Delhi District Court
Union Of India vs M/S Manraj Enterprises on 15 January, 2026
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1. Memo of Parties 2
2. Description of case 2
3. Brief Facts of the case 2-4
4. Grounds of objection/challenge 4
5. Reply of Respondent 4-5
6. Submissions of the Parties 5-7
7. Appreciation of Arguments, Facts & Law 7-13
8. Decision 13
Digitally
signed by
PULASTYA
PULASTYA PRAMACHALA
PRAMACHALA Date:
2026.01.15
17:37:19
+0530
OMP (COMM.) No.19/2023 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 13 Patiala House Court, New Delhi
OMP (COMM). 19/2023
In the Matter of: -
Union of India (M/o Railways)
(Through General Manager)
Northern Railway, Baroda House,
New Delhi-110001.
...Petitioner
Versus
1. M/s Manraj Enterprises
R/o 230, Sukhdev Vihar,
New Delhi-110025.
2. Gopal Dass Dalwani
Chief Engineer (Retd) FCI
(sole Arbitrator) R/o C-153,
Sarvodaya Enclave, Delhi-110017.
...Respondents
Date of Institution : 06.02.2023
Arguments heard on : 07.01.2026
Decided on : 15.01.2026
Decision : Petition is allowed.
JUDGMENT
DESCRIPTION OF CASE
1. Present petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed by petitioner seeking setting aside of the arbitral award dated 26.10.2022, passed by ld. Sole Arbitrator, Sh. Gopal Dass Dalwani.
BRIEF FACTS OF THE CASE
2. Briefly stated, petitioner is an organisation forming part of the Northern Railway. Respondent No. 1 is a partnership concern engaged in rendering services on a contractual basis, primarily to OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.2 of 13 Patiala House Court, New Delhi various agencies. Respondent No. 2 is ld. Sole Arbitrator who passed the impugned arbitral award dated 26.10.2022.
3. On 20.02.2018, petitioner floated a tender for the work titled "Removal of Permanent Speed Restriction (PSR) and shifting of turnouts at Amin, Taraori, Bazida Jattan and Panipat in DUK Section". The said work was awarded to Respondent No. 1 vide Letter of Award dated 11.06.2018. In terms of the contract, Respondent No. 1 was required to deposit PBG amounting to Rs.3,53,080/-. Respondent was informed that the subject work was of an urgent nature, the objective being enhancement of train speeds in the busy Delhi-Ambala Section. However, vide letter dated 02.07.2018, Respondent No. 1 requested supply of drawings for different work sites and further made demand for release of an amount of Rs.1.65 crores, allegedly due against six previous contracts, a pre-condition for commencing work at the Taraori site. In order to expedite execution of the work, a meeting was held with Respondent No. 1 on 03.07.2018. Petitioner also issued a letter dated 15.07.2018, followed by another letter dated 17.07.2018, advising respondent to mobilise resources and commence the work, while cautioning that appropriate action would be taken in case of failure. It is averred that Respondent No. 1 persisted with its demand regarding release of the alleged outstanding dues as a pre-condition for undertaking the subject work. Consequently, petitioner, in accordance with Clause 62 of the (GCC), issued a seven-day notice to Respondent No. 1 vide letter dated 01.08.2018. On receiving no response, a further 48-hour notice was issued on 08.08.2018. Thereafter, petitioner terminated the contract vide OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 13 Patiala House Court, New Delhi letter dated 13.08.2018. Respondent No. 1 invoked the arbitration clause and approached the Hon'ble High Court of Delhi. Pursuant thereto, the Delhi International Arbitration Centre (DIAC) appointed ld. Sole Arbitrator, who ultimately passed the impugned award dated 26.10.2022.
GROUNDS OF OBJECTION / CHALLENGE
4. Aggrieved by the arbitral award dated 26.10.2022, petitioner has preferred the present objections under Section 34 of the Arbitration and Conciliation Act, 1996, inter alia, on the following grounds: -
i. That the impugned award has been passed in violation of the principles of natural justice and is arbitrary, perverse, and unjust. ii. That learned Sole Arbitrator failed to appreciate that petitioner, through its counsel, had moved an application dated 11.01.2022 seeking change of the Arbitrator on the ground of loss of faith, which application was rejected by ld. Arbitrator vide order dated
05.02.2020.
iii. That ld. Arbitrator failed to properly consider petitioner's submissions relating to security deposit and Performance Bank Guarantee, as well as the agreed contractual provisions, particularly Clauses 62(2) and 16(2)(c) of the GCC. iv. That the impugned award is unfair, unreasonable, contrary to public policy of India, and suffers from patent illegality apparent on the face of the award.
REPLY OF RESPONDENT
5. In its reply, respondent has contested present petition and has contended that the same has been filed beyond the statutory OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 13 Patiala House Court, New Delhi period of three months prescribed under Section 34(3) of the Arbitration and Conciliation Act, 1996. It is averred that there is a delay of three days in filing the petition and that the application seeking condonation of delay does not disclose sufficient cause as required under law. It is further contended that petitioner has failed to make out any ground falling within the scope of Section 34 of the Arbitration and Conciliation Act. According to respondent, ld. Arbitrator has duly considered all the contentions raised by the parties and has rendered a reasoned award. It is asserted that there is no illegality or perversity in the impugned award. Respondent has further submitted that the scope of interference under Section 34 of the Arbitration and Conciliation Act is narrow and limited, and the Court may interfere only if any of the grounds specified under Section 34(2), Section 34(2A), Section 13(5), or Section 16(6) of the Act are made out, which, according to respondent, are not attracted in the present case.
SUBMISSIONS OF THE PARTIES
6. On behalf of petitioner, it was argued that the impugned arbitral award was pronounced on 26.10.2022, whereas the time limit prescribed under Section 29A of the Arbitration and Conciliation Act for making the award was twelve months from the date of completion of pleadings. It was submitted that pleadings were completed on 29.07.2019 and, accordingly, the mandate of the Arbitral Tribunal expired on 28.07.2020. It was further argued that the Arbitration and Conciliation Act does not provide for any implied consent of the parties for extension of time under Section 29A(3). It was contended that no application seeking OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 13 Patiala House Court, New Delhi extension of time under Section 29A(5) was filed by either party. Despite this, the arbitral proceedings continued. It was also submitted that petitioner had raised an objection by seeking recusal or change of the Arbitrator on the ground that the Arbitrator was associated with the counsel for respondent in other arbitral proceedings.Petitioner has further contended that Claim No. 7 was allowed by ld. Arbitrator without assigning reasons or specifying the basis for quantification of the amount awarded.
7. Per contra, ld. counsel for respondent submitted that the arbitral award dated 26.10.2022 was passed within the extended statutory period of eighteen months as contemplated under Sections 29A(1) and 29A(3) of the Arbitration and Conciliation Act. It was argued that the allegation of the award being time-barred is misconceived and liable to be rejected. It was further contended that the arbitral proceedings continued beyond the initial period of twelve months, even after adjustment of the period excluded on account of the COVID-19 pandemic, with the active and conscious participation of both parties. It was pointed out that final arguments were concluded on 08.08.2022, as recorded in the proceedings forming part of the impugned award. Learned counsel for respondent argued that petitioner participated in the arbitral proceedings without raising any objection regarding expiry of the mandate of the Arbitral Tribunal, and such conduct amounts to implied consent for extension of time under Section 29A(3) of the Act. It was contended that, in the absence of any prescribed form, consent under Section 29A(3) may be express or implied and can be gathered from the conduct and OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.6 of 13 Patiala House Court, New Delhi acquiescence of the parties. It was further argued that Section 31A of the Arbitration and Conciliation Act confers wide discretion upon the Arbitral Tribunal to award costs and that quantum of costs, even if excessive, does not constitute a ground for interference under Section 34 of the Act. It was also submitted that no material has been placed on record to substantiate the allegation of bias against ld. Arbitrator. In support of his contentions, ld. counsel for respondent relied upon following orders and Judgment: -
i. Balak Ram & Ors. v. NHAI [MANU/HP/1208/2023] ii. Ircon International Ltd. v. National Highways Authority of India [I.A. 5204/2019] APPRECIATION OF ARGUMENTS, FACTS & LAW
8. The first objection raised by petitioner is that the impugned arbitral award is barred by limitation under Section 29A of the Arbitration and Conciliation Act, 1996, as the award was passed beyond the statutory period of twelve months from the date of completion of pleadings. It was contended that no written or express consent was given by petitioner for extension of the mandate of ld. Arbitrator under Section 29A(3), and therefore the award has been passed without jurisdiction.
9. From the record, it is evident that ld. Sole Arbitrator was appointed by the Delhi International Arbitration Centre (DIAC) vide order dated 24.05.2019. The pleadings of the parties were completed on 29.07.2019. The provision of S. 29 A was amended w.e.f. 30.08.2019. Prior to 30.08.2019, this provision provided that award was to be made within a period of twelve OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 13 Patiala House Court, New Delhi months from the date the arbitral tribunal entered upon the reference. The date of reference was to be the date of receiving the notice in writing of the appointment of Arbitrator.
10. But, in any case, in the present case, admittedly award was not passed within twelve months even from the date of completion of pleadings. In terms of completion of pleadings, the arbitral award was required to be made on or before 28.07.2020.
11. Ld. counsel for respondent has relied upon the orders passed by the Hon'ble Supreme Court in Suo Motu W.P. (C) No. 3/2020, whereby the period of limitation stood excluded from 15.03.2020 to 28.02.2022 on account of the COVID-19 pandemic.
12. Even after excluding the aforesaid period, the adjusted period of the twelve-month statutory period lapsed on 10.07.2022. The final arguments were concluded on 08.08.2022, written submissions were filed by petitioner on 30.09.2022, and the arbitral award was ultimately pronounced on 26.10.2022.
13. It is thus, evident that the award was passed beyond the initial statutory period of twelve months. However, the contention of petitioner that the mandate of the Arbitrator stood automatically terminated for want of written or express consent, cannot be accepted. Respondent has relied upon the judgment of the Hon'ble High Court of Himachal Pradesh in Balak Ram & Ors. v. NHAI [MANU/HP/1208/2023], wherein it has been held that:-
"4(iv) In view of above discussion on facts & law, it has to be held that consent of the parties envisaged under Section 29A(3) of the 2015 Arbitration & Conciliation Act for extending the arbitral period need not necessarily be either express or in writing. There can be a deemed consent, an OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 13 Patiala House Court, New Delhi implied consent of the parties, which can be gathered from their acts and conduct. Their acquiescence in proceeding with the arbitration case beyond twelve months without raising any objection to the continuation of proceeding does amount to consent. On the basis of such consent, the arbitral award if passed within a further period of six months would be a valid award. In the given facts, consent of the parties to continue the arbitral proceedings beyond the period of one year (12 months) from the date the Arbitrator entered upon the reference, is writ large. The award was passed by the Arbitrator within further period of two months. The award was thus saved by Section 29A(3) of the Act as it was passed within the period permitted under Section 29A (3) of the Act. The conclusion drawn by learned District Judge about the award being illegal having been passed beyond the mandated period, therefore, being illegal, cannot be justified.
Under Section 29A(3) of the Arbitration and Conciliation Act, there is no requirement that consent of the parties has to be expressed and that too, in writing."
14. The law under S. 12 (5) and under S. 29 A, cannot be given same kind of interpretation, as far as it relates to form of consent. Therefore, the rquirement of mandatory written waiver of right, as contemplated in S. 12 (5), cannot be imported in S. 29 A also. In the present case, it is an admitted position that both parties continued to participate in the arbitral proceedings beyond the expiry of the statutory period without raising any objection to the continuation of the mandate of ld. Arbitrator. Petitioner participated in hearings, advanced arguments, and even filed written submissions subsequent to lapse of statutory period of twelve months. No contemporaneous objection was raised at any stage of the arbitral proceedings regarding expiry of the mandate. In these circumstances, the continued participation of petitioner OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 13 Patiala House Court, New Delhi amounted to implied consent for extension of time under Section 29A(3). Accordingly, this objection is found to be without merit and is rejected.
15. The second objection raised by petitioner relates to the independence and impartiality of ld. Sole Arbitrator. It was contended that petitioner had lost faith in the Arbitrator on account of a prior professional association between the Arbitrator and the counsel for the claimant, and that an application seeking change of the Arbitrator was moved during the proceedings, but the said application was rejected by ld. Arbitrator on the ground that: -
"I come to the conclusion that the application does not merit any justification for the sole Arbitrator to recuse from the case proceedings at this belated stage of proceedings and therefore the application is rejected. Both the parties are governed by the "Rule of DIAC" in these proceedings and the procedure for challenge of Arbitrator is provided in Rule 10 which requires issuing of a proper notice of challenge to DIAC along-with the requisite processing fee and not a direct application to Arbitrator in case of challenge to the appointment of the Arbitrator."
16. The record further reveals that, during the second hearing held on 21.08.2019, ld. Arbitrator made a disclosure that the counsel appearing for the claimant, Dr. V.K. Agarwal, had been professionally associated with the Arbitrator in other arbitral proceedings. The order stated as follows: -
"At the outset the Sole Arbitrator noted the presence of Dr.V.K. Agarwal as Advocate for the claimant. It was brought to the notice of all concerned that in the past he had also been associated in another arbitration case with the Arbitrator appearing as an Advocate before the Arbitrator.
OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 13 Patiala House Court, New Delhi Further in another arbitration case at present, he is in the arbitral tribunal where I am associated as a Technical Consultant with one of the parties. The Ld. Advocates on both the sides have no objection for the same and in view of the same, the arbitration proceedings continues further."
17. This disclosure has also been recorded in the impugned arbitral award dated 26.10.2022, which states as follows: -
"The claimants M/s. Manraj Enterprises were represented by the partner of the company Shri M.K Garg and Advocate Shri Vibhor Aggarwal in the first hearing. Respondents were represented by Shri Sachin Kumar, Div. Elect. Engineer Railway (DEE) and Shri Praveen Kumar (SSE) as well as their `Advocate Shri V.K Rai. The second hearing was conducted on the scheduled date of 21-08-2019 at DIAC centre wherein Dr. V.K. Agarwal appeared as Advocate for the claimant and Mr. Ravi Ranjan appeared as Advocate for respondent. On appearance of Dr. V.K. Agarwal it was brought to the notice of all concerned by the Sole Arbitrator that the Advocate Dr.V.K. Agarwal had been associated in another Arbitration case with the Arbitrator where he appeared as an Advocate before the Arbitrator and yet in another arbitration case at present, he was in the arbitral tribunal whereas the present sole Arbitrator was associated as a Technical consultant with one of the parties."
"However, before the next date of hearing on 05.02.2020 fixed for cross examination of RW-1 respondent's advocates filed an application on 11.01.2020 direct to Arbitrator requesting for change of Arbitrator without routing the same through the DIAC with requisite fee as required under Rule 10 of the "Rules of DIAC" which prescribes the proper notice of challenge to DIAC along with filing the requisite processing fee. The said application of respondent was, therefore, bad in law as he required to apply through DIAC after following the prescribed rules".
18. The disclosure made by ld. Sole Arbitrator regarding his prior OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 13 Patiala House Court, New Delhi and contemporaneous professional association with the counsel appearing for the claimant constituted a circumstance falling within Section 12(1) read with the Fifth Schedule of the Arbitration and Conciliation Act, 1996. The said relationship does not get reference in Section 12(5) read with the Seventh Schedule of the Act. However, it has to be also appreciated that the declaration being made under Section 12(1) is not a sheer formality. This requirement of law is also based on same objective i.e. to ensure independence and neutrality of the Arbitrator and therefore, Arbitrator is obligated to make disclosure keeping in view the circumstance/relationships mentioned in the Fifth Schedule. Apparently at the time of making this disclosure, Sh. V.K. Agarwal was not in picture and therefore, Ld. Arbitrator had no occasion to make any disclosure about his relationship with Sh. V.K. Agarwal. If Sh. V.K. Agarwal would have been there since begining and if such disclosure would have been made at the inception of arbitration proceedings, then before continuing further it would have been obligatory to obtain written consent/waiver of the right from the petitioner herein. Therefore, wherenever this situation arose, it was expedient for Ld. Arbitrator to obtain written waiver of right/consent from the petitioner, as contemplated under section 12(5) of the Act. It is well settled law that the requirement of express/written consent under Section 12(5) of the Act cannot be molified to the extent of making it oral consent or to infer it from the conduct of the parties. In Bharat Broadband Network Limited v. United Telecom Ltd. [2019(5) SCC 755], a request was made before Ld. Arbitrator to withdraw from the OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 13 Patiala House Court, New Delhi proceedings and while dealing with such situation and subsequent legal proceedings, Supreme Court again emphasised about scheme of law under Section 12,13 and 14 and about ground to raise justifiable doubts as to independence or impartiality of the Arbitrator. Thus, following this scheme of law, in the present case, instead of rejecting the subsequent application moved by petitoner for recusal of Ld. Arbitrator, the legal course of action was to refer the matter to DIAC for appointment of another Arbitrator. Ld. Arbitrator referred to the rules of DIAC, for rejecting the aforesaid application of the petitioner, but he ignored the mandate of law under section 12 of the Act. That mandate casts duty upon the Arbitrator and such duty cannot be shrugged off citing some procedural rules. Therefore, I do find that this arbtiration proceedings continued in violation to scheme of law under Section 12 of the Act and for such reasons itself, the award in question is liable to be set aside.
DECISION
19. In view of the foregoing discussion, the present petition is allowed. The arbitral award dated 26.10.2022 is set aside.
Digitally signed by PULASTYAPULASTYA PRAMACHALA PRAMACHALA Date:
2026.01.15 17:37:26 +0530 Pronounced in the (PULASTYA PRAMACHALA) Open Court on this District Judge (Commercial Court)-01, th 15 Day of January, 2026 Patiala House Court, New Delhi OMP (COMM.) No.19/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 13 Patiala House Court, New Delhi