Administrative Debarment Actions Independent of Contractual Provisions are Non-Arbitrable and Unsuitable for Section 9 Relief

NCC Limited (Petitioner) was awarded a contract dated 09.11.2018 for the construction of a New Domestic Terminal Building at Patna Airport.

Although a Provisional Completion Certificate was issued on 09.12.2025, the Airport Authority of India (Respondent) raised concerns regarding water seepage and poor flooring quality.

On 23.03.2026, the Respondent issued a Debarment Letter disqualifying the Petitioner from future tenders for two years, citing unsatisfactory performance.

The Petitioner filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking a stay on the debarment pending arbitration.

The Respondent raised a preliminary objection, arguing that the debarment was an administrative act based on statutory powers, not a contractual dispute, rendering the petition non-maintainable.

1. Whether a challenge to a debarment/blacklisting order issued by a statutory authority is an arbitrable dispute referable to arbitration under the underlying contract.

2. Whether the Court has jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996, to grant interim relief against an administrative debarment order.

The Court applied Section 9 of the Arbitration and Conciliation Act, 1996, noting that interim measures must have a proximate nexus to the "subject matter of the arbitration".

It relied on Vidya Drolia v. Durga Trading Corporation, establishing that disputes involving the exercise of public law or sovereign powers are non-arbitrable.

The Court further applied the doctrine from Patel Engineering Ltd. v. Union of India, which characterizes blacklisting as an inherent executive power of the State to choose its future commercial partners, independent of contractual stipulations.

Finally, it followed A.K.G. Construction and Developers Pvt. Ltd. v. State of Jharkhand, which distinguishes between contractual termination (past/subsisting rights) and debarment (future eligibility), placing the latter in the realm of administrative law.

The Court reasoned that for Section 9 jurisdiction to exist, the dispute must be "arbitrable" and fall within the Four Corners of the contract.

It observed that the Impugned Debarment Letter did not invoke contractual remedies like liquidated damages or termination, but rather operated prospectively to regulate future eligibility.

The Respondent’s power to debar was found to be sourced from Section 12 and 20 of the AAI Act and Clause 35.12 of the AAI Works Manual, rather than the specific contract with the Petitioner.

The Court rejected the Petitioner's argument that the factual nexus to contractual delays translated into an arbitrable dispute, holding that the "legal source" of the power (administrative) outweighs the "factual trigger" (contractual performance).

Since the debarment was an exercise of public law authority, its validity must be tested on constitutional benchmarks (reasonableness and fairness) by a writ court, not by an arbitral tribunal limited to private law rights.

Consequently, the petition under Section 9 of the Arbitration and Conciliation Act is not maintainable.

The Court dismissed the petition, expressing no opinion on the merits or legality of the debarment, leaving those questions open for adjudication before a competent judicial review forum.

No costs were awarded.