Delhi District Court
J.K Ghai vs Oil And Natural Gas Corporation Ltd on 12 September, 2025
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. No. HEADINGS Page Nos.
1. Memo of Parties 2
2. Description of case 2-3
4. Ground of objection 3-4
5. Reply of respondent 4-5
6. Arguments of petitioner 5-6
7. Arguments of respondent 6-7
8. Appreciation of Arguments, Facts & Law 7-24
9. Decision 24
Digitally
signed by
PULASTYA
PULASTYA PRAMACHALA
PRAMACHALA Date:
2025.09.12
16:58:04
+0530
ARBTN No. 2535/2018 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 24 Patiala House Court, New Delhi
ARBTN- 2535/2018
In the matter of: -
M/s J.K. Ghai
Through Sh. J.K. Ghai
Sole Proprietor
29, Yamuna Colony, Dehradun,
Uttarakhand-248001.
...Petitioner
Versus
Oil and Natural Gas Corporation Limited
124, Jeevan Bharti Tower-II,
Connaught Circus, New Delhi-110001
Through its Dy. General Manager (Civil).
...Respondent
Date of Institution : 03.07.2018
Arguments heard on : 02.09.2025
Decided on : 12.09.2025
Decision : Petition is Dismissed.
JUDGMENT
DESCRIPTION OF CASE
1. Petitioner i.e. M/s J.K. Ghai, has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') challenging the impugned Award dated 21.03.2018 as passed by Ld. Sole Arbitrator.
2. The brief facts as averred in the petition are that petitioner is a proprietorship concern, whereas the respondent is a public sector undertaking of the Government of India. The respondent had invited tenders for the work of "Up-gradation of Multipurpose Hall at the Respondent Colony, Sector-39, Noida." Petitioner was declared successful and awarded the contract for a tender ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.2 of 24 Patiala House Court, New Delhi value of Rs.88,95,388.17/. Petitioner deposited an Earnest Money Deposit (EMD) of Rs.1,78,000/- and the stipulated period for completion of work was fixed as 150 days, i.e. up to 25.06.2012. Petitioner contends that after execution of the works, it submitted its first and final bill amounting to Rs.98.38 lakhs vide letter No. JKG/ONGC/MPH/16/2012-13 dated 08.09.2012. However, the respondent arbitrarily deducted a sum of Rs.33,17,833/- from the final bill on account of alleged deductions which, according to Petitioner, were illegal and unjustified. Disputes having arisen between the parties, the matter was referred to arbitration under Clause 25 of the contract and Shri Upendra Goel was appointed as the learned Sole Arbitrator. As the proceedings could not be concluded within the stipulated time and Petitioner declined to grant further extension, the mandate of Shri Goel stood terminated. Thereafter, Shri P.K. Jain was appointed as the Sole Arbitrator, which according to Petitioner, was contrary to law, as under Section 23(3) of the Act, an arbitrator cannot adjudicate upon disputes not contemplated by the arbitration agreement without request or submissions from both parties.
3. Learned Sole Arbitrator, Shri P.K. Jain, published the award on 21.03.2018 rejecting all the claims of Petitioner. Aggrieved thereby, Petitioner has preferred the present objections under Section 34 of the Act.
GROUNDS OF OBJECTION
4. Aggrieved by the said award, present objection petition has been filed by Petitioner mainly on following grounds: -
ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 24 Patiala House Court, New Delhi i. That ld. Arbitrator wrongly recorded the amount claimed in the first and final bill as Rs.9,83,838/- instead of Rs.98,94,078/.
ii. That ld. Arbitrator made and published an award contrary to the conditions of the contract and the award was passed on the basis of wrong factual position and by ignoring and not considering the evidence submitted by Petitioner.
iii. That ld. Arbitrator relied on the wrong interpretation of law and did not apply principle of natural justice upon contractual relations.
iv. That ld. Arbitrator failed to appreciate that the respondent had failed to adduce any evidence on record to show that the respondent had carried out joint measurements as required under clause 6 of the agreement, after the submission of final bill.
v. That ld. Arbitrator wrongly observed that there was no obligation upon the respondent to make the payment of final bill within a period of six months, which is in direct contravention of clause 9 of the agreement.
vi. That ld. Arbitrator instead of giving its own reasoning for rejecting the claims, merely reiterated the submissions of the respondent which implies non-application of mind by the arbitrator in passing of the impugned award.
REPLY FILED BY THE RESPONDENT
5. Respondent filed a reply contesting the present petition. It is contended that the scope of interference under Section 34 of the ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 24 Patiala House Court, New Delhi Act is extremely narrow and confined strictly within the parameters of Section 34(2) and 34(2A) of the Act and petitioner has failed to disclose any ground envisaged under Section 34 of the Arbitration Act, which would warrant setting aside of the impugned award. It is urged that this Court cannot re-appreciate evidence or sit in appeal over the arbitral award so as to arrive at a conclusion different from that of the learned Arbitrator. Respondent has also asserted that the impugned award is reasoned, logical, and based on due appreciation of the record, and provides cogent justification for the rejection of all claims raised by Petitioner.
ARGUMENTS/SUBMISSIONS OF PETITIONER
6. Petitioner also filed written submissions in support of the present petition. It is mentioned that ld. Arbitrator, in complete contradiction to the documents placed on record and by ignoring vital evidence, rendered the impugned award dated 21.03.2018, which is contrary to the terms of the contract, opposed to the public policy of India, and patently illegal. It is contended that ld. Arbitrator has passed a NIL award in respect of the claims of Petitioner, and the findings recorded therein are nothing but a reiteration of the submissions of Respondent. It is further mentioned that ld. Arbitrator failed to independently apply his mind to the facts and evidence of the case.
7. Ld. counsel for Petitioner argued that the appointment of the Sole Arbitrator was unilateral, having been made solely by Respondent, and that merely providing a panel of arbitrators does not cure the defect of unilateral appointment. It was further ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 24 Patiala House Court, New Delhi alleged that even the arbitral award was misplaced during the proceedings. It was contended that although the arbitral proceedings commenced prior to the 2015 Amendment to the Act, the award came to be passed subsequent thereto, and therefore, the provisions of the Amended Act would govern the present proceedings.
8. Petitioner relied upon following judgments: -
i. Radhika Engineering Co. vs Telecommunication consultants India Ltd. [2024:DHC:4655] ii. KRR Infra Projects Pvt. Ltd vs Union of India [2018 SCC OnLine Del 12418].
iii. Ram Kripal Singh Construction Pvt. Ltd. vs NTPC [2022/DHC/004781] iv. ISAR Engineers Pvt. Ltd. vs NTPC-SAIL Power company Ltd. [2025:DHC:658] v. M/s Satya Parkash and Brothers (P) Ltd. vs Union of India [2025:DHC:6615-DB].
vi. Govind Singh vs M/s Satya Group Pvt. Ltd. & Anr. [2023/DHC/000081] vii. Taleda Square Pvt. Ltd vs Rail Land Development Authority [2023 SCC Online Del 6321] viii. Central Organisation for Railway Electrification vs M/s ECI SPIC SMO MCML [ 2024 SCC Online SC 3219]. ARGUMENTS OF RESPONDENT
9. Respondent also filed written submissions. It was argued that the contract was executed between the parties on 24.01.2012, and the arbitration clause was invoked by Petitioner on 01.01.2014, i.e. prior to the coming into force of the Arbitration and Conciliation (Amendment) Act, 2015, which was notified on 23.10.2015.
ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.6 of 24 Patiala House Court, New Delhi Accordingly, the present proceedings were governed by the provisions of the unamended Act. Under the pre-amendment Act, unilateral appointment of an arbitrator was not rendered invalid, and therefore, the challenge to the appointment of the learned Sole Arbitrator is untenable.
10. Respondent relied upon following judgements: -
i. Aravali Power Co. Pvt. Ltd vs Era Infra Engineering Ltd.
[(2017) 15 SCC 32] ii. Rajasthan Small Industries Corporation Ltd. vs Ganesh Containers Movers Syndicated [2019 3 SCC 282]. iii. Shri Vishnu Constructions vs Engineer in Chief Military Engineering Service & Ors. [(2023) 8 SCC 329]. iv. S.P. Singla Constructions Pvt. Ltd vs State of Himachal Pradesh & Anr. [(2019) 2 SCC 488] v. Union of India vs Pradeep Vinod Construction Company [(2020) 2 SCC 464].
vi. ABB India Ltd. vs Bharat Heavy Electricals Ltd. [2020 SCC OnLine Del 2070].
vii. M/s Yashwith Constructions (P) Ltd. vs M/s Simplex Concrete Piles (India) Ltd. [(2006) 6 SCC 204]. viii. Arjun Mall retail Holdings Pvt. Ltd. & Ors vs Gunocen Inc., [2024 SCC OnLine Del 428] ix. Kanodia Infratech Ltd. vs Dalmia Cement (Bharat) Ltd. [2021 SCC OnLine Del 4883].
11. I have examined the rival contentions and the record of arbitration proceedings.
APPRECIATION OF ARGUMENTS, FACTS & LAW
12. The general guiding principles for invoking S. 34 of the Act, are that Arbitrator is a Judge of the choice of the parties and his ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 24 Patiala House Court, New Delhi decision, unless there is an error apparent on the face of the Award which makes it unsustainable, is not to be set aside by the Court, even if the Court could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the Award can be set aside are mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the Award will not call for interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the Award passed by the Arbitrator.
13. Hon'ble Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 held that under Section 34 (2A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the Award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore, would also have to be characterised as perverse. It was held that a finding based on no ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 24 Patiala House Court, New Delhi evidence at all or an Award which ignores vital evidence in arriving at its decision, would be perverse and liable to be set aside on the ground of patent illegality.
14. In the present case, dispute between the parties was referred to Arbitration in terms of clause 25 of the contract which stipulates as under: -
"14. Subject to the aforesaid conditions, provisions of the Arbitration and Conciliation Act, 1996 and any statutory modification or re-enactment thereof shall apply to the arbitration proceedings under this clause."
15. During arguments, ld. counsel for Petitioner focussed on the issue of unilateral appointment, terming it illegal in view of S.12 of the Act (as amended in the year 2015). Her stand had been that after amendment in the Act in 2015, unilaterally appointed Arbitrator had no jurisdiction to pass the Award. Per contra, ld. counsel for Respondent maintained the stand that since arbitration was already invoked prior in time to amendment in the year 2015, therefore, ld. Arbitrator had the jurisdiction to pass the Award, as the effect of amendment was prospective rather than retrospective. Both learned counsels sought support to their respective stand, while quoting observations from different judgments. The relevant observations from different judgments as referred and relied upon by both counsels are as follows: -
16. JUDGMENTS RELIED UPON BY PETITIONER
a) Radhika Engineering Co. vs Telecommunication consultants India Ltd. [2024:DHC:4655] "8. The stand taken by the Petitioner is that since the latest appointment by the Respondent, which is unilateral, has ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 24 Patiala House Court, New Delhi been made after commencement of 2015 Amendment, the said unilateral appointment would not be permissible.
15. The decision in Aravali Power Company Pvt/ Ltd. (supra) has already been considered by the coordinate Bench in Progressive Infotech Pvt. Ltd. (supra). Mr. Krishnan's emphasis on Parmar Construction Company (supra) to argue that in respect of proceedings, which were commenced prior to 2015 Amendment of the Act, the unamended Act would apply, cannot be questioned, inasmuch as once the proceedings have commenced and there is no change in the Arbitrator, the old Act would continue to apply. But in the present case, the appointment of Mr. Karnal Singh as a Sole Arbitrator has been made in January, 2024, well after the 2015 Amendment of the Act came into effect. In the opinion of this Court, though the said appointment, post 2015, is being termed as a continuation to the previous appointment, it is in fact a new substitute appointment and would require to comply with the explicit mandate of the Act including the 2015 amendments to the Act. Moreover, in Parmar Construction Company (supra), from the judgement it appears that the invocation was prior to 2015 and the arbitration petition under Section 11(6) of the Act was also filed prior to 2015. Under these circumstances, the decision in Parmar Construction Company (supra) would not be applicable in the present case.
16. Insofar as Shree Vishnu Construction (supra) is concerned, in the said judgement as well, the invocation was of 2013. Thus, the question that has arisen in the present case is clearly covered by Ellora Paper Mills Ltd. (supra).
17. In these circumstances and also in the spirit of impartiality and to ensure that the true spirit of the amendments is not lost in such cases, it is deemed appropriate to appoint Dr. Amit George, Advocate (9910524364) as the Sole Arbitrator to adjudicate upon the disputes between the parties."
ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 24 Patiala House Court, New Delhi
b) KRR Infra Projects Pvt. Ltd vs Union of India [2018 SCC OnLine Del 12418].
"8. In view of the above, merely because the Arbitration Agreement had been invoked prior to the coming into force of the Amending Act and the arbitration proceedings had commenced before the earlier Arbitrator prior to coming into force of Amending Act, the respondent could not have proceeded to appoint an ineligible Arbitrator under Section 12(5) read with the Seventh Schedule of the Act after coming into force of the Amending Act. At the time of such appointment, the eligibility of the Arbitrator had to be considered in accordance with the laws applicable to such appointment, including Section 12(5) and the Seventh Schedule of the Act. The Arbitrator being a serving employee of the respondent, was ineligible to be appointed in terms of Entry 1 of the Seventh Schedule of the Act and therefore, all proceedings that were conducted by him were not in accordance with the law."
c) M/s Satya Parkash and Brothers (P) Ltd. Vs Union of India [2025:DHC:6615-DB].
"14. The question that arises for consideration in this case is a short one as to whether a unilateral appointment of a Sole Arbitrator by one of the parties could have been the basis for setting aside the arbitral award passed by the Sole Arbitrator, especially when the parties have voluntarily participated in the entire arbitration proceedings without any demur whatsoever.
21. The Court, thereafter, went on to consider the question as to whether there can be a waiver of the objection to unilateral appointment and if so, in what manner. Again, after considering the relevant decisions of the Supreme Court as also the High Courts, the Court came to the conclusion that any waiver has to be expressly in writing and the same has to be waived after the dispute arises between the parties.
23. With the background of the applicable judicial ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 24 Patiala House Court, New Delhi precedents, the impugned judgement deserves to be considered. In the present appeal, the Commercial Court has held that the Engineer-in-Chief, PWD was not eligible for appointment of an Arbitrator in view of Section 12(5) of the Arbitration & Conciliation Act, 1996. Though no objection was raised by either party to the said appointment, the Court itself set aside the award on the ground that this was a unilateral appointment. The observations of the Commercial Court are set out below:
"7. Reverting to the present matter, Engineer-in- Chief of the petitioner i.e. PWD/Union of India was not eligible for appointment of arbitrator in view of provision of Section 12(5) of Arbitration & Conciliation Act. Hence, it is found that the appointment of Ld. Arbitrator in this matter was not as per settled provisions, hence, cannot be sustained in law. In the light of above discussion, and in view of settled legal position, the petition stands allowed and accordingly the impugned award dated 21.05.2020 is set aside."
24. The clear legal position that has emerged is that any award passed by a unilaterally appointed Arbitral Tribunal who is conflicted under Section 12(5) of the Arbitration and Conciliation Act, 1996, would be against public policy. Under such circumstances, the approach of the Commercial Court cannot be faulted with.
25. In the opinion of this Court, even the affidavit filed on behalf of the PWD would not constitute express waiver in writing as required in CORE (supra) and M/s Mahavir Prasad Gupta and Sons (supra) and hence, the present appeal is liable to be dismissed. The impugned judgment does not warrant any interference of this Court."
d) Govind Singh vs M/s Satya Group Pvt. Ltd. & Anr. [2023/DHC/000081] "19. The contention that the appellant by its conduct has waived its right to object to the appointment of the learned ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 24 Patiala House Court, New Delhi Arbitrator is also without merit. The question whether a party can, by its conduct, waive its right under Section 12(5) of the A&C Act is no longer res integra. The Supreme Court in the case of Bharat Broadband Network Ltd. v. United Telecom Ltd. (2019) 5 SCC 755 had explained that any waiver under Section 12(5) of the A&C Act would be valid only if it is by an express agreement in writing. There is no scope for imputing any implied waiver of the rights under Section 12(5) of the A&C Act by conduct or otherwise.
20. Thus, it is not necessary to examine the question whether the appellant had raised an objection to the appointment of the learned Arbitrator. Even if it is assumed that the appellant had participated in the arbitral proceedings without raising any objection to the appointment of the learned Arbitrator, it is not open to hold that he had waived his right under Section 12(5) of the A&C Act. Although it is not material, the record does indicate that the appellant had objected to the appointment of respondent no.2 as an arbitrator.
21. In view of the above, the remaining question to be addressed is whether an arbitral award rendered by a person who is ineligible to act 2023/DHC/000081 as an arbitrator is valid or binding on the parties. Clearly, the answer must be in the negative. The arbitral award rendered by a person who is ineligible to act as an arbitrator cannot be considered as an arbitral award. The ineligibility of the arbitrator goes to the root of his jurisdiction. Plainly an arbitral award rendered by the arbitral tribunal which lacks the inherent jurisdiction cannot be considered as valid. In the aforesaid view, the impugned award is liable to be set aside as being wholly without jurisdiction.
22. In Kanodia Infratech Ltd. v. zdalmia Cement (Bharat) Ltd. (2021) 284 DLT 722 the learned Single Judge of this Court had declined to interfere with the arbitral award, which was challenged on the ground that the arbitrator was ineligible to act as an arbitrator, on the ground that the ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 24 Patiala House Court, New Delhi parties had participated in the arbitral proceedings. The learned Single Judge had observed that the decision of the Supreme Court in Bharat Broadband Network Ltd. v. United Telecom Ltd. (supra) was not applicable as the said matter had travelled to the Supreme Court against the decision of this Court, rejecting the petition under Section 14 and 15 of the A&C Act.
23. We are unable to agree that the decision in Bharat Broadband Network Ltd. v. United Telecom Ltd. (supra) can be distinguished on the aforesaid ground. The said decision had authoritatively held that in terms of the proviso of Section 12(5) of the A&C Act, the ineligibility of an arbitrator under Section 12(5) of the A&C Act could be waived only by an express agreement in writing and cannot be inferred by the conduct of the parties. Thus, the fact that the parties had participated before the arbitral tribunal cannot be construed as a waiver of their rights to object to the ineligibility of the arbitrator(s). We are unable to accept that while such a right could be exercised prior to the delivery of the award, it would cease thereafter. If the arbitrator is ineligible to act as an arbitrator, the arbitral award rendered by the arbitral tribunal would be without jurisdiction."
e) Taleda Square Pvt. Ltd vs Rail Land Development Authority [2023 SCC Online Del 6321] "5. From a perusal of the aforesaid, what emerges is that the methodology as prescribed under clause 23.5.10 of the agreement while entitling the claimant/petitioner to select one of the arbitrators from the panel of five offered by the respondent also empowers the respondents to nominate the other two arbitrators. Having given my thoughtful consideration to the rival submission of the parties, I find that the respondent's plea that the petitioner should be compelled to select its nominee arbitrator from the five- member panel provided by the respondent cannot be accepted. Not only has such an approach been disapproved by the Apex Court in Voestalpine Schienen Gmbh (supra) ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 24 Patiala House Court, New Delhi but has also been categorically dealt with by a Coordinate Bench in Margo Networks Pvt. Ltd. (supra), wherein the Court while dealing with a similar clause pertaining to the railway board had, after examining various decisions of the Apex Court including the decisions in Voestalpine Schienen Gmbh (supra) and Central Organisation for Railway Electrification (supra), come to a conclusion that the panel of arbitrators being offered by the respondent therein, which was a ten member panel in the said case, was clearly restrictive and, therefore, proceeded to appoint the nominee arbitrators for both the petitioner and the respondent."
17. JUDGEMENTS OF RESPONDENT
a) Aravali Power Co. Pvt. Ltd Vs Era Infra Engineering Ltd. [(2017) 15 SCC 32] "14. At the outset, it must be stated that the invocation of arbitration in the present case was on 29.07.2015, the Arbitrator was appointed on 19.08.2015 and the parties appeared before the Arbitrator on 07.10.2015, well before 23.10.2015 i.e. the date on which the Amendment Act was deemed to have come into force. The statutory provisions that would therefore govern the present controversy are those that were in force before the Amendment Act came into effect. We must mention here that both the parties have addressed their submissions on this premise.
21. Except the decision of this Court in Voestalpine Schienen Gmbh (supra) referred to above, all other decisions arose out of matters where invocation of arbitration was before the Amendment Act came into force. Voestalpine Schienen GMBH (supra) was a case where the invocation was on 14.6.2016 i.e. after the Amendment Act and the observations in Para 18 clearly show that since "the arbitration clause finds foul with the amended provisions", the Court was empowered to appoint such arbitrator(s) as may be permissible. The ineligibility of the arbitrator was found in the context of amended Section 12 read with Seventh Schedule (which was brought in by Amendment ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.15 of 24 Patiala House Court, New Delhi Act) in a matter where invocation for arbitration was after the Amendment Act had come into force. It is thus clear that in pre-amendment cases, the law laid down in Northern Railway Administration (Supra), as followed in all the aforesaid cases, must be applied, in that the terms of the agreement ought to be adhered to and/or given effect to as closely as possible. Further, the jurisdiction of the Court under Section 11 of 1996 Act would arise only if the conditions specified in clauses (a), (b) and (c) are satisfied. The cases referred to above show that once the conditions for exercise of jurisdiction under Section 11(6) were satisfied, in the exercise of consequential power under Section 11(8), the Court had on certain occasions gone beyond the scope of the concerned arbitration clauses and appointed independent arbitrators. What is clear is, for exercise of such power under Section 11(8), the case must first be made out for exercise of jurisdiction under Section 11(6).
22. The principles which emerge from the decisions referred to above are: -
22.1 In cases governed by 1996 Act as it stood before the Amendment Act came into force: -
22.1.1. The fact that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality or lack of independence on his part. There can however be a justifiable apprehension about the independence or impartiality of an employee arbitrator, if such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate to the officer whose decision is the subject- matter of the dispute.
22.1.2. Unless the cause of action for invoking jurisdiction under Clauses (a), (b) or (c) of sub-section (6) of Section 11 of 1996 Act arises, there is no question of the Chief Justice or his designate exercising power under sub-section (6) of Section 11.
22.1.3. The Chief Justice or his designate while exercising ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.16 of 24 Patiala House Court, New Delhi power under sub-section (6) of Section 11 shall endeavour to give effect to the appointment procedure prescribed in the arbitration clause.
22.1.4 While exercising such power under sub section (6) of Section 11, If circumstances exist, giving rise to justifiable doubts as to the independence and impartiality of the person nominated, or if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, the Chief Justice or his designate may, for reasons to be recorded ignore the designated arbitrator and appoint someone else.
22.2. In cases governed by 1996 Act after the Amendment Act has come into force: - If the arbitration clause finds foul with the amended provisions, the appointment of the Arbitrator even if apparently in conformity with the arbitration clause in the agreement, would be illegal and thus the Court would be within its powers to appoint such arbitrator(s) as may be permissible."
b) ABB India Ltd. Vs Bharat Heavy Electricals Ltd. [2020 SCC OnLine Del 2070].
"16. The issue to be determined is, quite obviously, whether Section 12(5) of the 1996 Act would apply to the facts of the present case, or not.
18. Section 26 of the 2015 Amendment Act read as under:
"26. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."
33. Having thus set out the contention of SPSCL, advanced before it, the Supreme Court went on, in para 16 of the report, to hold thus:
ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.17 of 24 Patiala House Court, New Delhi "Considering the facts and circumstances of the present case, we are not inclined to go into the merits of this contention of the appellant nor examine the correctness or otherwise of the above view taken by the Delhi High Court in Ratna Infrastructure Projects case; suffice it to note that as per Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015, the provisions of the Amended Act, 2015 shall not apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the principal Act before the commencement of the Amendment Act unless the parties otherwise agree. In the facts and circumstances of the present case, the proviso in Clause (65) of the general conditions of the contract cannot be taken to be the agreement between the parties so as to apply the provisions of the amended Act. As per Section 26 of the Act, the provisions of the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after the date of commencement of the Amendment Act, 2015 (w.e.f. 23-10-2015). In the present case, arbitration proceedings commenced way back in 2013, much prior to coming into force of the amended Act and therefore, provisions of the amended Act cannot be invoked."
35. The observations and findings of the Supreme Court, in S.P. Singla Constructions Pvt Ltd., may be enumerated thus:
(i) In view of the facts and circumstances of the case before it, the Supreme Court did not enter into the merits of the contention, of SPSCL, that the concluding caveat, in Clause (65) of the GCC, made Section 12(5) of the 1996 Act applicable to the arbitral proceedings between SPSCL and the State of Himachal Pradesh. Nor did the Supreme Court examine the correctness, or otherwise, of the judgement of this Court in Ratna Infrastructure Projects (P) Ltd.
ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.18 of 24 Patiala House Court, New Delhi
(ii) Section 26 of the 2015 Amendment Act makes the provisions of Section 12(5) inapplicable to arbitral proceedings commenced before 23rd October, 2015.
(iii) The arbitral proceedings, between SPSCL and the State of Himachal Pradesh had commenced in 2013, much prior to 23rd October, 2015.
(iv) "In the facts and circumstances" of the case before it, the proviso in Clause (65) of the GCC could not be regarded as an "agreement between the parties", so as to make Section 12(5) applicable.
38. Parmar Construction Company is a decision which considerably impacts the outcome of these proceedings. The Supreme Court, in the very first para of the judgment, delineated three issues, arising for consideration, of which the first issue was worded thus:
"(1) The High Court was justified in invoking amended provision which has been introduced the Arbitration and Conciliation (Amendment Act), 2015 with effect from 23rd October, 2015 (hereinafter being referred to as "Amendment Act, 2015")?"
Clearly, therefore, the very first issue, identified by the Supreme Court, as arising before it, was the issue with which we are concerned in the present case. We may turn, therefore, to the facts.
55. The above study reveals that the facts which obtained, and the dispute which arose, in Parmar Construction Company, were substantially akin to the facts, and the dispute, in the present case. For all intents and purposes, the arbitration clause, in that case, was also similar to the one before the petitioner and the respondent, with a caveat, akin to the caveat contained in the second paragraph of clause 33.1 of the GCC in the present case. A specific contention was taken, before the Supreme Court, that, in view of the said caveat, Section 12(5), as inserted by the 2015 Amendment Act, would apply. The Supreme Court rejected the contention and held that the benefit of the Section 12(5) ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.19 of 24 Patiala House Court, New Delhi of the 1996 Act was not available to PCC."
18. In the present case, from the perusal of the record and the submissions advanced, it emerges that the contract between the parties was executed on 24.01.2012. The arbitration clause was first invoked by the petitioner on 01.01.2014. Vide letter dt. 02.03.2015, Sh. Upendra Goyal was appointed as sole Arbitrator. Since, the proceedings could not be completed within the time stipulated under the contract and Claimant did not agree to extend the time for passing the Award, Sh. Upendra Goyal was replaced and vide letter dt. 31.08.2017, Sh. P.K. Jain was appointed as the sole Arbitrator. The arbitral proceedings recommenced from the stage where the previous arbitrator had left. All the submissions made earlier, were forwarded to new Arbitral Tribunal. First sitting before the newly appointed sole Arbitrator was held on 11.10.2017. It is also pertinent to note that the respondent, vide letter dated 01.08.2017, had forwarded a communication to the petitioner proposing certain names for appointment as arbitrator and had requested the petitioner to select one of the suggested names, amongst which the name of Sh.P.K Jain was also included.
19. During arguments, my attention was taken by ld. counsel for the petitioner to different portions of Award in question, so as to challenge the same. In the narration of Claim No.1, Award mentions the net amount of first and final bill as submitted by the claimant/petitioner herein as Rs.983838/-. Ld. Counsel submitted that this was not the amount of bill. I do find that this was a kind of typographical error because in the initial part of the Award i.e. ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.20 of 24 Patiala House Court, New Delhi para-3, ld. Arbitrator had already mentioned the amount of Rs.98.38 lacs. Such kind of error cannot become a ground to challenge the Award, especially when the final outcome is not affected by such kind of error.
20. My attention was further taken to paragraph-22 of the Award, wherein ld. Arbitrator had given factual finding. This court is not supposed to re-evaluate the evidence to look into validity of the factual finding given by ld. Arbitrator. My attention was not otherwise taken to any particular piece of evidence terming it as a vital piece of evidence, to allege that finding was given by ld. Arbitrator contrary to the effect of such vital piece of evidence. Vital piece of evidence means something extraordinary in nature, which on the face of it gives impression about its importance qua the subject matter of arbitration. Ld. Counsel had taken my attention to several letters sent by petitioner to the official of the respondent and the manual related to Rate Analysis of Extra Items. In my opinion, this is beyond scope of present proceedings to reevaluate all these communications between the parties and to analyse the evidence again, to find out fault in the factual finding given by ld. Arbitrator.
21. Thus, the only issue, requiring to be look into, is regarding effect of unilateral appointment of Arbitrator. The arguments of both the parties have already been mentioned herein-above with reference to several judgments relied upon by both the parties. In order to seek guidance from a particular judgment, it has to be seen that which one is based on similar fact situation, as peculiar to this case. There is no second thought for the legal proposition ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.21 of 24 Patiala House Court, New Delhi that after amendment in the Act in 2015, with effect from 23.10.2015 unilateral appointment of Arbitrator cannot be termed as valid, unless there is written waiver from the other party. This law holds ground even if the arbitration agreement between the parties, came into existence prior to 23.10.2015. An Award passed by unilaterally appointed Arbitrator, thus, cannot pass the test of legality in such situations.
22. However, here is the case wherein arbitration proceedings were already initiated before the amendment was done in the Act in the year 2015. Most of the judgments cited by Petitioner relate to the stages where new Arbitrator was to be appointed. However, here is the case wherein Award has already been passed under the arbitration initiated prior to the amendment. Therefore, it has to be seen if this Award can be termed to be nullity on the grounds of having been passed by Arbitrator without jurisdiction? There cannot be quarrel with the proposition that under unamended Act, unilateral appointment of Arbitrator was not a disqualification. The relevant date for initiation of arbitration was the date of invoking arbitration clause by a party i.e. 01.01.2014. The first Arbitrator was also appointed before 23.10.2015. However, his tenure was over and was not extended, and thus, a substitute Arbitrator was appointed after 23.10.2015.
23. In the case of ABB (supra) also, arbitration was invoked on the basis of similar clause in the agreement between the parties and an Arbitrator was appointed prior to 23.10.2015. However, tenure of first Arbitrator was terminated and a new Arbitrator was appointed after 23.10.2015. This appointment of new ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.22 of 24 Patiala House Court, New Delhi substitute Arbitrator was challenged before Delhi High Court, on the grounds of being hit by S.12 of the amended Act. In the background of arbitration being initiated under the regime of law prior to the amendment w.e.f. 23.10.2015, Hon'ble Delhi High Court examined the law and various judgments given by Supreme Court, dealing with validity of arbitrator's appointment subsequent to amendment but in an arbitration-proceedings already initiated prior to 23.10.2015. Delhi High Court held that appointment of new Arbitrator was not vitiated on account of Section 12(5) of the 1996 Act, as inserted by the 2015 Amendment Act. This judgment has been subsequently approved by Supreme Court in the case of Ratnam Sudesh Iyer v. Jackie Kakubhai Shroff, (2022) 4 SCC 206. Delhi High Court has discussed all the judgments of Supreme Court, which were cited before me, in the case of ABB (supra). Hence, I am not required to discuss the interpretation of those judgments. The judgment in M/s Radhika (supra) was apparently passed subsequently and the court primarily dealt with the question of appointment of new Arbitrator.
24. The question dealt in the case of ABB (supra) has direct bearing over the issue involved in the present case. If the appointment of subsequent Arbitrator in this case is not vitiated by S.12 (5) of the amended Act, then it cannot be said that Award in question is bad on the grounds of unilateral appointment of the Arbitrator. In that situation, decisions taken in the cases as cited by Petitioner, do not have any application in this case, because, it is the legal principle enunciated and explained in the judgments, which ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.23 of 24 Patiala House Court, New Delhi becomes precedent, rather than peculiar decisions taken in those cases. Therefore, this objection against unilateral appointment of Arbitrator in this case, though not taken in the petition, but raised during the arguments of the Petitioner, is also liable to be rejected.
DECISION
25. In view of foregoing discussions and observations, I find that none of the grounds under S. 34 of the Act, has been established against the Award in question. Hence, petition is dismissed.
Digitally signed by PULASTYA PULASTYA PRAMACHALA PRAMACHALA Date: 2025.09.12 16:58:10 +0530 Pronounced in the (PULASTYA PRAMACHALA) Open Court on this District Judge (Commercial Court)-01, th
12 day of September, 2025 Patiala House Court, New Delhi ARBTN No. 2535/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.24 of 24 Patiala House Court, New Delhi