M/S Kamac Shiva Harlalka Jv vs National Highways And Infrastructure Development Corporation Ltd & Anr.

* IN THE HIGH COURT OF DELHI AT NEW DELHI
%
+ O.M.P. (T) (COMM.) 33/2026
M/S KAMAC SHIVA HARLALKA JV .....Petitioner
versus
NATIONAL HIGHWAYS AND INFRASTRUCTURE
DEVELOPMENT CORPORATION LTD & ANR. .....Respondents

Advocates who appeared in this case:
For the Petitioner : Mr. Jatin Sehgal, Mr. Ashish Garg, Ms. Devna
Soni, Mr. Arjun Gaur and Mr. Simran Bajaj,
Advocates.
For the Respondents : Mr. K.K. Sharma, Senior Advocate with Mr.
Abhinav Mishra, Ms. Arehisha Singh, Mr. Ram
Prakash Rai, Mr. Raju, Mr. Priyanshu Singh, Mr.
Hardik Dimania, Ms. Swati Srivastava, Ms.
Ramani Juneja and Mr. Dilip Nagourna,
Advocates for R-1.
st
Date of Decision: 21 July, 2026
CORAM:
HON’BLE MR. JUSTICE TUSHAR RAO GEDELA


J U D G M E N T

TUSHAR RAO GEDELA, J. (ORAL)
1. This is the petition under Section 15(2) of the Arbitration and
Conciliation Act, 1996 ( hereinafter referred to ‘the Act’ ) filed on behalf of
the petitioner M/s. Kamac Shiva Harlalka (JV) seeking appointment of a
substitute sole arbitrator in place of the previous learned Sole Arbitrator.
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2. Mr. Sehgal, learned counsel appearing for the petitioner draws
attention of this Court to the order dated 23.02.2026 passed by the learned
Arbitrator in the arbitration proceedings titled “M/s. Kamac Shiva Harlalka
JV vs. NHIDCL & Anr.” bearing reference no.DIAC/8260/05-24, whereby
the reference was returned to the Delhi International Arbitration Centre
(hereinafter referred to as “ DIAC ”) for nomination of another arbitrator, and
with a direction to continue the proceedings from the stage where it was at
that point of time.
3. The learned counsel states that the learned Sole Arbitrator had rescued
from deciding the reference and had also noted in the impugned order dated
23.02.2026 that the continuation of the proceedings had become impossible
in terms of Section 32(1)(b) of the Act, however, the termination of the
mandate of the arbitrator appears to have been under Section 14(1)(b) of the
Act. He contends that if the impugned order is construed under the
provisions of Section 14(1)(b) of the Act, this Court only needs to substitute
the learned Sole Arbitrator in terms of Section 15(2) of the Act.
4. Per Contra, Mr. K.K. Sharma, learned senior counsel appearing for
respondent no.1/NHIDC contends that the learned Arbitrator vide order
impugned dated 23.02.2026 has clearly referred to Section 32(1)(b) of the
Act making it clear the intention behind passing this order. He states that the
Supreme Court in its judgment, namely, Harshbir Singh Pannu and
Another vs. Jaswinder Singh, cited in 2025 SCC Online SC 2742 ,
particularly in para 415, has laid down the remedies available to the parties,
if the Arbitrator undertakes any of the measures provided under Sections 25,
30, 32 and 38 of the Act.
5. According to the learned senior counsel, whenever the Arbitral
Tribunal passes an order terminating the proceedings, the appropriate
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remedy available to the parties would be to file an application for recall of
such order before the Tribunal itself. He states that the Supreme Court had
categorically held that the Arbitral Tribunal possess the inherent procedural
power to recall an order terminating the proceedings.
6. Although, he admits that the Arbitral Tribunal has not terminated the
proceedings itself, however, once the Supreme Court has laid down the law
in respect of the procedure to be followed, it would be incumbent upon the
petitioner first to approach the learned Sole Arbitrator seeking recall of the
impugned order which is under challenge in the present proceedings. He
states that this is the only procedure that is prescribed by the Supreme Court
in such circumstances. Hence, this Court might as well relegate the petitioner
first to approach the learned Sole Arbitrator seeking recall of the said
decision.
7. This Court has heard the arguments of Mr. Sehgal, learned counsel for
the petitioner as also Mr. K.K. Sharma, learned senior counsel appearing for
the respondent. It would be relevant to extract the order dated 23.02.2026
passed by the learned sole arbitrator in its entirety. The same reads thus-
“1. Learned counsel for the parties were present and were heard. An
application has been moved on behalf of the claimant which seeks to
produce a large number of documents- running into over two thousand
pages. The tribunal had previously dealt with and permitted the claimant to
produce some additional documents, in its proceeding, dated 10.10.2025.
The production of other documents was not permitted. In addition to the
application (for production of further additional documents) the claimant
seeks to withdraw its consent that the final hearing proceedings may take
place, without either party leading oral evidence. The tribunal notes that it
had previously recorded the parties' consent on 16.11.2025 that no oral
evidence would be led by either party and that final hearing would be held
on the basis of the existing record. The points of difference/dispute were
framed on 31.10.2025.

2. In the course of the hearing today counsel for the claimant argued
rather strenuously that it is absolutely necessary to lead oral evidence and
cross examine the respondent. He also made grievance with respect to
non-availability of the local commissioner's report [which was furnished on
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09.01.2026 to the parties] , after inspection of the record. It was further
submitted that there is a need to cross examine the local commissioner.

3. The tribunal had suggested that the application for additional
documents may be allowed subject to just exceptions provided the
respondent is given some time to admit or deny the documents having
regard to the late stage of the arbitration. It was also suggested that the
claimant may file its objection to the expert's report (as the technical expert
was called, and not the local commissioner). This course was not
acceptable to the claimant counsel who repeatedly emphasised that he
needs to cross examine the respondent's witness.

4. The manner in which the tribunal was addressed and the conduct of
proceedings, on behalf of the claimant left much to be desired. Counsel for
the claimant - it must be stated, apologized and stated that he did not mean
any disrespect.

5. The entire proceeding, held today leads me to conclude that the
claimant harbours acrimony, and I would not be able to preside over the
reference. The tribunal hereby finds that the continuation of the
proceedings has for any other reason become impossible, in terms of
Section 32 (1) (b) of the Arbitration and Conciliation Act, 1996. The
reference is hereby returned to the Delhi International Arbitration Centre
(DIAC) for appropriate nomination of another arbitrator, to continue with
the proceedings, from the stage where it is at present.”

8. From a holistic reading of the said order, it is clear that due to certain
reasons, which compelled the learned Sole Arbitrator, the learned Arbitrator
was of the opinion that he would be unable to preside over the reference. It
was further observed that the Tribunal also found the continuance of
proceedings has become impossible in terms of Section 32(1)(b) of the Act
and hence, as a consequence returned the reference to the DIAC for
appropriate nomination of another arbitrator and had also observed that the
proceedings may continue from the stage where it was at that point in time.
(Emphasis supplied)
9. The Act, as observed by this Court contemplates two different
situations: (i) which may arise out of the provisions contained in Section
14(1) of the Act; and (ii) which is provided in the other Section of the Act.
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While under the provisions of Section 14 of the Act, it is the mandate of the
arbitrator itself which would be terminated while under Section 32, the
arbitral proceedings themselves would be terminated. The fundamental
difference between both is that under Section 14 of the Act, while the
arbitrator has no mandate further to continue, however, the proceedings
themselves do not get terminated and resume once another arbitrator is
substituted by the authority. Whereas under Section 32 of the Act, the
proceedings themselves stand terminated. It would be appropriate to extract
Sections 14 and 32 of the Act. The same read thus –
“Section 14: Failure or impossibility to act.

14. (1) [The mandate of an arbitrator shall terminate and he shall be
substituted by another arbitrator, if]—

(a) he becomes de jure or de facto unable to perform his functions or
for other reasons fails to act without undue delay; and
(b) he withdraws from his office or the parties agree to the
termination of his mandate.

(2) If a controversy remains concerning any of the grounds referred to in
clause (a) of sub-section (1), a party may, unless otherwise agreed by the
parties, apply to the Court to decide on the termination of the mandate.

(3) If, under this section or sub-section (3) of section 13, an arbitrator
withdraws from his office or a party agrees to the termination of the
mandate of an arbitrator, it shall not imply acceptance of the validity of any
ground referred to in this section or sub-section (3) of section 12.”

xxx xxx xxx

“Section 32: Termination of proceedings.

32. (1) The arbitral proceedings shall be terminated by the final arbitral
award or by an order of the arbitral tribunal under sub-section (2).

(2) The arbitral tribunal shall issue an order for the termination of the
arbitral proceedings where—

(a) the claimant withdraws his claim, unless the respondent objects to
the order and the arbitral tribunal recognises a legitimate interest on
his part in obtaining a final settlement of the dispute,
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(b) the parties agree on the termination of the proceedings, or

(c) the arbitral tribunal finds that the continuation of the proceedings
has for any other reason become unnecessary or impossible.

(3) Subject to section 33 and sub-section (4) of section 34, the mandate of
the arbitral tribunal shall terminate with the termination of the arbitral
proceedings.”

10. It is clear from the above that the provisions of Section 32 of the Act
contemplate termination of the arbitral proceedings, attaching finality to the
same, while as per Section 14, only the mandate of the arbitrator is
terminated while the proceedings still survive. The learned senior counsel
has extensively relied upon the ratio laid down by the Supreme Court in
Harshbir Singh Pannu (supra), particularly sub-para 7 & 8 of para 415 of
the said judgment. For clarity, the said para 415 in its entirety is extracted
hereunder:
“415. A conspectus of our legal discussion is as under: -

(I) Section 32 of the Act, 1996 is exhaustive and covers all cases of
termination of arbitral proceedings under the Act, 1996. The power of the
arbitral tribunal to pass an order to terminate the proceedings under the
scheme of the Act, 1996 lies only in Section 32(2).

(II) Sections 25, 30 and 38 of the Act, 1996 respectively, only denote
the circumstances in which the tribunal would be empowered to take
recourse to Section 32(2) and thereby, terminate the proceedings.

(III) The use of the expression “the mandate of the Arbitral Tribunal
shall terminate” in Section 32 of the Act, 1996 and its omission in
Section(s) 25, 30 and 38 of the said Act, cannot be construed to mean that
the nature of termination under Section 32(2) is distinct from a
termination under the other aforesaid provisions of the Act, 1996.

(IV) The expression “mandate of the Arbitral Tribunal” is merely
descriptive of the function entrusted to the tribunal, namely, the authority
and duty to adjudicate the disputes before it. It refers to the obligation of
the arbitral tribunal to administer the arbitration by conducting the
proceedings in order to adjudicate upon the disputes referred to it.

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(V) Irrespective of whether the proceedings are terminated on account
of the passing of a final award, or by the withdrawal of claims, or on
account of default by the claimant, or the intervention of any impossibility
in the continuation of the proceedings, the legal effect remains the same,
inasmuch as the arbitral tribunal thereafter stands divested of its authority
to act in the reference.

(VI) The common thread that runs across Sections 25, 30 32 and 38 of
the Act, 1996 respectively is that although the arbitral proceedings may
get terminated for varied reasons, yet the consequence of such termination
remains the same i.e., the arbitral reference stands concluded and the
authority of the tribunal stands extinguished.

(VII) There is a clear distinction between a procedural review and a
review on merits. The arbitral tribunal possesses the inherent procedural
power to recall an order terminating the proceedings as such power is
merely to correct an error apparent on the face of the record or to address
a material fact that was overlooked. It does not tantamount to revisiting
the findings of law or reappreciating the substantive issues already
decided.

(VIII) Where an arbitral tribunal passes an order for terminating the
proceedings under the Act, 1996, the appropriate remedy available to the
parties would be to first file an application for recall of such order before
the arbitral tribunal itself. The arbitral tribunal would then in turn be
required to examine whether the order does or does not deserve to be
recalled.

(IX) If a favourable order is passed for recommencing arbitration
proceedings, the only option available to a party aggrieved therefrom,
would be to participate in the proceedings and thereafter, challenge the
final award under Section 34 of the Act, 1996.

(X) If, however, the recall application is dismissed, the party
aggrieved therefrom, would be empowered to approach the court under
Section 14(2) of the Act, 1996. The court would then in turn examine
whether the mandate of the arbitrator stood legally terminated or not. If it
finds that the proceedings were not terminated in accordance with the law,
it would be empowered to either set-aside the order of termination of
proceedings and remand the matter to the arbitral tribunal, or, if the
circumstances so require, proceed to appoint a substitute arbitrator in
terms of Section 15 of the Act, 1996.”

11. Before adverting to and addressing the guiding principles laid down
by the Supreme Court in the said judgment, it would be more appropriate to
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first examine sub-para (v) of para 109 of the said judgment. The same is
extracted hereunder:
“(v) Fifthly, Section 32 sub-section (1) of the Act, 1996, stipulates that
the arbitral proceedings shall be terminated by the final award or by an
order under sub-section (2) thereof. Subsection (2) contemplates three
situations where the tribunal is vested with the power to the arbitral
proceedings, namely, (i) when the claimant withdraws his claim, (ii) when
the parties agree and (iii) when the Tribunal finds that continuation of the
proceedings has for any other reason become unnecessary or impossible.
The termination of proceedings results in the termination of the mandate
of the tribunal. The relevant observations read as under:-

“46. Section 32 is entitled “Termination of proceedings” and
sub-section (1) provides that the arbitral proceedings shall be
terminated by the final Arbitral Award or by an order of the
Arbitral Tribunal under sub-section (2). Sub-section (2) of
section 32 is important for the purposes of the present
proceedings [...]

“47. Sub-section (2), therefore, contemplates three situations
where the Arbitral Tribunal is vested with the power to
terminate the arbitral proceedings, namely, (i) when the
claimant withdraws his claim, (ii) when the parties agree and
(iii) when the Tribunal finds that continuation of the
proceedings has for any other reason become unnecessary or
impossible. The mandate of the Arbitral Tribunal terminates
with the termination of the arbitral proceedings. (Sub-section
(3) of section 32). [...]
(Emphasis supplied)”

12. It is clear from the aforesaid paragraph that the Supreme Court was
conscious of the fact that the provisions of Section 14 and 32 of the Act,
which are subject matter of the present order, contemplate two different
situations in that, first, (i) where the termination of the mandate of the
arbitrator is contemplated and (ii) where the termination of the arbitral
proceedings themselves are contemplated. In the former situation, it is only
the arbitrator who withdraws from arbitral office while permitting the
appointment of a substitute arbitrator to continue the proceedings, whereas
in the latter situation, the arbitral proceedings themselves would collapse,
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meaning thereby, it attaches finality to the arbitral proceedings.
13. As to what was the controversy before the Supreme Court in Harshbir

Singh Pannu (supra) , it would be appropriate to consider the observations
in para 247 which is extracted hereunder:
“247. The aforesaid may be looked at from one another angle. The
omission of the expression “the mandate of the Arbitral Tribunal shall
terminate” in Sections 25, 30 and 38 of the Act, 1996 respectively, is for
the simple reason that the said provisions do not pertain to the manner in
which the arbitral proceedings come to an end, rather only prescribe the
circumstances in which the proceedings may be terminated. Section 32 of
the Act, 1996 on the other hand, explicitly relates to the termination of
proceedings, and thus, the legislature in order to provide certainty as
regards the consequences of such termination, incorporated the aforesaid
expression.”

14. The aforesaid paragraph explicitly makes it clear that invocation of
Section 32 of the Act would result in termination of the proceedings and
attach finality to such action. It is in that context that the Supreme Court in
para 415 laid down the guiding principles as to what a party is mandated to
comply with in case the actions under Section 32 of the Act has been
undertaken by the Arbitral Tribunal.
15. However, in the present case, it is clear that though the learned Sole
Arbitrator has referred to Section 32(1)(b) of the Act in the order, to the mind
of this Court, it appears that the reference was actually to provisions of
Section 14(1)(b) of the Act. The mere fact that the learned Sole Arbitrator
has noted that he would be unable to preside over the reference, coupled with
the fact that the reference has been returned to DIAC for nomination of an
appropriate arbitrator and to continue the proceedings wherefrom it had
culminated as on that date, by itself makes it clear that the action proposed
by the learned Sole Arbitrator falls squarely within the provisions of Section
14(1)(b) of the Act.
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16. Mr. K.K. Sharma, learned senior counsel appearing for the respondent
has also relied upon the judgment of the Coordinate Bench of this Court in
Bhavin C. Kothari vs. Armor India Coding and Imaging Supplies Private
Limited, cited in 2026 SCC OnLine Del 101, particularly paras 48, 49, 50 &
51 in support of his contentions. This Court has perused the said judgment
and does not find that the same would be relatable to the issues which have
arisen here. This is for the reason the Coordinate Bench in that case was
considering an issue which had arisen out of the provisions of Section
32(2)(c) of the Act and not Section 14 of the Act.
17. As noted above, it is clear that the provisions of Section 32 of the Act,
if invoked by the arbitrator, would culminate into termination of the arbitral
proceedings themselves, whereas, under the provisions of Section 14 of the
Act, it is only the mandate of the arbitrator which stands terminated and not
the arbitral proceedings. That being the factual situation in the present case,
the said judgment would not be applicable.
18. In the overall circumstances, this Court is of the considered opinion

that the petition under Section 15(2) of the Act should succeed.
19. In that view of the matter, this Court appoints Justice (Retd.) Kurian
Joseph as the Sole Arbitrator in terms of the order dated 25.04.2024 in
O.M.P.(I) COMM 119/2024 between the parties.
20. Needless to observe, and as also noted by the learned Sole Arbitrator
in the penultimate paragraphs of the order dated 23.02.2026, that the arbitral
proceedings shall continue from the stage where it was, as on 23.02.2026.
21. In view of the above, this petition is disposed of accordingly.

TUSHAR RAO GEDELA

(JUDGE)
JULY 21, 2026/ kct
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