr. Siddharth Bhatnagar for the
MCGM, argued with vehemence that the arbitral award deserves
to be set aside due to improper constitution of the tribunal and the
award lacks jurisdiction. It has been submitted that the Arbitral
Tribunal, learned Single Judge and the Division Bench of the High
Court have interpreted and substituted the contractual scheme as
agreed by the parties, which militates against the principle of party
11


autonomy. It has been urged that Clause 8.3(b) of the Agreement
permits a period of 30 days from the date of appointment of the
latter Arbitrator for the arbitrators to jointly appoint the Presiding
Arbitrator, after which the Tribunal is rendered coram non judice
and loses its power to appoint the Presiding Arbitrator. In such a
case, he submits, the only way the Presiding Arbitrator could have
been appointed, would have been by the parties approaching the
Secretary General of the ICSID since use of the word ‘shall’ in
Clause 8.3(b) of the Agreement makes this the only possible
interpretation of the contractual terms. As such, entire arbitral
process becomes ‘ non-est ’ in law due to a foundational
jurisdictional defect which is incurable.
26. The above said arguments have been met with equal
vehemence by the learned Senior Counsel Mr. Shyam Divan
appearing for the Respondent. He submitted that the Tribunal has
passed a detailed award after interpreting the clauses of the
Agreement and the question of jurisdiction has been aptly dealt
with by the learned Arbitral Tribunal. He further contended that
once the award has been passed by the Arbitral Tribunal, the scope
of interference at the stage of a challenge under Section 34 of the
1996 Act is limited. Such scope of interference is even more limited
12


in an appeal under Section 37 of the 1996 Act and more so in a
special leave petition arising out of the said appeal. It is urged that
once the learned Arbitral Tribunal has reached a conclusion with
respect to interpretation of the contract, there is no scope for re-
interpretation and the Courts must not sit in appeal in these
proceedings merely because a different view may be possible. He
has urged assiduously that Clause 8.3(b) is an enabling clause and
not a restricting clause, it merely provides an additional avenue for
the parties to seek appointment of the Presiding Arbitrator before
the Secretary General of ICSID in case there is an impasse and the
Co-Arbitrators fail to appoint the Presiding Arbitrator within the
prescribed time period of 30 days. It is argued that neither party
took recourse before the ICSID as specified under this clause and
as such, MCGM has waived its right to challenge the appointment
of arbitrator after having actively participated in the arbitration. It
is therefore, submitted that the jurisdictional challenge is an
afterthought, after the arbitral process was well underway and is
hit by waiver.
ANALYSIS OF SUBMISSIONS
27. Having heard learned counsel for the parties at length and on
perusal of the facts and material placed on record, the short
13


question which falls for our consideration is whether the arbitral
award deserves to be set aside on the ground of lack of jurisdiction
due to improper constitution of the arbitral tribunal or patent
illegality?
Interpretation of Clause 8.3(b) of the Agreement
28. The instant jurisdictional challenge hinges on Clause 8.3(b)
of the Agreement and its interpretation by the learned Arbitral
Tribunal. Clause 8 of the Agreement is of utmost relevance in this
case, and is therefore reproduced as thus:
“ 8. SETTLEMENT OF DISPUTES
8.1 Amicable Settlement
The Parties shall use their best efforts to settle amicably all
disputes arising out of or in connection with this contract or
the interpretation thereof.
8.2 Right to Arbitration
Any dispute between the Parties as to matters arising
pursuant to this Contract which cannot be settled amicably
within thirty (30) days after receipt by one Party of the other
Party’s request for such amicable settlement may be
submitted by either Party to arbitration in accordance with
the provisions of Clauses 8.3 through 8.7 hereinafter.
8.3 Selection of Arbitrators
Each dispute submitted by a Party to arbitration shall be
heard by a sole arbitrator or an arbitration panel composed
of three arbitrators, in accordance with the following
provisions:
(a) Where the Parties agree that the dispute to appoint a sole
arbitrator or, failing agreement on the identity of such sole
arbitrator within thirty (30) days after receipt by the other
Party of the proposal of a name for such appointment by the
14


Party who initiated the proceedings, either Party may apply
to the Federation Internationale des Ingenieurs-Conseil
(FIDIC) of Lausanne, Switzerland for a list of not fewer than
five nominees and on receipt of such list, the Parties shall
alternately strike names therefrom, and the last remaining
nominee on the list shall be the sole arbitrator for the matter
in dispute. If the last remaining nominee has not been
determined in this manner within sixty (60) days of the date
of the list. FIDIC shall appoint upon the request of either
Party and from such list or otherwise, a sole arbitrator for
the matter in dispute.
(b) Where the Parties do not agree that the dispute concerns
a technical matter, the Client and Consultants shall each
appoint one arbitrator, and these two arbitrators shall
jointly appoint a third arbitrator, who shall chair the
arbitration panel. If the arbitrators named by the Parties do
not succeed in appointing a third arbitrator within thirty (30)
days after the latter of the two arbitrators named by the
Parties has been appointed, the third arbitrator shall, at the
request of either Party, be appointed by the Secretary
General of the International Centre for Settlement of
Investment Disputes, Washington D.C.
(c) If, in a dispute subject to Clause 8.3(b), one Party fails to
appoint its arbitrator within thirty (30) days after the other
Party has appointed its arbitrator, the Party which has
named an arbitrator may apply to the Secretary General of
the International Centre for Settlement of Investment
Disputes, Washington D.C. to appoint a sole arbitrator for
the matter in dispute, and the arbitrator appointed pursuant
to such application shall be the sole arbitrator for that
dispute.
8.4 Rules of Procedure
Except as stated herein, arbitration proceedings shall be
conducted in accordance with the rules of procedure for
arbitration of the United Nations Commission of
International Trade Law (UNCITRAL) as in force on the date
of this Contract.
8.5 Substitute Arbitrators
15


If for any reason an arbitrator is unable to perform his
function, a substitute shall be appointed in the same
manner as the original arbitrator.
8.6 Nationality and Qualifications of Arbitrations
The sole arbitrator or the third arbitrator appointed
pursuant to paragraphs (a) through (c) of Clause 8.3 hereof
shall be an internationally recognized legal or technical
expert with experience in relation to the matter in dispute
and shall not be a national of the Consultants’ home country
or of the Government. For the purpose of this clause, “home
country” means any of:
(a) the country of incorporation of the Consultants or
(b) the country in which the Consultants’ (or any of their
Members’) principal place of business is located; or
(c) the country of nationality of a majority of the Consultants’
(or of any Members’) shareholders; or
(d) the country of nationality of the Subconsultant
concerned, where the dispute involves a subcontract.
8.7 Miscellaneous
In any arbitration proceeding hereunder:
(a) proceedings shall, unless otherwise agreed by the
Parties, be held in Bombay;
(b) the English language shall be the official language for all
purposes; and
(c) the decision of the sole arbitrator or of a majority of the
arbitrators (or of the third arbitrator if there is no such
majority) shall be final and binding and shall be enforceable
in any court of competent jurisdiction, and the Parties
hereby waive any objection to or claims of immunity in
respect of such enforcement. ”

29. On a plain reading, Clause 8.3(b) provides that the parties
shall each appoint one arbitrator and if the two arbitrators do not
succeed in appointing the third arbitrator who shall preside the
arbitration panel, within 30 days, then, on the request of either
16


party, the ICSID shall appoint the third arbitrator. Such is the
requirement in respect of appointment of the three arbitrators who
shall constitute the Arbitral Tribunal.
30.
On an objective perusal of the arbitration clause, it appears
to be enabling in nature. It does not provide that in case the two
arbitrators do not succeed in appointing the third arbitrator within
the period so prescribed, the two arbitrators will lose their power
of appointment of the third arbitrator. Rather, the power of
appointment of the third arbitrator acts in an independent sphere
when juxtaposed with the second part of the clause which is
enabling in nature, permitting the parties to approach the ICSID
after 30 days, in case the two arbitrators appointed by the parties
reach an impasse and do not succeed in making such
appointment.
31. The consequence of non-appointment of the Presiding
Arbitrator within the prescribed period has not been specified in
the Agreement. In fact, the clause merely grants liberty to the
parties to seek the appointment of the Presiding Arbitrator, after a
period of 30 days, before the ICSID. The intent of the parties while
drafting the arbitration clause could not have been to withdraw the
power to appoint the Presiding Arbitrator from the Co-Arbitrators
17


appointed by the parties upon expiry of 30 days from the date of
appointment of the second arbitrator, otherwise, it would have
certainly found mention in the Agreement. The intent of the clause
appears to be that in case both Arbitrators cause a delay in
appointment of the third arbitrator, the parties retain the authority
to remedy the delay and after 30 days of such non-appointment,
they have liberty to apply before the ICSID to address the delay
and upon making such a request, the ICSID shall appoint the third
Arbitrator. Hence, in absence of such a stipulation in the said
clause and looking to the intent of the language used, the Court
while exercising its jurisdiction in proceedings arising out of
Section 34 of the 1996 Act, cannot read something into the
contract which it does not explicitly provide.
32. The manner in which a contract is understood and acted
upon by the parties is the best aid to interpreting the contract and
understanding the intent of the parties while drafting the contract.
The Arbitral Tribunal has interpreted the arbitration clause in a
manner which is certainly plausible, holding that it is enabling in
nature, on the contingency that an application is made by either
party before the ICSID. We are in complete agreement with the said
view, however, addressing the contentions made before us, it is
18


seen that the initial part of Clause 8.3(b), “ Where the Parties do not
agree that the dispute concerns a technical matter, the Client and
Consultants shall each appoint one arbitrator, and these two
arbitrators shall jointly appoint a third arbitrator, who shall chair
the arbitration panel.” lays down the composition of the arbitral
tribunal and their method of appointment, it vests the power of
appointment of the third arbitrator with the Co-Arbitrators
appointed by the parties. The subsequent part of Clause 8.3(b)
reads “If the arbitrators named by the Parties do not succeed in
appointing a third arbitrator within thirty (30) days after the latter
of the two arbitrators named by the Parties has been appointed, the
third arbitrator shall, at the request of either Party, be appointed by
the Secretary General of the International Centre for Settlement of
Investment Disputes, Washington D.C.” . This deals with a
contingency which breaks into three critical components, firstly,
the contingency is triggered upon the expiration of the thirty-day
period from the date of appointment of the second arbitrator
without the appointment of the third arbitrator; secondly, the
condition precedent is that a request must be made by either party,
meaning thereby that the Secretary General of ICSID does not have
the power to act sua sponte (on its own accord); and thirdly, by
19


using the word ‘shall’, the mandate is that once such a request is
made by either party, the Secretary General of ICSID is required to
make such appointment.
33.
The parties have, in their commercial wisdom, drafted a ‘fail-
safe’ into the arbitration clause to deal with a contingency where
the Co-Arbitrators fail to appoint the third arbitrator, so as not to
leave the dispute resolution process in the balance. They have
retained with themselves the power to approach the ICSID and
make a request for appointment of the third arbitrator in case of
such a contingency. At the very first instance, when the Co-
Arbitrators did not succeed in appointing the third arbitrator
within thirty days of the appointment of Mr. Upasani, neither party
exercised the option to approach the ICSID. If the parties had
exercised such an option upon the contingency being triggered,
certainly an argument could have been made that despite a
request being made before the ICSID, the Co-Arbitrators have
proceeded to appoint the third arbitrator and therefore the arbitral
tribunal is improperly constituted. In the present case, however,
the parties have not exercised the option to approach the ICSID
and non-exercise of the contingency cannot make the initial part
of the arbitration clause otiose . It certainly cannot be said that
20


after the period of thirty days, the power of the Co-Arbitrators to
appoint the third arbitrator was completely extinguished.
34. Much emphasis has been placed by the learned Senior
Counsel Mr. Bhatnagar on the use of the word ‘shall’ in Clause
8.3(b) to argue that once the 30-day period from the date of
appointment of the second arbitrator elapses, the only way to
appoint the Presiding Arbitrator is through the Secretary General
of ICSID. We are unable to agree with this submission since the
word ‘shall’ has been used to enable the parties and the ICSID to
proceed in the matter, upon a request being made by either party,
upon the non-appointment of third, i.e. Presiding arbitrator,
otherwise it will lead to procedural and commercial absurdity. By
using ‘shall’ in the clause, the responsibility has been cast on the
Secretary General of the ICSID to appoint the third Arbitrator only
upon a request made by either of the parties. It provides a mandate
that the President of the ICSID shall mandatorily appoint the third
arbitrator and this mandate is based on the condition precedent,
i.e., a request being made by either of the parties. It is nobody’s
case that a request has been made by either party before the ICSID
after 30 days and prior to appointment of the Presiding Arbitrator
by the Co-Arbitrators. The enabling clause is permissive and only
21


attracts when the condition precedent of making a request before
the ICSID is satisfied. The parties have, in their wisdom and in a
specific circumstance, retained the power and liberty, to make a
request before the ICSID, which shall appoint the third arbitrator.
The clause cannot, therefore, be read to be restrictive in nature as
contended by the Appellant, however, this Court is inclined to
reject this argument in line of the decision of the Arbitral Tribunal.
35. Another important factor is that once the arbitrators were
appointed by the respective parties, which initiated the arbitration
by sending a notice, it cannot be said that the arbitrators have to
indefinitely wait for the parties to apply before the ICSID in order
to appoint the Presiding Arbitrator and for the arbitration to
proceed. If such an interpretation is made, it will lead to
commercial irrationality, since until the parties approach the
ICSID, the two arbitrators would be left in a state of limbo. This
could not have been the intent of the parties within the framework
of party autonomy and from the conduct of the parties, which will
be discussed in the subsequent part of this judgement, the parties
never interpreted the contract in such a manner. In view of the
aforesaid discussion, it cannot be said that the parties would want
their contract to become unworkable and for the dispute resolution
22


clause to work in such a manner that the arbitrators appointed by
the parties after invocation of arbitration would wait indefinitely
for either of the parties to approach the ICSID seeking appointment
of the third arbitrator.
36. Of course, while saying so we are cognizant of the sacrosanct
principle of party autonomy and the fact that Courts cannot
substitute the commercial wisdom of parties as is borne out from
the plain meaning of the words used in the contract. However,
Clause 8.3(b) has been rightly interpreted by the learned Arbitral
Tribunal in the Section 16 order and the matter has been dealt
with in the right perspective by the learned Single Judge in Section
34 and the learned Division Bench in the Section 37 appeal. The
law in respect of the scope of interference permissible in
proceedings arising out of a challenge to the arbitral award under
Section 34 of the 1996 Act, is well settled. Generally, the scope of
interference is quite narrow. The arbitrator is the master of
evidence and so also of interpretation of the terms of contract. If
the arbitrator has reached at a certain view with respect to
interpretation which is plausible, interference is not warranted
merely because some other view may also be possible. This is a
settled principle of law which has been recently reiterated in the
23


decisions of this Court in Consolidated Construction
1
Consortium Limited v. Software Technology Parks of India
and SEPCO Electric Power Construction Corporation v. GMR
2
Kamalanga Energy Ltd.
The role of the Court, in the
proceedings arising out of Section 34 of the 1996 Act, is clearly
demarcated. The approach of the Court must be to respect arbitral
autonomy and ensure minimum judicial interference.
37. As rightly observed by the learned Arbitral Tribunal in the
Section 16 order as well as the High Court, this is not a case where
the Arbitral Tribunal has been composed completely outside the
scope of the agreement and a procedure alien to the agreement has
been adopted to appoint the arbitrators. The difference in
interpretation is merely as to whether the third arbitrator could
only have been appointed by the Secretary General of ICSID or by
the two arbitrators nominated by the parties. In any case, in the
facts of this case, it cannot be said that the Arbitral Tribunal has
been improperly constituted in derogation of the arbitration
agreement, or that the interpretation of the arbitration clause as
made by the Arbitral Tribunal has resulted in any patent illegality,

1
2025 INSC 574.
2
2025 INSC 1171.
24


which would warrant setting aside of the award. As such, the High
Court has rightly decided not to interfere with the arbitral award
under Section 34(2)(a)(v) or Section 34(2A) while rejecting the
application to set aside the award.
Conduct, Acquiescence and Waiver
38. Even though we have found that the Arbitral Tribunal has
reached the right conclusion with respect to interpretation of the
arbitration clause as contained in the Agreement and that the
appointment of the third arbitrator is in line with the arbitration
clause, there is yet another aspect of the instant matter which we
must address, since it forms a part of the reasoning of the Section
16 order. Even assuming that there is non-compliance of the
arbitration agreement in appointing the third arbitrator, whether
the MCGM has waived its right to object to the same due to its
conduct?
39. Section 16 of the 1996 Act permits the arbitral tribunal to
rule on its own jurisdiction. It is relevant and is therefore quoted
as under:
“ 16. Competence of arbitral tribunal to rule on its
jurisdiction.
(1) The arbitral tribunal may rule on its own jurisdiction,
including ruling on any objections with respect to the
25


existence or validity of the arbitration agreement, and for
that purpose, —
(a) an arbitration clause which forms part of a contract
shall be treated as an agreement independent of the
other terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is
null and void shall not entail ipso jure the invalidity of the
arbitration clause.
(2) A plea that the arbitral tribunal does not have jurisdiction
shall be raised not later than the submission of the
statement of defence; however, a party shall not be
precluded from raising such a plea merely because that he
has appointed, or participated in the appointment of, an
arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of
its authority shall be raised as soon as the matter alleged
to be beyond the scope of its authority is raised during the
arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases referred
to in sub-section (2) or sub-section (3), admit a later plea if it
considers the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to in
sub-section (2) or sub-section (3) and, where the arbitral
tribunal takes a decision rejecting the plea, continue with
the arbitral proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make
an application for setting aside such an arbitral award in
accordance with section 34.”
40. On the other hand, Section 4 of the 1996 Act deals with
waiver of right to object. It provides as follows:
“ 4. Waiver of right to object. –
A party who knows that –
(a) any provision of this Part from which the parties may
derogate, or
(b) any requirement under the arbitration agreement,
26


has not been complied with and yet proceeds with the
arbitration without stating his objection to such non-
compliance without undue delay or, if a time limit is
provided for stating that objection, within that period of
time, shall be deemed to have waived his right to so object.”

41. It has been argued by the Respondent that even though a
challenge to arbitrability was raised by the MCGM under Section
16 of the 1996 Act, at its core, it is a challenge to non-compliance
of the requirements under the arbitration agreement with regard
to the procedure for appointment. In fact, the learned Arbitral
Tribunal in its order has observed that the challenge by the MCGM
is that the appointment of the Presiding Arbitrator is a ‘nullity’ and
as such, the Arbitral Tribunal lacks jurisdiction. In this context, it
is to be examined whether MCGM has waived its right to object to
the appointment of the Presiding Arbitrator by the Co-Arbitrators
appointed by the parties.
42. MCGM has claimed before us and also before the Tribunal
and the High Court that once the period of thirty days had elapsed
from the date of appointment of the second arbitrator, Mr.
Upasani, the Co-Arbitrators were denuded of their power to
appoint the Presiding Arbitrator and it was only the Secretary
General of ICSID who could make such appointment. As
discussed, such an interpretation of the arbitral agreement cannot
27


be countenanced. In any case, it is pertinent to refer to the conduct
of MCGM to understand the aspect of waiver and acquiescence and
its understanding of the arbitration clause.
43.
On a perusal of the communication between the parties and
the history of the present dispute, the authenticity whereof is not
disputed by either party, it appears that Mr. Upasani was
appointed by MCGM on 07.10.2005. Thereafter, in the meeting
dated 04.11.2005, there was some discussion between the parties
about pursuing conciliation/mediation which has been referenced
in the letter dated 08.11.2005 by the Respondent to the MCGM, a
copy whereof has been forwarded to the Co-Arbitrators, Justice
Jhunjhunwala (Retd.) and Mr. Upasani. The relevant portion of the
said letter was as follows:
“…
During the meeting we had with yourself on 04.11.2005 in
your office the possibility of amicably settling the issue
under dispute through a process of ‘non-binding
conciliation’ or ‘mediation’ was discussed and positively
received by yourself.
As we are keen to avoid litigation and we consider it
appropriate to attempt to amicably resolve issues to the
fullest extent possible. We, therefore, request you to confirm
MCGM’s agreement to participate actively in such ‘non-
binding conciliation’ or ‘mediation’ with us, having regard to
a time limit of six months for (sic) resolution of the issues.
Upon receipt of MCGM’s confirmation of the above, we will
request the arbitrators to keep the proceedings in abeyance
28


while such conciliation proceedings are continuing between
us and MCGM.
In case the parties are unable to arrive at a mutual
settlement on all the issues, those issues not amicably
settled may be taken up by the Arbitrators in the arbitration
proceedings. We, therefore, await your confirmation within
15 days of receipt of this letter, so that the Arbitrators could
be appropriately informed. You are also requested to kindly
initiate the conciliation proceedings.
…”
44. This letter was not replied to by the MCGM until 07.01.2006
when the MCGM wrote a letter addressed to the Respondent,
relevant part whereof has been reproduced:
“…
Dear Sir,
Prejudice to our right, we have noted your intention to keep
arbitration proceedings in abeyance & start conciliation
proceedings. It is to inform further that contractors have
initiated arbitration process in this case without taking
efforts for resolving the issues of dispute, if any. Please note
that MCGM’s doors were always open and are open for
reconciliation, if any.
…”
45. It is relevant to note that at this stage, there was no objection
raised by MCGM that the Co-Arbitrators, due to the operation of
Clause 8.3(b), after the elapsing of 30 days period from the date of
appointment of Mr. Upasani, had lost the power to appoint the
Presiding Arbitrator and to proceed with the arbitration. It has also
not been indicated that they had applied or that are intending to
29


apply before the ICSID for appointment of the Presiding Arbitrator.
The intent of the parties was clearly to pursue other alternative
methods of dispute resolution such as mediation or conciliation
and to amicably settle the disputes, prior to pursuing arbitration
with respect to issues which remained unsettled.
46. It appears from the record that thereafter the parties did not,
in fact, pursue mediation/conciliation and on 15.12.2006, the
MCGM informed their nominee arbitrator, Mr. Upasani that there
was no conciliation and that it was in fact the Respondent which
was delaying the appointment of Arbitrator in order to ‘get a
contract from MCGM’. In this letter, the MCGM has also alleged
that the appointment of Arbitral Tribunal by the Respondent is of
no effect, which was under examination by the MCGM. It is not
explained why the appointment made by Respondent was of no
effect. It is, however, acknowledged by the MCGM that the
appointment of arbitrators had been delayed. Relevant portion of
the letter dated 15.12.2006 has been quoted herein for reference:
“…
There was no conciliation as alleged under the letter dated
th
8 November 2005. It appears that the Claimant was
delaying appointment of Arbitrators to get a contract from
MCGM.
30


From the records, we feel that appointment of Arbitral
Tribunal by Claimant is of no effect. However, MCGM will
examine the case and report soon.”
47. On 08.01.2007, a letter was written by the Respondent to
MCGM which was received by MCGM on 14.02.2007. The relevant
portion of the said letter is reproduced below for reference:
“…
However, it now appears, based on MCGM’s above referred
letter that MCGM does not intend to attempt non-binding
mediation & conciliation efforts to resolve the dispute
amicably.
We are therefore left with no option but to continue with the
arbitration proceedings and request the two arbitrators to
proceed with the appointment of the third arbitrator in
accordance with the contract.”
48. A copy of this letter was also marked to Justice
Jhunjhunwala (Retd.) and Mr. Upasani. By means of the letter
dated 08.01.2007, the Respondent made it clear to MCGM as well
as the two learned Arbitrators that it is fully intent to proceed with
arbitration and in fact, explicitly requested them to appoint the
third arbitrator. This letter was also not replied to by the MCGM.
The MCGM did not, at this stage, take a plea that due to elapse of
30 days, the Co-Arbitrators had lost discretion or competence to
appoint the Presiding Arbitrator and therefore the Respondent
could not have requested the Co-Arbitrators to appoint the third
31


arbitrator. No objection with respect to non-compliance of the
terms of the agreement was raised by the MCGM.
49. It was on 30.04.2007 that the Co-Arbitrators appointed
Justice D.R. Dhanuka (Retd.) as the Presiding Arbitrator. If
MCGM’s argument is to be accepted, this would be the first
instance of non-compliance of the agreement. If in fact it was under
the impression that the Co-Arbitrators had no power to appoint
the Presiding Arbitrator, at first instance itself, it should have
objected to the appointment of Justice D. R. Dhanuka (Retd.),
which it admittedly did not do. Justice D.R. Dhanuka (Retd.),
acting in the capacity of the Presiding Arbitrator then issued a
notice dated 09.05.2007 to both parties for a preliminary meeting.
At this stage, it was actually the Respondent which raised an
objection to his appointment by means of their letter dated
28.05.2007, alleging non-compliance of Clause 8.6 of the
Agreement, since the Presiding Arbitrator could not be of Indian
origin.

50. Justice D.R. Dhanuka (Retd.) withdrew his acceptance to act
as the Presiding Arbitrator on 28.06.2007 and thereafter, the Co-
Arbitrators addressed the letter dated 17.09.2007 to both parties,
posing a question as to whether the parties were still interested in
32


the conduct of arbitral proceedings and to continue with the
proceedings. Even though MCGM did not reply to this letter of the
Co-Arbitrators, the Respondent replied to the Co-Arbitrators with
a copy marked to the MCGM vide letter dated 29.09.2007,
mentioning that they intend to continue the arbitration
proceedings. The Respondent also mentioned that the Co-
Arbitrators should proceed with the appointment of the third
arbitrator and inform the parties. No reply was made by the MCGM
to this letter either, it did not inform the Co-Arbitrators or the
Respondent that since more than 30 days had elapsed, the
appointment necessarily had to be made by the Secretary General,
ICSID and could not be made by the Co-Arbitrators as its case now
is. Relevant portion of the letter dated 29.09.2007 has been
reproduced below for reference:
“…
In reference to your above letter, we confirm our intent to
continue with the arbitration proceedings. We request your
goodselves to proceed with the appointment of the third
arbitrator.
We await your subsequent communication confirming the
appointment of the third arbitrator and commencement date
for the proceedings.
…”
51. On 24.04.2008, the Co-Arbitrators appointed Mr. John
Savage as the Presiding Arbitrator, who tendered his resignation
33


on 11.08.2008. Yet again, even to the appointment of Mr. John
Savage, MCGM did not raise an objection or point out that the Co-
Arbitrators had no power to appoint the third arbitrator.
52.
After Mr. John Savage’s resignation, the letter dated
21.10.2008 was addressed by the Co-Arbitrators to Mr. Anwarul
Haque for appointment as the Presiding Arbitrator, who
communicated his acceptance vide letter dated 29.10.2008. Mr.
Justice Jhunjhunwala (Retd.) on behalf of the arbitral tribunal,
addressed the letter dated 12.11.2008 to both parties, scheduling
the preliminary meeting of the Arbitral Tribunal on 08.12.2008,
which was further rescheduled to 09.12.2008 and then
09.01.2009. Even at that stage, there was no objection raised by
MCGM to the appointment of the Presiding Arbitrator by the Co-
Arbitrators.
53. The preliminary meeting of the Arbitral Tribunal was
conducted on 09.01.2009. The minutes of the meeting reflect that
the meeting was attended by representatives of both parties. The
MCGM was represented through Mr. S.B. Sardar, AE (SO) P & C
along with Mr. A.B. Mengole, AE (SO) P & C and Mr. R.H. Murya,
SE (SO) P & C. The minutes of the preliminary meeting do not
34


reflect any objection being raised by the MCGM to the constitution
of the tribunal.
54. When things stood thus, as explained above, the MCGM
raised their objection for the first time, addressing the letter dated
20.02.2009 to the Presiding Arbitrator, alleging that his
appointment is a ‘nullity’ since the Co-Arbitrators had not
succeeded in appointing the third arbitrator within 30 days and
therefore had no power to appoint. Relevant portion of the letter
dated 20.02.2009 has been reproduced below for reference:
“ As per facts, the appointed Arbitrators Mr. S.P. Upasani
and Mr. Justice S. M. Jhunjhunwala (Retd.) have not
succeeded in appointing within 30 days after their
appointment, i.e. they have ought to have appointed the
third arbitrator on or about 07.11.2005. Since they have not
appointed the third Arbitrator within 30 days, as per law,
they have forfeited their right to appoint the third Arbitrator
within 30 days.
Thus, as per clause 8(b), the third Arbitrator is required to
be appointed by the Secretary General of International
Center of Settlement of Investment Disputes Washington
D.C.
The claimant Mr. R.V. Anderson Associates + PHE
Consultants had not (illegible) under clause 8.3(b) to the
Secretary General of International Center for Settlement of
Investment (illegible) though after Arbitrator Mr. S.P.
Upasani was appointed on 07.10.2005 and add 30 days
period is over as 07.10.2005 i.e. as on 07.11.2005.
Thus you have no right to be an Arbitrator under the
Arbitration Agreement under the Contract.
35


The MCGM request you to withdraw your self as Arbitrator
since your appointment is not in consonance with
Arbitration Agreement under this contract.”
55. Application under Section 16 of the 1996 Act was then filed
by MCGM on 07.07.2009 prior to filing the Statement of Defence.
The Respondent, in its reply to the letter dated 20.02.2009 as well
as the application inter alia contended that the MCGM has not
approached the Secretary General of the ICSID seeking
appointment of the third arbitrator, and has not raised this
objection at the earliest, therefore it may not raise this objection at
this stage.
56. It is clear from the above factual conspectus that the MCGM
did not raise any objection to the appointment of the third
arbitrator by the Co-Arbitrators until after the preliminary meeting
of the Arbitral Tribunal was conducted by Mr. Anwarul Haque, who
happened to be the third person appointed as the Presiding
Arbitrator by the Co-Arbitrators. It is nobody’s case that the third
arbitrator appointed by the parties was ineligible to be appointed
as an arbitrator under Section 12 of the 1996 Act. In fact, it has
been recorded in the Section 16 order that MCGM itself conceded
that Section 12 and 13 have no applicability to the present case.
Its challenge was limited to the aspect of improper constitution of
36


tribunal due to non-compliance of terms of the arbitration
agreement. What needs to be considered, therefore, is whether
there was undue delay on the part of the MCGM in objecting to
what it alleges to be non-compliance of the arbitration agreement,
resulting in waiver of rights.
57. In this context, it has been submitted by the learned Senior
Counsel appearing for the MCGM that as per Section 4, waiver may
not attract in case an objection is made to non-compliance of terms
of the agreement ‘within the time limit provided’ for raising such
objection. He contends that under Section 16(2) a plea that the
arbitral tribunal does not have jurisdiction may be raised at any
time prior to submission of statement of defence, which the MCGM
has done in the present case. Also, as per the said provision, a
party shall not be precluded from raising such a plea, merely
because he has appointed, or participated in the appointment of,
an arbitrator.
58. The facts of this case do not reveal a situation where the
MCGM has, under protest, participated in the appointment of the
third arbitrator. In fact, the third arbitrator was appointed by the
Co-Arbitrators appointed by the parties. Be that as it may, it
cannot be said that the challenge to jurisdiction of the Arbitral
37


Tribunal under Section 16 was belated; it was rather filed at the
appropriate stage, i.e., prior to filing of the statement of defence,
which is as per the timeline as prescribed in Section 16(2) of the
1996 Act.
59. A co-ordinate bench of this Court, in the context of
ineligibility of the arbitrator under Section 12 of the 1996 Act, in
Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman
3
Nigam Ltd. , discussed the concept of waiver, acquiescence and
estoppel under the 1996 Act. The relevant portion of the said
judgement is quoted herein for reference:
“ 13.1. Waiver is a foundational principle of arbitration,
rooted in party autonomy and fairness in conduct.
Arbitration, being adversarial in nature, inevitably results
in a winning and a losing side. The legislative rationale in
codifying waiver is to ensure that parties do not secure a
second bite at the cherry after an unfavourable outcome.
Parties are not permitted to sleep over their rights. This
statutory policy is in harmony with the scheme of minimal
judicial intervention, where the grounds for interference
with an arbitral award are narrow, and waiver operates as
a significant bar to belated objections.
13.2. Though waiver, acquiescence, and estoppel are often
discussed together in arbitral jurisprudence, they occupy
distinct conceptual spaces. Waiver is the intentional
relinquishment of a known right; acquiescence arises from
passive acceptance or delay; and estoppel precludes a
party from resiling from a representation on which the other
has relied. The Act, however, incorporates only the doctrine
of waiver - presuming parties to be conscious of their
conduct and its consequences. The Act elevates silence to

3
2025 SCC OnLine SC 2578.
38


waiver by importing an element of intent, thereby preventing
parties from approbating and reprobating. A party who has
actively participated or consented to continuation of the
proceedings cannot later challenge the same process merely
because the result is adverse. The legislative design thus
discourages tactical objections and multiplicity of
proceedings. ”
60. Additionally, this Court in Quippo Construction Equipment
4
Ltd. v. Janardan Nirman (P) Ltd. , has relied upon the
judgement of this Court in Narayan Prasad Lohia v. Nikunj
5
Kumar Lohia , where the Court held that in case a party is
making a challenge to the composition of the arbitral tribunal, the
challenge must be made within the timeline as prescribed under
Section 16 of the 1996 Act, i.e., prior to filing of the statement of
defence, otherwise the waiver under Section 4 shall attract.
Relevant portion of the judgement in Narayan Prasad Lohia
(Supra) is quoted herein for reference:
“ 16. It has been held by a Constitution Bench of this Court,
in the case of Konkan Rly. Corpn. Ltd. v. Rani Construction
(P) Ltd. [(2002) 2 SCC 388] that Section 16 enables the
Arbitral Tribunal to rule on its own jurisdiction. It has been
held that under Section 16 the Arbitral Tribunal can rule on
any objection with respect to existence or validity of the
arbitration agreement. It is held that the Arbitral Tribunal's
authority under Section 16, is not confined to the width of
its jurisdiction but goes also to the root of its jurisdiction. Not
only this decision is binding on this Court, but we are in
respectful agreement with the same. Thus it is no longer

4
(2020) 18 SCC 277
5
(2002) 3 SCC 572.
39


open to contend that, under Section 16, a party cannot
challenge the composition of the Arbitral Tribunal before the
Arbitral Tribunal itself. Such a challenge must be taken,
under Section 16(2), not later than the submission of the
statement of defence. Section 16(2) makes it clear that such
a challenge can be taken even though the party may have
participated in the appointment of the arbitrator and/or
may have himself appointed the arbitrator. Needless to
state a party would be free, if it so chooses, not to raise such
a challenge. Thus a conjoint reading of Sections 10 and 16
shows that an objection to the composition of the Arbitral
Tribunal is a matter which is derogable. It is derogable
because a party is free not to object within the time
prescribed in Section 16(2). If a party chooses not to so
object there will be a deemed waiver under Section 4. Thus,
we are unable to accept the submission that Section 10 is a
non-derogable provision. In our view Section 10 has to be
read along with Section 16 and is, therefore, a derogable
provision.”
61. From the above judgements, it is clear that statutory waiver
under Section 4 of the 1996 Act would attract in case an objection
under Section 16 challenging the composition of tribunal and lack
of jurisdiction is not filed prior to the time-limit as prescribed
under Section 16(2). In the present case, the application under
Section 16 has been filed within the said time-limit. Therefore, it
cannot be said that the MCGM is completely precluded from
raising a challenge of this nature. As such, statutory waiver under
Section 4 does not attract in the present case since a timely
challenge to the jurisdiction of the Arbitral Tribunal has been made
by the MCGM.
40


62. However, upon making such a challenge by a party, while
adjudicating the application under Section 16 on merits by the
Arbitral Tribunal, or examining its rejection at the stage of Section
34 followed by Section 37, the prior conduct of the party certainly
becomes a relevant consideration to decipher its understanding of
the contractual scheme. This is especially so, when the
jurisdictional challenge due to improper composition of the
Arbitral Tribunal is made on the ground of non-compliance of the
arbitration clause. In such a case, the conduct of the party right
from the stage of invocation of arbitration becomes a relevant
consideration. While examining the alleged departure from the
contractual scheme, acquiescence by the party in its conduct, its
actions pursuant to the contractual terms and how it has
understood and acted as per the terms of the contract, are all
crucial aid in comprehending the contractual scheme.
63. In the facts of this case, beyond 30 days from the date of
appointment of the second Arbitrator, i.e. 07.10.2005, the MCGM
agreed to attempt mediation / conciliation by its letter dated
07.01.2006 and then informed the Co-Arbitrators about there
being no mediation / conciliation by its letter dated 15.12.2006.
MCGM passively sat idle while three different persons were
41


appointed as the Presiding Arbitrator under Clause 8.3(b) of the
Agreement by the Co-Arbitrators, without any demur. Even when
the Co-Arbitrators in their communication marked to parties
discussed about appointing the third arbitrator and the
Respondent requested them to appoint the third arbitrator, there
was no objection or demur from MCGM about the alleged non-
compliance of the terms of the arbitration agreement. The MCGM,
until they raised their objection after the first preliminary meeting
of the Arbitral Tribunal, had never come up with a plea that after
expiry of thirty days from the date of appointment of Mr. Upasani,
the Co-Arbitrators had become forum non conveniens and therefore
they had absolutely no power to appoint the third arbitrator. Even
though we have found above that the interpretation by the
Tribunal and High Court that the appointment of the third
arbitrator by Secretary General, ICSID was not a requirement
under the arbitration agreement, but rather an enabling clause
triggered upon a request being made by either party before the
ICSID, we find that if the conduct of the Appellant is examined, it
is clear that the Appellant never interpreted the contract in the
manner which they are suggesting now.
42


64. We have reached this conclusion in the peculiar facts and
circumstances of this case, where it is apparent that merely filing
the application under Section 16 could not regularize the conduct
of the Respondent and its acquiescence to the power of
appointment of the third arbitrator being exercised by the Co-
Arbitrators not only once, but thrice. We are constrained to reach
this conclusion, primarily because, Justice Dhanuka (Retd.) was
appointed as the Presiding Arbitrator by the Co-Arbitrators on
30.04.2007; even if MCGM’s argument that the Co-Arbitrators had
become forum non conveniens , is assumed to be corrected, this was
the first time an objection to non-compliance of terms of the
arbitration agreement should have been raised. Yet, it was only
after the subsequent appointment of Mr. John Savage, his
resignation and the later appointment of Mr. Anwarul Haque and
the preliminary meeting of the Tribunal in the year 2009 that the
objection to composition of the Arbitral Tribunal was made for the
first time.

65. Neither party has approached the ICSID and triggered the
enabling clause by fulfilling the condition precedent of making a
request for appointment. Although there was extensive
communication between the parties and the Co-Arbitrators, the
43


MCGM did not point out from the very beginning that the
Respondent must approach the ICSID. In such circumstances, the
Appellant cannot now turn around and say, that was the only
method for appointment.
66. In the present case, the MCGM was completely aware about
the non-compliance of a contractual requirement under the
arbitration agreement which it alleges. It proceeded with the
arbitration process without any demur, agreed to keep the
arbitration proceedings in abeyance to pursue other methods of
dispute resolution (mediation / conciliation), and did not object to
such non-compliance on three different occasions when such
alleged non-compliance took place. In such a case, filing of an
application under Section 16 of the 1996 Act cannot regularize or
condone its conduct and such conduct is a relevant consideration
to decipher its understanding of the contractual terms while
deciding the Section 16 application on merits by the Tribunal even
in the absence of statutory waiver under Section 4 being attracted.

67. We say so because the subsequent conduct of the parties
serves as a powerful practical tool to understand their contractual
intent. Reliance on a party’s original understanding of obligations
under a contract as well as their actions prevents a party from later
44


on adopting a legalistic interpretation which supports their case in
stark contradiction of how they actually operated on the ground.
In the present case, even though the MCGM argues with
vehemence that the Co-Arbitrators had no power to appoint the
third arbitrator, the admitted case is that neither party triggered
the contingency by approaching the ICSID. Additionally, the
MCGM was put to notice by the Co-Arbitrators and the Respondent
about the appointment of the third arbitrator, not only once, but
on three different occasions. In response to communication where
the Respondent has requested the Co-Arbitrators to appoint the
third arbitrator, the MCGM has not taken a view that the Secretary
General, ICSID is the only authority who could appoint the third
arbitrator. The MCGM seems to have conveniently turned a blind
eye to the communication which was marked to it and then at the
stage prior to filing of the statement of defence, for the first time,
raised this issue which relates to alleged non-compliance of terms
of the agreement in respect of appointment of arbitrators. In such
a fact situation, no party can be permitted to take the dispute
resolution process, the nominee arbitrators or the opposite party
for a ride. A party cannot keep a ‘jurisdictional ace’ up their sleeve
and then claim that filing of the jurisdictional challenge under
45


Section 16 would go back in time and wipe out the past conduct
and acquiescence of the party which would clearly evince how the
contractual terms were viewed by the parties. If the same is
permitted, it will erode the basic principles of alternative dispute
resolution and ethos of arbitration.
68. In view of the above findings, the learned Single Judge in the
Section 34 application and the Division Bench in the Section 37
appeal were completely justified to reject interference and refuse
to set aside the arbitral award. In light of the evidence which goes
to show the manner in which the contract was understood and
acted upon by the parties, the view taken by the Arbitral Tribunal
is certainly a plausible view and no reasonable ground is made out
for setting aside the arbitral award under Section 34 of the 1996
Act. As such, we do not find any merit in these appeals, they are
accordingly dismissed. In the facts, there shall be no order as to
cost. All pending applications shall be treated as disposed of.

………..………………………….J.
(J.K. MAHESHWARI)



………..………………………….J.
(ATUL S. CHANDURKAR)
NEW DELHI;
MARCH 11, 2026.
46