Delhi District Court
Dharamvir And Co vs Dda on 26 July, 2025
IN THE COURT OF MS. PREETI AGRAWAL GUPTA,
DISTRICT JUDGE (COMMERCIAL COURT)-01,
NORTH WEST, ROHINI, NEW DELHI
OMP (COMM) No.15/2020
M/S DHARAMVIR & COMPANY
(Through Sh. Dharamvir Sole Proprietor)
H. No. 123, Pocket 9 Sector 24
Rohini, New Delhi-110085
...Objector/Petitioner
VS.
1. DELHI DEVELOPMENT AUTHORITY
(Through its Vice Chairman)
Vikas Sadan, I.N.A.
New Delhi-110023
2. EXECUTIVE ENGINEER
RPD-2 DDA Rohini,
Madhuban Chowk,
New Delhi-110085
....Respondents
OBJECTION UNDER SECTION 34 OF THE
ARBITRATION & CONCILIATION ACT, 1996 FOR
SETTING-ASIDE AND STAY THE ARBITRAL AWARD
DATED 04.08.2020, PASSED IN ARBITRATION CASE
TITLED AS 'M/S DHARAMVIR & CO. VS. EXECUTIVE
ENGINEER'.
Date of institution of Petition : 01.10.2020
Date of Assignment to this court : 03.10.2020
Date of hearing of final argument : 19.07.2025
Date of Judgment : 26.07.2025
OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 1/31
Digitally
signed by
PREETI
PREETI AGRAWAL
AGRAWAL GUPTA
GUPTA Date:
2025.07.26
16:22:57
+0530
(PREETI AGRAWAL GUPTA)
District Judge (Commercial Court)-01
North-West/Rohini/New Delhi.
26.07.2025
JUDGMENT
1. By way of this judgment, the present petition Under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter called as A & C Act) is being taken up for adjudication, as per law.
2. This petition has been filed on behalf the Petitioner M/s Dharmvir & Company, through Sh. Dharamvir Sole Proprietor, (Claimant, in the Claim petition in question), seeking setting aside of Arbitral Award dated 04.08.2020 passed by Sh.Surender Kumar Agarwal, Ld. Sole Arbitrator, in respect of claim against respondent namely Delhi Development Authority through its Executive Engineer/RPD2. By way of the impugned Award, claim of the petitioner/Claimant had been allowed for the awarded amount Rs.NIL.
3. Upon notice of the petition, Counsel for Delhi Development Authority/respondent(s) appeared and submitted on instructions from the respondent(s) that no reply was sought to be filed.
4. The present petition has been filed on behalf of Petitioner U/S. 34 of the Arbitration & Conciliation Act, 1996, challenging the ex-parte Award passed by Ld. Sole Arbitrator Sh. S. K. Aggarwal on 04.08.2020, on various grounds which have been crystalised herein-below : -
OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 2/31 Digitally signedPREETI by PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date: 2025.07.26 16:23:07 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025
(i) The impugned Award has been passed by Ld. Sole Arbitrator, who was unilaterally appointed by the respondent, without any consent of the petitioner and hence, not sustainable.
Ld. Sole Arbitrator is not competent in terms of Section 12(5) of Arbitration and Conciliation Act, 1996. The appointment of Ld. Arbitrator Sh. S.K. Agarwal (a former DDA employee) by DDA is in violation of Section 12(5) read with Schedule V & VII of the Arbitration & Conciliation Act, 1996 (as amended) and hence, the impugned Award passed, is bad in the eyes of law.
(ii) Ld. Arbitrator failed to disclose his past affiliation with DDA under Section 12(2) of the Arbitration & Conciliation Act, 1996, vitiating the entire proceedings. No Declaration under Section 12(2) of the Arbitration & Conciliation Act has been made by the Arbitrator to certify that he was an independent Arbitrator. Hence, such appointment is de jure disqualified.
(iii) The impugned Award has been passed in the mechanical manner, on the basis of a standard form of contract, without applying quasi-judicial mind and not binding upon the petitioner.
iv) The impugned Award is illegal, erroneous, against public policy, biased, against basic tenets of rules of justice and is unforceable.
(v) Ld. Arbitrator failed to consider that the delay and underpayment by the respondent, were retaliatory, owing to the refusal by petitioner to withdraw testimony against AE P.S. Rai, who was later convicted in a CBI bribery case. The petitioner was coerced and harassed by DDA officers. The respondent deliberately under-measured the work and withheld payment, OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 3/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:23:17 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 causing financial injury to the petitioner.
(vi) Ld. Arbitrator failed to consider that petitioner himself requested joint inspection on 03.09.2010, to prove that full work was done, but respondent avoided, despite the site being within DDA's own office premises, acting in bad faith. Relevant correspondence (e.g., letters dated 28.06.2010 & 04.11.2010) was ignored by the Arbitrator.
(vii) Ld. Arbitrator did not consider that the respondent had released the Earnest Money and Performance Guarantee, without any deductions qua any lapse in the work. There was no notice issued for any alleged shortcoming in work or for final bill finalization, yet Ld. Arbitrator treated the bill as conclusive.
(viii) Ld. Arbitrator wrongly gave validity to an ex-parte final bill, finalized after 6 years, without notice or joint verification. Work on site was executed under constant supervision and in excess, as directed, as per CPWD specifications, duly certified by Respondent. Ld. Arbitrator failed to appreciate that the final bill was delayed by 6 years, without any intimation to the petitioner, regarding the ex-parte final bill.
(ix) Ld. Arbitrator wrongly construed, acceptance of part- payment 'under protest' by the petitioner, as acceptance of under- measurement. Ld.Arbitrator overlooked/failed to consider that the final bill was not accepted by the petitoiner, due to unrecorded measurements and lack of notice.
(x) Ld. Arbitrator failed to consider Judicial precedents and settled legal propositions cited by the petitioner, in the alleged impugned Award, vitiating the whole proceedings. Section 73 of OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 4/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:23:23 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 the Indian Contract Act, relating to damages for breach and delay, was not applied/considered by Ld. Arbitrator.
(xi) Award was dispatched from Lucknow during lockdown, however published at New Delhi, without permitting physical hearings to the petitioner, denying fair opportunity to petitioner. The petitioner was denied fair hearing and access to certified records, resulting in procedural unfairness and breach of natural justice.
5. The respondent was duly served and appeared before the Court. However, respondent did not choose to file any response/reply to the present petition. Ld. Counsel for respondent desired to submit his arguments, without any formal reply, on merits of the petition. During submissions, allegations made in the petition have been denied and it is contended that the present petition is not maintainable for setting aside the Award under Section 34 of the Act. It is submitted that the Arbitral Award dated 04.08.2020 is a well reasoned Award and is sustainable in the eyes of law. Further, as submitted, Arbitral Award is stated to be neither against the public policy nor perverse or patently illegal, as claimed in the petition. It is submitted that the petitioner himself invoked the arbitration for resolution of disputes pertaining to the final bills settled by the respondent and also participated during the arbitration process/proceedings. It is contended that the petitioner was given fair hearing by the Ld.Sole Arbitrator and that it is only after the impugned Award was passed by Ld. Arbitrator, as per merits of the case, as per OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 5/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:23:31 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 law, the petitioner has come up before the Court to challenge the Award as the same is not favourable to the petitioner. It is prayed that the petition is devoid of any merits, as per law, as this Court cannot sit in appeal against the findings of the Ld. Arbitrator and that the impugned Award is sustainable in the eyes of law, praying for dismissal of the petition outrightly.
6. Arguments heard as addressed by both the sides. Arbitral Award/record has been perused. Legal position has been examined. During the course of arguments on behalf of the petitioner, two main grounds that have been assailed for challenging the impugned Award are based on the legal position wherein the very appointment of the Sole Arbitrator has been challenged, with the contention that the appointment of Ld. Arbitrator Sh. S.K. Agarwal (a former DDA employee) by DDA, is in violation of Section 12(5) read with Schedule V & VII of the Arbitration & Conciliation Act, 1996 (as amended). Ld. Arbitrator failed to disclose his past affiliation with DDA under Section 12(2), vitiating the entire proceedings. Besides other objections on merits of the case, legal objection as to the impugned Award being unsustainable has been raised as being against public policy and principles of natural justice. It is contended that The petitioner was denied fair hearing and access to certified records, resulting in procedural unfairness and breach of natural justice, thereby not being sustainable in the eyes of law.OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 6/31 Digitally signed by PREETI
PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:23:38 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025
7. During the course of further arguments, ld. Counsel for petitioner has raised contentions on merits of the Award, asserting that though the petitioner executed the work worth Rs.
2,31,075/- as per the work contract issued by the respondent, a sum of only Rs.86,285/- was paid, unjustifiably and without any violation on the part of the contractor/petitioner. It is further contended that the entire work on site was done by the petitioner in accordance with strict CPWD specifications and for no reason, an ex-parte final bill was passed after a long lapse of six years, reflecting the ill intention of the respondent to devoid the contractor/petitioner from legally entitled dues, besides the grounds already enumerated in forgoing para no.4 herein-above, malafide have been attributed to the respondent for under payment to the petitioner on account of the role of the petitioner in a CBI case leading to unfavourable verdict of one of the employees of the respondent. It is hotly argued that the Ld. Sole Arbitrator appointed by the respondent failed to appreciate the critical evidence including necessary correspondences that were put by the petitioner before the Arbitrator to demonstrate malafide conduct and delay on part of the respondent. Due to the arbitrary, non-judicious, and flawed approach of the Arbitrator in ignoring both facts and law, the impugned Award is vitiated and deserves to be set aside in the interest of justice.
8. The contentions on behalf of the Petitioner have been strongly opposed on behalf of the respondent asserting that a well reasoned and legally enforceable Award has been passed by Ld. OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 7/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:23:45 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 Sole Arbitrator Sh. S. K. Aggarwal. It is contended that petitioner participated in the entire arbitral proceedings, without raising any objection to the neutrality or appointment of the Sole Arbitrator.
It has been contended that the Petitioner already raised all the objections, during arbitration proceedings and have thus, waived their right to challenge the appointment of the Sole Arbitrator. It is further contended that as per the Clause 25 of the binding Arbitration Agreement between the parties, the claim/dispute was referred for Arbitration. It is further contended that now when the Award is passed, which is not suitable to the petitioner, the present petition has been filed, as an after thought. It is stated that a valid and enforceable order dated 04.08.2020 was passed by Ld. Arbitrator and that the petition be dismissed.
9. The Court has appreciated vehement arguments on behalf of respective Counsels and has perused and briefly reproduced herein-above the averments and pleadings before the Court. The Statutory provisions have also been considered. During course of arguments, numerous authorities have been relied upon by Ld. Counsels, which have also been appreciated as per the facts and circumstances of this case.
10. Considered. Arbitral proceedings have been perused. The impugned Award dated 04.08.2020 has been passed by Ld.Sole Arbitrator Sh. S.K. Aggarwal, after the respondent nominated the Sole Arbitrator for his appointment as Sole Arbitrator, which was accepted. Allegedly, upon notice of arbitration, parties appeared OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 8/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:23:52 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 and filed/submitted respective Statement of Claim, counter reply, rejoinder etc. alongwith other annexures. The Arbitral proceedings were concluded after final hearing, leading to passing of the impugned Award dated 04.08.2020. By way of the said Arbitral Award, Petitioner herein as claimant, sought recovery of outstanding dues (including Compensation, litigation cost and interest) computed in respect of the work of 'Providing & fixing of SFRC drain covers' under the Head 'Construction of the M.S. DDA Zonal Office Building at Madhuban Chowk', awarded by EE/RPD-2 DDA on 22.01.2010 via Agreement No. 06/EE/RPD-2/DDA/2009-10, from the respondent. The claim was decided by Ld. Arbitrator, who passed the impugned Award dated 04.08.2020 with awarded amount Rs.NIL, in favour of the petitioner/claimant.
11. As per the case of the Petitioner, the petitioner has challenged the impugned Award dated 04.08.2020 as void ab initio due to the Arbitrator's ineligibility under Section 12(5) read with Schedule V & VII of the Arbitration and Conciliation Act, 1996 (as amended in 2015). Petitioner never gave any written consent for waiver to the appointment of the arbitrator unilaterally by the respondent. It is further case of the petitioner that the Arbitrator, Sh. S.K. Agarwal, a former/ex DDA employee, appointed unilaterally by respondent/DDA, failed to disclose his prior affiliation with respondent/DDA in gross violation of Section 12(2) of the Arbitration and Conciliation Act, 1996. The petitioner gained knowledge about the Arbitrator OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 9/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:23:57 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 being former/ex-employee of DDA, only at the fag end of the Arbitration and had no resources to know about past projects of the Arbitrator during arbitration proceedings. Petitioner also filed an application under RTI Act to seek information about the status of Arbitrator, but the same was denied by the respondent/DDA, on one pretext or the other. There was no reason with Arbitrator not to disclose his past relations with respondent/DDA under Section 12(2) of the Act. No Declaration U/S 12(2) of the Arbitration & Conciliation Act has been made/filed by the Arbitrator to certify that he was an independent Arbitrator. There are several grounds raised alleging lack of fair hearing and violation of principles of natural justice by the petitioner to suggest that the proceedings were held via VC (Video Conferencing) during COVID period, although it has been conceded by the petitioner itself that the petitioner duly participated during the arbitral process/proceedings. The other ground raised on behalf of the petitioner is based on challenging the impugned Award dated 04.08.2020 on several grounds of merits, stating its entitlement as per the work done on specifications of the respondent. However, such grounds go to the root of the matter on merits and cannot be examined by this Court, if the Court is satisfied that a neutral and independent arbitrator has given his reasoned and justifiable findings on the dispute before the Arbitral Tribunal. It is well settled law that this Court cannot sit in Appeal against the findings of the arbitration tribunal, if the facts and evidence adduced before the Arbitral Tribunal, have been duly appreciated and an un-biased finding OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 10/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:24:03 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 has been given by the Arbitral Tribunal.
12. It shall be relevant to first examine the well settled legal position, in regard to the scope of interference by the Court as per Section 34 of the Arbitration and Conciliation Act. The relevant statutory provisions which empowers the petitioner to take recourse to a Court against the Arbitral Award, has been provided under Sub-sections (1) and (2) of Section 34, as amended by the Arbitration and Conciliation (Amendment) Act, 2019. Same are being reproduced herein for perusal : -
"34. Application for setting aside arbitral award. - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3). (2) An arbitral award may be set aside by a Court only if - (a) the party making the application establishes on the basis of the record of arbitral tribunal that -
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with the dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 11/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:24:09 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025
(b) the Court finds that - (i) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India. Explanation 1. - For the avoidance of any doubt, it is clarified that what is in conflict with the public policy of India, only if, -
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian Law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2. - For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian Law shall not entail a review on the merits of the dispute. (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence."
This Court has to exercise its judicial discretion in the backdrop of the Statutory Law provided under Section 34 of the Act by way of well settled judicial pronouncements and landmark judgements of Hon'ble Superior Courts.
13. Law applicable for consideration before the Court for exercise of its judicial discretion, as per law, has been by way of development of law through landmark judgments of Hon'ble Supreme Court of India and Hon'ble High Court of Delhi. The legal position that is binding on the Court by well settled principles of law, lay binding guidance that a broad distinction has to be maintained between the decisions which are perverse and those which are not and interference by the Court under OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 12/31 Digitally signed PREETI by PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date: 2025.07.26 16:24:15 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 Section 34(2)(b)(ii) does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. The court ought not to interfere with any Arbitral Award, if the view taken by the arbitrator is a possible view, based on facts of the matter before Ld.Arbitrator. An erroneous application of law by the Arbitrator, who has given a reasoned Award, in accordance with the contract between the parties and has arrived at a conclusion which is reasonable, plausible to the mind of a reasonable person and is not violative of public policy or law of the land, ought to be maintained and have the force of law and such an Award shall not be set aside.
14. Keeping in sync with the intent of the legislature and the purpose of Arbitration and Conciliation Act, the Court before whom the petition U/S.34 of A & C Act, has been filed, challenging an Arbitral Award, cannot be lightly set aside by re- appreciation of evidence or substitution of mind of this Court, unless there is any situation to reveal perversity, bias or prejudice, during the conduction of Arbitration proceedings or failure of the Arbitrator to appreciate the material evidence before the Arbitral Tribunal. The afore-discussed guiding principles are not exhaustive and each and every case is to be decided on its own merits, as per law. (Reliance placed on MMTC Ltd. vs. Vedanta Ltd., AIR 2019 SC 1168; Union of India and Anr Vs. OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 13/31 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.07.26 16:24:22 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 Annavaram Concreta Pvt. Ltd. 2021 SCC Online Del 4211, Union of India vs. Chenab Construction Company (Regd.), 2019 SCC OnLine Del 10515 and Ssangyong Engineering & Construction Co. Ltd. Vs. National Highways Authority of India (NHAI) - (2019)15SC C 131), Parsa Kente Collieries Limited vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited, AIR2019 SC 2908; Patel Engineering Ltd. Vs. North Eastern Electric Power Corporation Ltd. (NEEPCO) 2020 SCC OnLine SC 466 and Anglo America Metallurgical Coal PTY Ltd. vs MMTC Ltd. 2020 SCC OnLine SC 1030).
15. The dynamic law on the subject has been examined by Hon'ble High Court of Delhi in 'M/s Brij Lal & Sons Vs. Union of India & Anr'., FAO 351/2010 & CM APPL. 54765/2022, vide orders dated 28.03.2025, after duly appreciating the authoritative pronouncements by the Hon'ble Apex Courts, as have been summarised herein-above. The Hon'ble High Court of Delhi was pleased to dwell into the burning issue on the power of the Court U/S 34 of the Act, to set-aside an Award passed by an Arbitrator and if this power of the Court would include the power to modify such an Award. The Hon'ble High Court of Delhi duly considered the binding law laid down in 'NHAI Vs. M. Hakeem' (2021) 9 SCC1, and after appreciating the dictum, held as under:
20. The aforesaid dictum that there is no power vested in the Court to modify, revise or vary the terms of an award under Section 34 of Arbitration Act was further reiterated in a decision titled Hindustan Construction Company Limited v. National Highways OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 14/31 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.07.26 16:24:30 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 Authority of India ; 2023 SCC Online SC 1063. The Supreme Court in the aforesaid case held that "Courts under Section 34 are not granted the corrective lens and cannot re- appreciate the decision on merits unless the conclusions drawn are patently perverse." Similarly, in the case of Reliance Infrastructure Ltd. v. State of Goa;
2023 SCC Online SC 606, the decision in the case of Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation; (2022) 1 SCC 131, was referred with approval and it was observed that "The arbitrator is a Judge chosen by the parties and his decision is final. The Court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the Court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law".
21. Having discussed the proposition of law as to the scope of powers under Section 34, we may further briefly elaborate on how the expression "the public policy of India" contained in Section 34(2)(b)(ii) of the Act is to be construed. The Supreme Court in the case of ONGC Ltd. v. Saw Pipes Ltd.; (2003) 5 SCC 705, explained the expression as under:
"31. Therefore, in our view, the phrase "public policy of India" used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term "public policy" in Renu Sagar case [Renu agar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal. The result would be
-- award could be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality; or OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 15/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:24:37 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025
(d) in addition, if it is patently illegal.
[EMPHASIS SUPPLIED]
22. Coming straight to the point, in a recent decision of the Supreme Court in S.V. Samudram v. State of Karnataka: (2024 3 SCC 623, approving its earlier decision in Associate Builders v. DDA : (2015) 3 SCC 49, (two- Judge Bench), it was reiterated that an award can be said to be against the public policy of India, inter alia, under the following circumstances:
"42.1. When an award is, on its face, in patent violation of a statutory provision. 42.2. When the arbitrator/Arbitral Tribunal has failed to adopt a judicial approach in deciding the dispute. 42.3. When an award is in violation of the principles of natural justice.
42.4. When an award is unreasonable or perverse. 42.5. When an award is patently illegal, which would include an award in patent contravention of any substantive law of India or in patent breach of the 1996 Act.
42.6. When an award is contrary to the interest of India, or against justice or morality, in the sense that it shocks the conscience of the Court."
16. The full Bench of Hon'ble Supreme Court of India (5 Judge Bench), in 'Gayatri Balasamy Vs. M/s ISG Novasoft Technologies Limited'; Civil Appeal No.s15336-15337 of 2021, vide orders dated 30.04.2025, was pleased to appreciate the fulcrum of legal controversy on the following questions:
"Whether the powers of the Court under Section 34 and 37 of the Arbitration and Conciliation Act 1996 will include the power to modify an arbitral award?"
After scrutinising the judicial diversion on modification powers, the majority view by the ratio 4:1, has been pleased to lay down the binding legal position on the limited power of the Court u/s 34 and 37 of the 1996 Act in regard to modification of OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 16/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:24:47 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 the arbitral award, only under following circumstances :-
I. when the award is severable, by severing the "invalid" portion from the "valid" portion of the award and exercise power of partial setting-aside - particularly, in relation to liability and quantum and without any co- relation between 'valid' and 'invalid' parts.
II. by correcting any clerical, computational or typographical errors which may appear erroneous on the face of the record, by applying the doctrine of severability and modify a portion of the award, while retaining the rest, subject to parts of the award being separable, legally and practically. However, such a power must not be conflated with the appellate jurisdiction of a higher court or the power to review a judgment of a lower Court.
III. post award interest may be modified to both increase or decrease the post-award interest rate and while exercising this power, must be cautious and mindful not to overstep its role by altering the interest rate unless there are compelling and well founded reasons to do so.
IV. Article 142 of the Constitution applies, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power to do complete justice, in consonance with the fundamental principles and objectives behind the 1996 Act and not in derogation or in suppression thereof.
17. Thus, in accordance with the dictum laid down by binding authorities of the Hon'ble Superior courts on the scope of the power of the Court U/S 34 of the A & C Act, the following guiding principles that emerge for consideration of the Court, while exercising jurisdiction, are as under :-
(i) The Arbitral tribunal is the final arbiter of the facts and the OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 17/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:24:55 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 law. Ordinarily, conclusions of fact, or law, at which the arbitral tribunal arrives, are not amenable to interference under Section 34;
(ii) Courts under Section 34 are not granted the corrective lens and cannot re- appreciate the decision on merits unless the conclusions drawn are patently perverse.
(iii) The arbitrator is a Judge chosen by the parties and his decision is final. The Court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the Court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law.
(v) Ordinarily, interference with the arbitral award is to be scrupulously eschewed. Having elected to resolve their disputes by arbitration, the parties are ordinarily expected to defer to the decision of the arbitrator. Awards of arbitral tribunals cannot be likened with judgments of courts, which are susceptible to appeal. Else, the very raison d'etre of the establishment of the arbitral institution would stand defeated.
(vi) The court is not, therefore, entitled to sit in appeal over the decision of the arbitral tribunal. Neither can the court re- appreciate the evidence, which has been appreciated by the arbitral tribunal. If, however, the arbitral tribunal ignores material evidence, that would amount to "perversity", which would invite interference under Section 34. If all the evidence has been examined by the arbitral tribunal, the court cannot interfere on the ground that the examination of the evidence, as undertaken by the arbitral tribunal, is not, to its mind, satisfactory or sufficient. The Court can not substitute its own view for the view of the arbitral tribunal, on the ground that, in its perception, the view of the court is "better" or "more appropriate".
(vii) There is restricted power vested in the court to modify, revise or vary the terms of an award under Section 34 and 37 of Arbitration Act, subject to few exceptions. The Court has limited powers U/s 34 and 37 of the Act, to modify the arbitral award, when the award is severable, by severing the "invalid" portion from the "valid" portion of the award and/or by correcting any clerical, computational or typographical errors and/or modification of post award interest.
(viii) The aforenoted principles pertain to the scope of interference with arbitral awards, by courts, on merits. These are apart from the other well-established grounds on which the court may interfere, such as opposed to public policy of India, OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 18/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:25:03 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 misconduct by the arbitrator, bias or prejudice or conducting of the arbitral proceedings in violation of the principles of natural justice, to refer to a few.
18. Thus, as per well settled law, there are guided principles which create exceptions to the golden rule of upholding the sanctity and validity of an arbitral award. The Court, in exercise of guided power, in exercise of its jurisdiction U/s 34 and 37 of A & C Act, towards preservation of valid Arbitral Award, have the power to set-aside and to a limited extent, modify an arbitral award, under exceptions, as enumerated herein:-
(a) Where the conclusion of the arbitral tribunal, whether on facts or on law is perverse, it merits interference. Perversity, in such a case must be of such a degree that no reasonable man, conversant with the facts and the law, would arrive at such a decision
(b) If the findings of the arbitral tribunal are contrary to the contract between the parties, the court is bound to interfere.
This is, essentially, because the arbitral tribunal draws its jurisdiction from the contract, and is a creature thereof. The arbitral tribunal, cannot, therefore, arrive at a conclusion which militates against the terms of the contract between the parties, merely to do equity, or for any other reason
(c) Similarly, if the conclusion of the arbitral tribunal is contrary to the law laid down by the Supreme Court, or any other binding judicial precedent, the court can interfere. This is because any conclusion, by the arbitral tribunal, which is contrary to the extant law, is treated as violative of public policy, which is a well settled ground for interference with the award;
(d) The arbitral tribunal ignores material evidence, that would amount to "perversity", which would invite interference under Section 34.
19. In the facts of the present case, several grounds to challenge the impugned Award dated 04.08.2020 have been raised OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 19/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:25:09 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 by the petitioner, which go to the evaluation of findings of the Arbitrator on the dispute under consideration before the Arbitral Tribunal. The Court shall dwell upon the reasons and findings of the Ld. Arbitrator, as per law, if this Court is of the considered view that a valid Arbitral Award has been passed by a legally and validly constituted Arbitration Tribunal.
20. The present petition u/s 34 of A & C Act has been filed by the petitioner aggrieved by the impugned Award, praying for setting-aside of the Award based on the principle objection of validity of the appointment of the Ld. Sole Arbitrator by the respondent, unilaterally and without necessary disclosure, as envisaged u/s 12(1) of the A & C Act and further to consider whether the Sole Arbitrator was ineligible to be appointed as an Arbitrator.
21. In support of the case, heavy reliance has been placed by the petitioner on the pronouncement of Hon'ble High Court of Delhi in 'Ram Kumar and Anr. Vs. Shriram Transport Finance Co. Ltd.', FAO(COMM) 60/2021 and CM Nos.8298/2021 & 40377/2022, dated 05.12.2022, where similar controversy was examined by the Hon'ble High Court of Delhi in the case where the Ld. Sole Arbitrator had not made any disclosure as required U/S 12(1) of the A & C Act. It is not the case of the respondent contended before the Court or any supporting material or document placed before the Court to show that the Ld. Sole Arbitrator duly complied with the disclosures as contemplated OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 20/31 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.07.26 16:25:24 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 U/S 12(1) of the Act. The relevant allegations for pondering by the Court are based on the alleged bias of the Sole Arbitrator in favour of the respondent, on the ground that the same Ld. Arbitrator was appointed as an Arbitrator by the respondent, in several such matters against various parties. This allegation raised by the petitioner is very serious, as it may needs to be examined if the violation of compliance envisaged U/S 12(1) of the Act, would in itself be a sufficient circumstance to give rise to justifiable doubts as to the independence and impartiality of the Sole Arbitrator, who passed the impugned Award.
22. It may be relevant to consider that the challenge of the impugned Award by the petitioner on ground of the Arbitrator being a former/ex-employee of the respondent itself, has not been denied. It is also not denied on behalf of the respondent that the sole arbitrator, who passed impugned Award in question, was also appointed as an Arbitrator in numerous matters of various parties, at the instance of the respondent/DDA. The Court has also further considered the case of the respondent in defending the validity of the impugned Award based on the ground that the arbitration was in itself invoked by the petitioner and further that the petitioner duly participated in the arbitral process. It has been contended on behalf of the respondent that no such objection to the appointment of the sole arbitrator concerned, was ever raised by the petitioner throughout the arbitral process, to suggest that the such conduct of the petitioner in not raising objection, would act as 'consent' or 'express waiver', by the petitioner herein to the appointment of OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 21/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:25:32 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 the Sole Arbitrator. The findings of Hon'ble High Court of Delhi in Ram Kumar (Supra), are applicable to the facts of the present case wherein the Hon'ble High Court of Delhi duly considered similar question of appointment of the Arbitrator by the respondent, without the necessary declaration provided under Section 12(1) of the A & C Act. It has been held that :-
"19....The onus for disclosing the number of matters in which the learned Sole Arbitrator had been appointed as such, at the instance of the respondent, rested with the learned Sole Arbitrator. The assumption that the burden to ascertain the circumstances that may give rise to justifiable doubts as to the independence and impartiality of the arbitrators is on the parties, is erroneous; this disclosure is necessarily required to be made by the person approached in connection with his appointment as an arbitrator.
20. In terms of Explanation 2 to Section 12(1) of the A&C Act, the arbitrator is also required to make the necessary disclosure as specified in the Sixth Schedule of the A&C Act.
21. The learned Commercial Court found that the appellants were precluded from assailing the impugned award on the ground that they had not filed an application before the learned Sole Arbitrator to make the disclosure or challenge his appointment.
22. It is necessary to note that the language of Section 12(1) of the A&C Act does not leave it at the discretion of any person, approached in connection with being appointed as an arbitrator, to make the necessary disclosures. The use of the words "he shall disclose" in Section 12(1) of the A&C Act makes it mandatory for the person who is approached in connection with his possible appointment as an arbitrator, to make a disclosure of all circumstances that may give rise to justifiable doubts as to his independence and impartiality.
23. In terms of Explanation 2 to Section 12(1) of the A&C Act, such disclosure is to be made in the form specified in the Sixth Schedule of the A&C Act. It may be sufficient compliance of the Explanation if the necessary particulars, as required to be disclosed in the Sixth Schedule, are OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 22/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:25:38 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 disclosed but the disclosure is not in the format as provided. However, it would be erroneous to assume that the requirement of making a disclosure is not mandatory.
24. This Court is of the view that the requirement of making a disclosure is a necessary safeguard for ensuring the integrity and efficacy of an arbitration as an alternate dispute resolution mechanism and is not optional."
23. It shall now be relevant to consider the legal position in respect to alleged ineligibility of the Ld. Sole Arbitrator in light of well settled and binding precedents which have laid down binding guidelines. The first and foremost notable matter for consideration before Hon'ble Court is "HRD Corporation Vs. GAIL" reported in (2018) 12 SCC 471, wherein Hon'ble Apex Court ruled that when a person directly falls under Schedule VII, ineligibility goes to the root of the appointment as per prohibition under Section 12(5) read with Schedule VII. Such person lacks inherent jurisdiction.
24. This approach was expanded in "TRF Limited Vs. Energo Engineering Projects Limited" reported in [2017] 7 S.C.R. 409, wherein Hon'ble Supreme Court of India held that an individual who himself is ineligible under the provisions of the Act to be appointed as an arbitrator, cannot nominate a sole arbitrator. The ineligibility goes to the root of the matter and arises out of lack of inherent jurisdiction.
25. Subsequently, in "Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd." reported in [2019] 17 S.C.R. 275, Hon'ble Supreme Court of India extended the approach taken in OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 23/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:25:45 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 TRF Limited (supra) and held that a party who has an interest in the outcome of a dispute also cannot nominate a sole arbitrator and held as under:
16. But, in our view that has to be the logical deduction from TRF Limited. Paragraph 50 of the decision shows that this Court was concerned with the issue, "whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator" The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in the paragraph, further show that cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and recognised by the decision of this Court in TRF Limited."
Therefore, the preposition under Section 12(5) read with Schedule VII of the Act was extended to persons unilaterally appointed to act as an arbitrator. Such persons who are unilaterally appointed lack inherent jurisdiction, unless an express written approval is given by the parties, subsequent to disputes having arisen.
OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 24/31
Digitally
signed by
PREETI
PREETI AGRAWAL
AGRAWAL GUPTA
GUPTA Date:
2025.07.26
16:25:51
+0530
(PREETI AGRAWAL GUPTA)
District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025
26. Furthermore, in "Bharat Broadband Network Limited Vs. United Telecoms Limited" reported in [2019] 6 S.C.R. 97, Hon'ble Supreme Court of India held that a unilaterally appointed arbitrator is de jure ineligible to perform his functions and that his mandate is automatically terminated under Section 14(1)(a) of the Act. Further, any prior agreement to do away with this ineligibility would be wiped out by the non-obstante clause contained in Section 12(5), and the same can be cured only through an express waiver. Hon'ble Supreme Court of India held that : -
"15. Section 12(5), on the other hand, is a new provision which relates to the de jure inability of an arbitrator to act as such. Under this provision, any prior agreement to the contrary is wiped out by the nonobstante clause in Section 12(5) the moment any person whose relationship with the parties or the counsel or the subject matter of the dispute falls under the Seventh Schedule. The sub-section then declares that such person shall be "ineligible" to be appointed as arbitrator. The only way in this ineligibility can be removed is by the proviso, which again is a special provision which states that parties may, subsequent to disputes having arisen between them, waive the applicability of Section 12(5) by an express agreement in writing. What is clear, therefore, is that where, under any agreement between the parties, a person falls within any of the categories set out in the Seventh Schedule, he is, as a matter of law, ineligible to be appointed as an arbitrator. The only way in which this ineligibility can be removed, again, in law, is that parties may after disputes have arisen between them, waive the applicability of this sub- section by an "express agreement in writing". Obviously, the "express agreement in writing" has reference to a person who is interdicted by the Seventh Schedule, but who is stated by parties (after the disputes have arisen between them) to be a person in whom they have faith notwithstanding the fact that such person is interdicted by the Seventh Schedule."
"......20.This then brings us to the applicability of the proviso to Section 12(5) on the facts of this case. Unlike Section 4 of OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 25/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:31:32 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 the Act which deals with deemed waiver of the right to object by conduct, the proviso to Section 12(5) will only apply if subsequent to disputes having arisen between the parties, the parties waive the applicability of sub-section 22 (5) of Section 12 by an express agreement in writing. For this reason, the argument based on the analogy of Section 7 of the Act must also be rejected. Section 7 deals with arbitration agreements that must be in writing, and then explains that such agreements may be contained in documents which provide a record of such agreements. On the other hand, Section 12(5) refers to an "express agreement in writing". The expression "express agreement in writing" refers to an agreement made in words as opposed to an agreement which is to be inferred by conduct. Here, Section 9 of the Indian Contract Act, 1872 becomes important. It states:
"9. Promises, express and implied.--In so far as a proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied."It is thus necessary that there be an "express"
agreement in writing. This agreement must be an agreement by which both parties, with full knowledge of the fact that Shri Khan is ineligible to be appointed as an arbitrator, still go ahead and say that they have full faith and confidence in him to continue as such......."
27. In this respect, Hon'ble High Court of Delhi has been further pleased to consider and lay down the binding law in EFA(COMM) 2/2023 CM APPL. 25636/2023, CM APPL. 25637/2023, CM APPL. 25638/2023, CM APPL. 25639/2023 & CM APPL. 25635/2023, in case titled 'SBI Card and Payment Services Limited. Vs. Narendra Kumar Prajapat' vide orders dated 17.05.2023. Hon'ble High Court of Delhi has been pleased to hold that an Award rendered by an Arbitrator, who is ineligible to act as an Arbitrator by virtue of Section 12(5) of the 'Act' is a nullity and, therefore, cannot be enforced. The finding of the Hon'ble High Court of Delhi have been fortified by Hon'ble OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 26/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.07.26 16:31:39 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 Apex Court in Special Leave Petition (Civil) Diary No(s).
47322/2023, vide orders dated 12.12.2023, and is accordingly, the law of the land.
28. The legal position has been now nailed and well settled by the recent pronouncement by five Judge's Constitution Bench of Hon'ble Apex Court in case titled 'Central Organisation of Railway Electrification Vs. M/s ECI SPIC SMO MCML (JV)' in Civil Appeal Nos.9486-9487 of 2019, dated 08.11.2024. The Hon'ble Apex Court, by majority view, was seized of the matter pertaining to a Government Agency wherein the arbitration proceedings involved three member tribunal. The Hon'ble Apex Court duly considered the Reference after appreciating the adequate safeguards provided within the Arbitration Act to ensure a level playing field between the disputing parties, having commercial conflict of interests which needs to be adjudicated by a mutual forum. The Hon'ble Supreme Court gave the following authoritative and binding conclusion as under:-
"VII. Neither public policy considerations under the Contract Act or the Arbitration Act restrain the parties to the arbitration from maintaining a panel of arbitrators in any manner. However, arbitration agreements enabling one of the parties to unilaterally constitute arbitral tribunal do not inspire confidence of independence and may violate the public policy requirement of constituting an independent and impartial tribunal. The Court will, therefore, scrutinise the agreement and hold them to be invalid if it considers it appropriate."
29. The position has been followed and reiterated by our own Hon'ble High Court in 'M/s Mahavir Prasad Gupta and Sons OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 27/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:31:46 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 Vs. Govt of NCT of Delhi': FAO(COMM) 170/2023, dated 31.05.2025, in respect of legal position on unilateral appointment of the Sole and Presiding Arbitrator, as under:-
a) Mandatory Requirement: Any arbitration agreement providing unilateral appointment of the sole or presiding arbitrator is invalid.
A unilateral appointment by any party in the arbitrations seated in India is strictly prohibited and considered as null and void since its very inception. Resultantly, any proceedings conducted before such unilaterally appointed Arbitral Tribunal are also nullity and cannot result into an enforceable award being against Public Policy of India and can be set aside under Section 34 of the Act and/or refused to be enforced under Section 36 of the Act.
b) Deemed Waiver: The proviso to Section 12(5) of the Act requires an express agreement in writing. The conduct of the parties, no matter how acquiescent or conducive, is inconsequential and cannot constitute a valid waiver under the proviso to Section 12(5) of the Act. The ineligibility of a unilaterally appointed arbitrator can be waived only by an express agreement in writing between the parties after the dispute has arisen between them. Section 12(5) of the Act is an exception to Section 4 of the Act as there is no deemed waiver under Section 4 of the Act for unilateral appointment by conduct of participation in the proceedings. The proviso to Section 12(5) of the Act requires an "express agreement in writing‟ and deemed waiver under Section 4 of the Act will not be applicable to the proviso to Section 12(5) of the Act.
c) Award by an Ineligible Arbitrator is a Nullity: An award passed by a unilaterally appointed arbitrator is a nullity as the ineligibility goes to the root of the jurisdiction. Hence, the award can be set aside under Section 34(2)(b) of the Act by the Court on its own if it "finds that‟ an award is passed by unilaterally appointed arbitrator without even raising such objection by either party.
d) Stage of Challenge: An objection to the lack of inherent jurisdiction of an arbitrator can be taken at any stage during or after the arbitration proceedings including by a party who has appointed the sole or presiding arbitrator unilaterally as the act of appointment is not an express waiver of the ineligibility under proviso to Section 12(5) of the Act. Such objection can be taken even at stage of challenge to the award under Section 34 of the Act or during the enforcement proceedings under Section 36 of the Act.
OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 28/31 Digitally signed by PREETIPREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.07.26 16:31:53 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025
30. In the present case, the impugned award dated 04.08.2020, was passed by a Sole Arbitrator, who was unilaterally appointed by respondent/DDA. The peculiar aspect in the present case that the petitioner itself sought invocation of the arbitration resolution of dispute, shall not absolve any of the party to the dispute, for a validly eligible and neutral appointment of arbitrator. In case, the very appointment of the Sole Arbitrator suffers from a permanent and indelible mark of bias and prejudice and as per Law, then in such an eventuality, the unilaterally appointed Arbitrator cannot be deemed to be an unbiased, neutral and independent arbitral tribunal. Furthermore, it is matter of record that the Petitioner, who was claimant in the Arbitration proceedings, did not ever issued any Letter of Consent in favour of the Arbitrator and accordingly, there is absence of any express waiver as contemplated by Section 12(5) of the Act, to lend any legal sanctity to the Arbitral proceedings, that took place before the Ld. Sole Arbitrator, who has been unilaterally appointed by the DDA/respondent, without consent of the Petitioner. It is also to be considered that not only the law of the land declares the unilateral appointment of an arbitrator as impermissible, additionally, in the facts of the present case, the ld. Sole Arbitrator failed to comply and make mandatory disclosure U/S 12(1) of the A & C Act, about all circumstances that may give rise to justifiable doubt as to his independence and impartiality. The onus for disclosing the number of matters, in which Ld.Sole OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 29/31 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.07.26 16:32:02 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 Arbitrator has been appointed at the instance of the respondent, rested entire upon the Ld. Sole Arbitrator. It shall not be out of place to observe that the facts and circumstances of non-
disclosure by the Arbitrator and furthermore, the proceedings being held via VC (Video Conferencing) during the Covid period, needed furthermore necessary for the Ld. Arbitrator to ensure the sanctity of the Arbitral process, for the purpose of ensuring the integrity and efficacy of the arbitration leading to the arbitral award, which may be valid and legally sustainable, in the eyes of law.
31. After consideration of the entirety of the facts and circumstances of the present case and the applicable law, the mere fact that the petitioner in the present case, participated before the Sole Arbitrator, who failed to comply with the necessary mandate u/s 12(1) of the A & C Act, shall in itself not be considered as a waiver or the valid consent to the appointment of the sole Arbitrator and is otherwise ineligible, in terms of non- compliance and violation of Section 12(1) of A & C Act. In the present case, not only the Sole Arbitrator has failed to comply the mandatory disclosure U/S 12(1) of the A & C Act, the petitioner who participated in the arbitral process, did not ever issue any 'letter of consent', as contemplated u/s 12(5) of the Act, to consent to the appointment of the Sole Arbitrator, who was unilaterally appointed by the respondent. The facts and circumstances of the conduct of the arbitration proceedings itself, by the Ld. Sole Arbitrator, give rise to the impugned Award dated OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 30/31 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.07.26 16:32:09 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 04.08.2020, renders the Award non-est, in the eyes of law, in view of such facts and grounds which raise justifiable doubts as to the independence and impartiality, that is paramount for the integrity and efficacy of an arbitration as an Alternate Dispute Mechanism. Therefore, the Sole Arbitrator, as the adjudicating Arbitral Tribunal lacks inherent jurisdiction and competence to adjudicate the disputes in hand, and thus, the impugned award is an unenforceable award and a nullity.
32. Accordingly, this Court is satisfied that the Award dated 04.08.2020 passed by Ld. Arbitrator is unenforceable, void ab initio and non-est in the eyes of law and cannot be sustained and is therefore, set aside.
Parties to bear their own cost.
Petition stands disposed of accordingly. File be consigned to Record R oom.
Announced in the open Court today on this 26nd day of July, 2025 PREETI Digitally signed by PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date: 2025.07.26 16:32:20 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025 OMP (Comm.) 15/2020 M/s Dharamvir & Company Vs DDA & Anr. Page 31/31 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
26.07.2025