Delhi District Court
Prashant Johiri vs Fiitjee Ltd. And Anr on 26 September, 2025
IN THE COURT OF DISTRICT JUDGE-05,
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI
DLCT010027022018
Presided by:-
Sh. Abhishek Srivastava, DHJS
ARBTN No. 220/18
CNR No. DLCT01-002702-2018
Prashant Johri
S/o Mr. S.S. Johri
R/o 42-SMS Colony,
B-Block, Mansarovar,
Jaipur, Rajasthan ........ Petitioner
Versus
1. M/s Fiijee Ltd.
ICES House,
29-A, Kalu Sarai
Sarvapriya Vihar,
New Delhi- 110016
2. Sh. Subhash Tagra
Advocate/Sole Arbitrator
Fiitjee Ltd.
Ch. No. 458, Wester Wing,
Tis Hazari Courts,
Delhi ........ Respondents
Date of Institution: 24.02.2018
Date of Judgment: 26.09.2025
ARBTN 220/18 1 of 33
Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025
JUDGMENT
1. By this judgment, this Court shall dispose of the present petition under Section 34 of the Arbitration & Conciliation Act, 1996 filed by the petitioner against the respondent No. 1 challenging the Award dated 30.11.2017 passed by Sh. Subhash Tagra, Ld. Sole Arbitrator in the case titled as 'M/s FIITJEE Ltd. V/s Prashant Johri & Ors.' (hereinafter referred to as the 'impugned award').
2. Petitioner (Sh. Prashant Johri) was the respondents No. 1, and respondent No. 1 herein (M/s FIITJEE Ltd.) was the claimant before the Ld. Arbitrator. One Sh. Vivek Kumar Gaurav was made respondent No. 2 before the Ld. Arbitrator who is not a party before this court. Parties are referred to by this Court in this judgment as per their status/ nomenclature given in the present petition before this Court. Meaning thereby, Sh. Prashant Johri as petitioner and M/s FIITJEE Ltd. as respondent No. 1.
BRIEF FACTS OF THE CASE, AND PROCEEDINGS BEFORE THE LEARNED ARBITRATOR
3. The facts of the case, as pleaded by the respondent No. 1 in statement of claim (before the Ld. Arbitrator), in brief, are as under:-
(a) That the respondent No. 1 is a public limited company duly incorporated under the Companies Act having its registered office at 29A Kalu Sarai, New Delhi-110016.
Respondent No. 1 is an educational institute, engaged in ARBTN 220/18 2 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 teaching students preparing for IIT-JEE and other Engineering Entrance Examinations.
(b) That the petitioner joined the respondent No. 1 as Faculty in Maths Department on 29.01.2010 at Delhi. The petitioner was provided with the Service Rules Manual and other documents well in advance vide offer of appointment letter dated 09.01.2010 so that he is having opportunity of going through the same. After perusing and satisfying himself, he came prepared on 29.01.2010 and accordingly signed and accepted the Service Rules Manual and other documents, and also handed over some of the documents, as desired by the terms and conditions of the service contract, on the date of joining, i.e. 29.01.2010 at Delhi.
(c) That the petitioner agreed under para 15 of Service Rule Manual of respondent No. 1 to serve the respondent No. 1 for a minimum period of about three years i.e. from 29.01.2010 to 31.05.2013. As the resignation was not submitted by the petitioner by 30.11.2012, as per clause 16 (e) of the Service Rule Manual, the initial period of contract was considered to be extended to another term of three years from 01.06.2013 to 31.05.2016.
(d) That Sh. Vivek Kumar Gaurav stood surety for the petitioner for the due performance of the contract of service entered between the respondent No. 1 and the petitioner and executed a joint declaration with the petitioner to this effect and Sh. Vivek Kumar Gaurav ARBTN 220/18 3 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 also executed a separate declaration whereby Sh. Vivek Kumar Gaurav undertook to compensate respondent No. 1 on demand, a sum arising out of the violation of terms and conditions of Service Rule of the respondent No. 1.
(e) That the petitioner was put on training after joining. The petitioner completed his training on 28.04.2010 and was put on probation w.e.f. 29.04.2010 vide letter dated 01.06.2010, which was duly accepted by him and further, he was confirmed w.e.f. 29.10.2010 vide letter dated 21.10.2010, which was also duly accepted by him.
(f) That on 27.07.2013, the petitioner left respondent No. 1 abruptly in breach of the terms and conditions of the Service Rules Manual and Code of Conduct. As per the clause 16 (b) of the Service Rule Manual, the petitioner was required to give 6 months prior notice so that such period co-terminates with expiry of academic session, as well as the petitioner was to complete the contractual period mentioned in the Service Rule Manual and Code of Conduct.
(g) That the respondent No. 1 suffered irreparable loss as the petitioner left the services of respondent No. 1 abruptly in breach of the terms and conditions of the Service Rule Manual and Code of Conduct. The whole teaching schedule was disturbed and had to be rescheduled which severely affected the interest of the students also. As the petitioner left the services of the respondent No. 1 in breach of the contract of service, both the petitioner and ARBTN 220/18 4 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 Sh. Vivek Kumar Gaurav are jointly and severely liable to pay the predetermined and pre-estimated damages including notice period salary as per clause 16 of the Service Rule Manual.
(h) That the respondent No. 1 vide letter dated 15.09.2014 called upon the petitioner and Sh. Vivek Kumar Gaurav to fulfill their contractual obligations in terms of Service Rule Manual of the Claimant. However, despite the notice, the petitioner and Sh. Vivek Kumar Gaurav deliberately refused to pay the amount to the respondent No. 1 as per term and conditions of Service Rule Manual.
(i) That the petitioner and Sh. Vivek Kumar Gaurav (being the surety) are jointly and severally liable to pay the claim amount of Rs. 12,04,501/- alongwith interest @ 18% p.a to the respondent No. 1 with effect from 27.07.2013. The interest has been calculated from 27.07.2013 to 31.03.2016 which amounted to Rs. 5,81,526/-. Thus, the petitioner and Sh. Vivek Kumar Gaurav are jointly and severally liable to pay Rs. 17,86,027/- (12,04,501/- + 5,81,526/-) to the respondent No. 1. clause 36
(j) Therefore, the respondent No. 1 invoked the Arbitration clause as enshrined under clause 36 of the Service Manual vide letter dated 14.10.2014 and appointed Sh. Subhash Tagra as Sole Arbitrator to adjudicate the dispute and requested him to enter into reference immediately. A notice for invocation of arbitration was ARBTN 220/18 5 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 issued to the petitioner and Sh. Vivek Kumar Gaurav vide notice dated 14.10.2014 whereby Sh. Subhash Tagra was appointed as sole arbitrator for adjudication of disputes between both the parties and Ld. Arbitrator was requested to enter into reference immediately.
(k) As per arbitral records, summons/ notices were sent to the petitioner and Sh. Vivek Kumar Gaurav, and both the petitioner and Sh. Vivek Kumar Gaurav participated in the proceedings through a counsel, however, subsequently they stopped appearing after 15.05.2017 and accordingly they were proceeded ex-parte.
(l) Ld. Arbitrator vide Award dated 30.11.2017 allowed the claim of the respondent No. 1 and held that the respondent No. 1 is entitled to recover a sum of Rs. 17,86,027/- from the petitioner and Sh. Vivek Kumar Gaurav. Ld. Arbitrator allowed interest thereon @10% from the date of Award. Ld. Arbitrator also allowed the cost of Rs. 22,000/- to be paid to the respondent No. 1. GROUNDS OF CHALLENGE
4. The aforesaid Award has been challenged by the petitioner herein/ respondents No. 1 before the Ld. Arbitrator in the present petition inter alia on the following grounds:-
(A) That the petitioner had not acted in breach of the employment agreement which was signed at the time of joining the services with the respondent No. 1. In fact it is the respondent no. 1, who relieved the petitioner no. 1 ARBTN 220/18 6 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 from the services in contravention of the employment agreement.
(B) That the agreement [Service Rules for the employees of FIITJEE Ltd. as Faculty Members (Salary and Terms & Conditions)] entered into between the parties was one sided agreement and favoured the respondent No. 1. No opportunity had been granted to the petitioner to read the same before signing it as it was handed over to him on the date of joining itself. Respondent No. 1 was in a dominating position and the agreement was signed by the petitioner under undue pressure. The agreement as such was/is against the fundamental policy of law (C) That the clauses in the agreement are onerous, unilateral and thus have no sanctity in the eyes of law. Various clauses of the agreement viz. 14, 15, 16, 17, 19 and 36 are opposed to public policy. The agreement is hit by provisions of Section 23 and Section 28 of the Indian Contract Act. An award based on the above clauses would be clearly opposed to the public policy of India and is liable to be interfered with under Section 34 (2) (b)
(ii) of the Act. Petitioner in this regard has placed reliance on a decision of Hon'ble High Court of Delhi passed in "Vivek Rai V/s. Aakash Institute 2015 III AD (Delhi) 712"
(D) That the sole arbitrator has been engaged by the respondent No. 1 in many arbitration proceedings.
However, the Ld. Arbitrator had given a false declaration ARBTN 220/18 7 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 that he is not connected with the parties in any way. The appointment of the respondent No. 2 (Ld. Arbitrator) as an arbitrator in so many cases involving the respondent No. 1 raises doubts as to his independence or impartiality.
(E) That the appointment of the Ld. Arbitrator was unilateral at the behest of the respondent No. 1 which is impermissible in law.
REPLY
5. A reply has been filed on behalf of the respondent No. 1.
Following submissions were made;
(A) That the award is a well reasoned award and the grounds raised by the petitioner do not fall within the ambit of Section 34 of Arbitration & Conciliation Act. It is further argued that while deciding the petition under Section 34 of the aforesaid Act the court cannot sit in appeal over the award passed by the arbitrator.
(B) That the terms and conditions of the agreement were made keeping in mind the welfare of the students, who had joined the institute for obtaining special coaching for IIT-JEE. In case the faculty is permitted to leave at his own whims and fancies the studies of students would be adversely affected. None of the terms of the agreement are opposed to public policy.
(C) That the unilateral appointment of sole arbitrator by the respondent No. 1 is valid. Ld. counsel for the respondent No. 1 has relied on a decision of Hon'ble High Court of ARBTN 220/18 8 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 Delhi passed in Manish Anand V/s FIITJEE Ltd. on 21.02.2018 in ARB. P. 654/2017.
ARGUMENTS
6. Final arguments were thereafter heard on behalf of the parties.
Both the Ld. Counsel for the parties filed written submissions as well. Original arbitration proceedings were also received by this Court.
7. Ld. counsel for the petitioner during arguments challenged the award passed by the Ld. Arbitrator on the grounds referred above and prayed for its setting aside. Per Contra, Ld. Counsel for the respondent No. 1 submitted that Ld. Arbitrator has rightly passed the award after properly appreciating the evidence on record. Ld. Counsel for the respondent further submitted that even otherwise the scope of interference by this Court under Section 34 of the Arbitration & Conciliation Act, 1996 is very limited and the facts of the present case does not warrant any interference by this Court. With these submissions it was prayed that the present petition should be dismissed by this Court.
8. This Court has considered the rival submissions and material on record.
DISCUSSION
9. The petitioner has challenged the Award inter alia on three grounds;
(a) Failure by the Arbitrator to make the requisite disclosure;
(b) Unilateral appointment of the Arbitrator; and ARBTN 220/18 9 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025
(c) The clauses of the agreement are hit by the provisions of Sections 23 and 28 of the Indian Contract Act, 1872 and an award based on the above clauses would be clearly opposed to the public policy of India and is liable to be interfered with under Section 34 (2) (b) (ii) of the Act.
10. Now, let us consider all the three grounds one by one.
Failure by the Arbitrator to make the requisite disclosure
11. Petitioner in para 29 of the present petition stated as under;
29. That it may also be relevant to mention that it has now come to the knowledge of the petitioner that the sole Arbitrator/ respondent No. 2 has been engaged by the claimant company/ respondent No. 1 in many arbitration proceedings. However, the respondent No. 2 had given false declaration that he is not connected with the parties in any way. The appointment of the respondent No. 2 as an Arbitrator in so many cases involving the respondent No. 1 gives rise to justifiable doubts as to his independence or impartiality. The copy of the declaration given by the Arbitrator is annexed herewith as Annexure P/5.
12. Respondent No. 1 has given a joint reply to paras 28 to 32 of the petition. It records as under;
28-32 That the contents of para no. 28 to 32 are wrong, denied and frivolous in nature. It is submitted that the arbitrator is appointed as per the clause 36 of the service manual. It is submitted that it is clearly mention in the clause 36 that the company will appoint the arbitrator. It is wrong to say that appointment of respondent no. 2 as an arbitrator in so many cases gives rise to justifiable doubts to his independence or impartiality. It is wrong to say that Ld. ARBTN 220/18 10 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 Arbitrator was so curious and excited to pass an award in favour of respondent and opportunity was not granted to the petitioner. It is mandatory to say that letter of appointment of sole arbitrator was sent to the petition vide letter dated 14.10.2014. The objection of partiality and injustice was never raised before the arbitrator. Moreover, the petitioner attended the arbitration proceedings but stopped appearing and was declared ex parte on 15.05.2017. Many opportunities were given to the petitioner but he never actively participated neither raised his objection before the arbitrator.
13. So, the respondent No. 1 is not denying the averment made on behalf of the petitioner that the Arbitrator was engaged by the respondent No. 1 in many arbitration proceedings. The respondent No. 1 is stating that even if the said Arbitrator was engaged by the respondent No. 1, it did not raise any doubt about his independence or his impartiality. Respondent No. 1 further submits that no such objection was taken by the petitioner before the Ld. Arbitrator.
14. The issue, in the considered view of this court, however, is not this. The issue is if an Arbitrator is engaged by a party in other matters as well, is this circumstance not one such as envisaged under Section 12 of the Act (and which should be disclosed by the Arbitrator in writing to the other party).
15. I am reproducing the relevant contents of Annexure P/5 herein below;
DECLARATION U/S 12 OF THE INDIAN ARBITRATION AND CONCILIATION ACT ARBTN 220/18 11 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 I, Subhash Tagra, Advocate declare that I am not, in any way, connected with the parties to the dispute and there are no such circumstances which may give rise to any doubt as to my independence or impartiality.
16. Hon'ble High Court of Delhi in Alupro Building Systems Pvt.
Ltd. v. Ozone Overseas Pvt. Ltd., 2017 SCC OnLine Del 7228, held as under;
"37. The third ground on which the impugned Award has been assailed is the failure by the Arbitrator to disclose that he was an arbitrator in certain claims involving the Respondent.
38. Under Section 12(2) of the Act as stood prior to the amendment with effect from 23rd October 2015, there is a requirement for the arbitrator throughout the proceedings to disclose circumstances which may give rise to a reasonable apprehension of the lack of impartiality of the arbitrator. The law in this regard is well-settled. It has been discussed in extenso in a recent decision dated 6th December 2016 passed by this Court in O.M.P. No. 199 of 2008 (Lanco Rani JV v. National Highways Authority of India). Paras 38 to 45 hereunder are a verbatim extract from the said decision.
39. The Supreme Court in A.K. Kraipak v. Union of India (1970) 1 SCR 457, held that the principles of natural justice would apply to administrative proceedings as well. It explained as under:
"the aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they ARBTN 220/18 12 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr. Judgment dated 26.09.2025 do not supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years. In the past it was thought that it included just two rules namely (1) no one shall be a judge in his own case (Nemo debet esse judex propria causa) and (2) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon there-after a third rule was envisaged and that is that quasi-judicial enquiries must be held in good faith, without bias and not arbitrarily [(1) [1967] 2 S.C.R. 625] or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice. Till very recently it was the opinion of the courts that unless the authority concerned was required by the law under which it functioned to act judicially there was no room for the application of the rules of natural justice. The validity of that limitation is now questioned. If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries. Often times it is not easy to draw the line that demarcates administrative enquiries from quasi-judicial enquiries. Enquiries which were considered administrative at one time are now being considered as quasi-judicial in character. Arriving at a just decision is the aim of both quasi-judicial enquiries as well as administrative enquiries. An unjust decision in an administrative enquiry may have a more far ARBTN 220/18 13 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr. Judgment dated 26.09.2025 reaching effect than a decision in a quasi-judicial enquiry."
40. Recently, in Union of India v. U.P. State Bridge Corporation Ltd. (2014) 3 Arb LR 538 (SC), the Supreme Court explained that the English Arbitration Act, 1996 (EAA) was enacted on the lines of the UNCITRAL Model Law, i.e. in the same year as the Act became applicable in India. Commenting upon the structure of the EAA, Mustill and Boyd in their "Commercial Arbitration, 2001 Companion Volume to the Second Edition" noted that it was founded on four pillars, and the first of these pillars comprised 'three general principles' on which the entire edifice of the said legislation was said to be structured. In Department of Economics Policy and Development of the City of Moscow v. Bankers Trust Co. (2004) EWCA Civ 314 it was explained, thus, in relation to the EAA:
"...Parliament has set out, in the Arbitration Act, 1996, to encourage and facilitate a reformed and more independent, as well as private and confidential, system of consensual dispute resolution, with only limited possibilities of court involvement where necessary in the interests of the public and of basic fairness'. Section 1 of the Act sets forth the three main principles of arbitration law, viz. - (i) speedy, inexpensive and fair trial by an impartial tribunal; (ii) party autonomy; and (iii) minimum court intervention. This provision has to be applied purposively. In case of doubt as to the meaning of any provision of this Act, regard should be had to these principles."
ARBTN 220/18 14 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025
41. The emphasis therefore is on "a fair trial by an impartial Tribunal". This forms the basis of Section 12 of the Act. Incidentally, there have been some significant changes to Section 12 with effect from 23rd October, 2015 which have further strengthened the requirements of disclosures by arbitrators to obviate any likelihood of bias. However, as far as the present case is concerned, when the AT was seized of the matter, Section 12 of the Act as it stood prior to the above amendment was relevant and it reads as under:
"12. Grounds for challenge.--
(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.
(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him. (3) An arbitrator may be challenged only if--
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made."
ARBTN 220/18 15 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr. Judgment dated 26.09.2025
42. Section 12(2) of the Act requires an Arbitrator from the time of his appointment and throughout the arbitral proceedings, to mandatorily disclose to the parties, "without delay" and "in writing any circumstances referred to in sub-
section (1) unless they have already been informed of them by him." The circumstances under sub-section (1) of Section 12 of the Act as it stood prior to 23rd October, 2015 were "any circumstances likely to give rise to justifiable doubts as to his independence or impartiality."
43. At this point, it is necessary to recapitulate the distinction between 'actual bias' and 'apparent bias'. In Director General of Fair Trading v. The Proprietary Association of Great Britain (decision dated 21st December 2000 of the Court of Appeal (Civil Division) in case No. C/2000/3582), this distinction has been succinctly explained by the Court of Appeals as under:
"38. The decided cases draw a distinction between 'actual bias' and 'apparent bias'. The phrase 'actual bias' has not been used with great precision and has been applied to the situation:
(1) where a Judge has been influenced by partiality or prejudice in reaching his decision and (2) where it has been demonstrated that a Judge is actually prejudiced in favour of or against a party.
'Apparent bias' describes the situation where circumstances exist which give rise to a reasonable apprehension that the Judge may have been, or may be, biased."
ARBTN 220/18 16 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025
44. Referring to the decision in Rex v. Sussex Justices, ex. P. McCarthy (1924) 1 K.B. 256, the Court of Appeals in Director General of Fair Trading v. The Proprietary Association of Great Britain (supra) discussed the leading judgment of Lord Hewart C.J. The facts of that case were that one of the Clerks to the Justices was a member of a firm of solicitors acting in a civil claim against the Defendant arising out of an accident that had given rise to the prosecution. The Clerk retired with the Justices who returned to convict the Defendant. On learning that the Clerk was a member of the firm of solicitors acting against the Defendant, the Defendant applied to have the conviction quashed. Lord Hewart CJ, who was satisfied that the conviction must be quashed reasoned that "a long line of cases shows that it is not merely of some importance but is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done."
45. Explaining the above opinion of Lord Hewart CJ, the Court of Appeals in Director General of Fair Trading v. The Proprietary Association of Great Britain (supra) observed as under:
"42. Had Lord Hewart asked the question 'was there any likelihood that the Clerk's connection with the case influenced the verdict?' he would have answered in the negative on the basis that he accepted the evidence that the Clerk had not intervened in the Justices' discussion. Had he asked the question 'would a reasonable onlooker aware of all the material facts, including the fact that the Clerk did not speak to the ARBTN 220/18 17 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 Justices after retiring, have concluded that the Clerk's connection with the case might have influenced the verdict?' he would equally have answered in the negative. His decision was reached on the premise that what actually transpired between the Clerk and the Justices behind closed doors was not relevant. The fact that the Clerk had retired with the Justices gave an appearance of the possibility of injustice, and that was enough to lead to the quashing of the verdict."
46. The two alternative tests applied by the Courts in considering whether a decision was vitiated on account of bias or not, are as under:
"(1) Did it appear to the Court that there was a real danger that the Judge had been biased?
(2) Would an objective onlooker with knowledge of the material facts have a reasonable suspicion that the Judge might have been biased?"
47. Turning to the case on hand, there is no denial that at the time he entered upon reference, the Arbitrator was adjudicating at least one of the claims of the Respondents in other arbitration proceedings. Admittedly, he did not disclose this fact at any time at the commencement of or during the arbitration proceedings. This fact was discovered later by the Petitioner. The averment on this aspect in the present petition has not been denied by the Respondent. In the circumstances, the Court is of the view that this is yet another ground on which the impugned Award is liable to be set aside as it is opposed to the fundamental policy of Indian law. It attracts the ground under Section 14(1) read with Section 15(1), viz.
ARBTN 220/18 18 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 the Arbitrator being rendered de jure incapable of acting as such. It also attracts Section 34 (2)(b)(ii) of the Act."
17. Coming to the case in hand, as already noted that it is not denied by respondent No. 1 that the Arbitrator was engaged by respondent No. 1 in other arbitration proceedings as well. And, admittedly, the Arbitrator did not disclose this fact to the petitioner (refer Annexure P/5). So, there was no occasion for the petitioner to raise this issue before the Arbitrator.
18. As already noted, Ld. counsel for respondent No. 1 has relied on a judgment passed by Hon'ble High Court of Delhi in Manish Anand supra. In this case the Hon'ble High Court held that an improper disclosure would not make the arbitrator de jure ineligible to proceed with the arbitration. However, Hon'ble High Court while distinguishing the 'improper disclosure' with the 'misleading disclosure' noted that in case of 'misleading disclosure', the arbitrator would become de jure ineligible to proceed with the arbitration. Relevant portion of the judgment is reproduced herein below;
"16. The petitioner(s) have placed reliance on the judgment of this Court in Dream Valley Farms Private Limited & Anr. Vs. Religare Finvest Limited & Ors. 2016 SCC Online Del 5584 to contend that in the absence of a proper disclosure by the Arbitrator, a petition under Section 11 of the Act would be maintainable. I am unable to accept the said argument. In Dream Valley (Supra) the Court was faced with a situation where the disclosure given by the Arbitrator was ex-facie misleading. The Court, in view of the conduct of the Arbitrator in seeking to mislead the petitioner therein and ARBTN 220/18 19 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 suppress, in the first instance the fact of his being a presiding Arbitrator in 27 matters relating to the respondent therein which in the opinion of the Court smacked of dishonesty and non- becoming of an Arbitrator, is held that the Arbitrator had become de jure disqualified as continuing as an Arbitrator and thereafter proceeded to appoint an Arbitrator in exercise of its power under Section 15 of the Act. The said judgment is therefore, distinguishable on facts of its own case."
19. The present case, in the considered view of this court, is not of an 'improper disclosure'. It is a case of 'misleading disclosure'. Hence, the Ld. Arbitrator had become ineligible to proceed with the arbitration.
Unilateral appointment of the Arbitrator
20. It is no longer res integra that arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent, unless otherwise agreed by the parties. Section 21 of the Act deals with commencement of arbitral proceedings. Such notice in the present case was sent on 14.10.2014 by the respondent No. 1 to the petitioner. The Award was passed on 30.11.2017.
21. Clause 36 of the Agreement provides for adjudication of disputes by a sole Arbitrator. Clause 36 reads as under;
"36 (a) All disputes and differences of any nature with regard to the FITJEE service manual and the interpretation & adjudication of clauses and claims respectively shall be referred to the Sole Arbitrator appointed by the Company i.e FIITJEE Ltd. The arbitration proceedings shall be conducted ARBTN 220/18 20 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 in accordance with the provisions of the Arbitration & Conciliation Act, 1996 and statutory modification thereof & rules made thereunder. The award of arbitrator shall be final & binding on both parties. The award of the arbitrator shall be final & binding on every matter arising hereunder. It is agreed that in spite of the fact that the Sole Arbitrator may be known to any of the Directors of or share holders and that he may have been dealing with the Company or had occasion to deal with any matter of this agreement shall not disqualify him. Even if the Arbitrator may have expressed opinion in similar matter earlier shall also not render him disqualified. The venue of the arbitration shall be Delhi New Delhi only."
22. Ld. counsel for the respondent No. 1 contended that since in the present case, arbitration proceedings were commenced prior to the amendment brought by the Arbitration and Conciliation (Amendment) Act, 2015 (w.e.f. 23.10.2015), the provisions of the Amendment Act would not be applicable to the facts of this case.
23. In the considered view of this court, this would make no difference as even prior to the amendment of 1996 Act, the Hon'ble Supreme Court had held that the very essence of the arbitral proceedings is consensus ad idem and therefore, there was no question of arbitration being conducted by an Arbitrator appointed by one party without the consent of the other.
24. Hon'ble High Court of Delhi in Vineet Dujodwala and Others V/s Phoneix ARC Pvt. Ltd. and Another, 2024 SCC OnLine Del 5940 (wherein award dated 22 September 2015 was under
challenge), held;
ARBTN 220/18 21 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 "Re. unilateral appointment of the learned Arbitrator
20. Perhaps the most damaging defect in the entire process is the fact that the appointment of the learned arbitrator was unilateral. A unilateral appointment, in an arbitral proceeding, is completely impermissible in law.
21. This is the position that has existed even prior to the amendment of the 1996 Act. The Supreme Court has, even in its decisions prior to the said amendment, clearly held that the very essence of arbitral proceedings is consensus ad idem and that, therefore, there can be no question of an arbitration by an arbitrator appointed by one of the parties without the consent of the other. One may refer, in this context, to the following passage from Dharma Prathishthanam v. Madhok Construction (P) Ltd.:
"14. In Thawardas Pherumal v. Union of India a question arose in the context that no specific question of law was referred to, either by agreement or by compulsion, for decision of the arbitrator and yet the same was decided howsoever assuming it to be within his jurisdiction and essentially for him to decide the same incidentally. It was held that : (SCR p. 58) "A reference requires the assent of both sides. If one side is not prepared to submit a given matter to arbitration when there is an agreement between them that it should be referred, then recourse must be had to the court under Section 20 of the Act and the recalcitrant party can then be compelled to submit the matter under sub-section (4). In the absence of either, agreement by both sides about ARBTN 220/18 22 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr. Judgment dated 26.09.2025 the terms of reference, or an order of the court under Section 20(4) compelling a reference, the arbitrator is not vested with the necessary exclusive jurisdiction."
15. A Constitution Bench held in Waverly Jute Mills Co. Ltd. v. Raymon and Co. (India) (P) Ltd. that:
"[A]n agreement for arbitration is the very foundation on which the jurisdiction of the arbitrators to act rests, and where that is not in existence, at the time when they enter on their duties, the proceedings must be held to be wholly without jurisdiction. And this defect is not cured by the appearance of the parties in those proceedings, even if that is without protest, because it is well settled that consent cannot confer jurisdiction."
16. Again a three-Judge Bench held in Union of India v. A.L. Rallia Ram that it is from the terms of the arbitration agreement that the arbitrator derives his authority to arbitrate and in absence thereof the proceedings of the arbitrator would be unauthorised."
(Italics in original; underscoring supplied)
22. Admittedly, the appointment of the arbitrator in the present case was unilateral. That single factor, even without reference to any other infirmity, is sufficient to vitiate the award."
25. Hon'ble High Court of Delhi in OM 360 Degrees Advertising and Entertainment Pvt. Ltd. V/s Delhi Metro Rail Corporation Limited [O.M.P. (Comm.) 40/2018; date of decision 25.08.2023), held as under;
ARBTN 220/18 23 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025
8. Indisputably, the AT was unilaterally nominated by the Director of the Respondent in terms of Clause 29.1 of the License Agreement.
9. The issue raised here is no longer res integra. Independence and impartiality of the arbitrator are the hallmarks of any arbitration proceedings. Rule against bias is one of the fundamental principles of natural justice which apply to all judicial and quasi-judicial proceedings. The Supreme Court in Ellora Paper Mills Limited v. State of Madhya Pradesh, reported as (2022) 3 SCC 1, while emphasizing on the "neutrality of arbitrator", noted that Sub-section (5) of Section 12 lays down that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator. It further held that Section 12(5) of the A&C Act, as amended by the 2015 Amendment Act, would be equally applicable to arbitral proceedings initiated prior to the coming into force of Amendment Act, 2015 as well.
10.xxxxx
11.xxxxx
12.xxxxx
13. The law on the issue having been well settled, this Court has no hesitation to hold that the learned Arbitrator was de jure ineligible to act and lacked inherent jurisdiction to render the Award. The ineligibility goes to the root of his jurisdiction. The Award as such is held to be a nullity and is accordingly, set aside.
ARBTN 220/18 24 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025
26. In view of the aforesaid discussions, the arbitration clause empowering respondent No. 1 to appoint a sole Arbitrator, in the considered opinion, was/ is invalid. Clauses of the agreement are hit by the provisions of Sections 23 and 28 of the Indian Contract Act, 1872 and an award based on the above clauses would be clearly opposed to the public policy of India and is liable to be interfered with under Section 34 (2) (b) (ii) of the Act
27. Ld. counsel for the petitioner while relying on a decision of Hon'ble Delhi High Court in Vivek Rai supra contended that various clauses of the agreement are hit by the provisions of Sections 23 and 28 of the Indian Contract Act, 1872 and an award based on the above clauses would be clearly opposed to the public policy of India and is liable to be interfered with under Section 34 (2) (b) (ii) of the Act.
28. On the other hand, Ld. counsel for the respondent No. 1 has taken an objection that the case of the petitioner is not covered by the judgment of Vivek Rai supra as the facts of the said case are quite different from the facts of the present case.
29. Relevant paras of Vivek Rai supra are reproduced herein below;
"11...The Court finds that this is a case where the Respondent is seeking to enforce terms and conditions of an agreement dated 1st March 2012 which are on the face of it opposed to public policy and clearly hit by Sections 23 and 28 of the Contract Act, 1872. In particular, the Court would like to refer to the following clause in the agreement:
"7 (b) In the event an employee wishes to leave the services of Aakash Institute, Lucknow Centre He/She ARBTN 220/18 25 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr. Judgment dated 26.09.2025 is required to give notice in writing giving clear 3 months time to Aakash Institute Lucknow Centre so that such period co-terminates with expiry of the academic session. The said notice is required to be delivered to the Centre Director/Centre Manager by Regd. AD post or hand delivered but duly acknowledged to be received so that there would be ambiguity regarding the contents of your notice and its serving upon Aakash Institute (Lucknow Centre). The notice for 3 months can be given only between 15th November to 28th November in any year after completion of the initial period of three years. If any employee gives notice at any time other than specified, it will not be accepted and will be invalid as per the terms between the above mentioned period, it will be assumed he/she is going to complete the coming next session."
12. Clauses 7 (d), 7(e) and 7 (f) read as under:
"7(d) In case you are unable to adhere to the said mandatory notice period, you would be liable to pay to Aakash Institute (Lucknow Centre) a minimum pre- estimated & predetermined damage to the tune of double the gross-salary for the deficient notice period or the remaining period of the academic year/contract period of three years, whichever is higher e.g. if a person quits on 31st October of any given year after completion of three years, he/she will be required to pay 4 x 2 x Y rupees as damages to Aakash Institute (Lucknow Centre) (the value of Y will be gross ARBTN 220/18 26 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 monthly salary). Such liability would be automatically incurred once the breach is committed by the employee & no notice in this regard would be served upon you to claim the said predetermined & pre-estimated damages. You would be severally liable to pay the same within (seven) days of your leaving. If Aakash Institute (Lucknow Centre) does not receive the payments within 7 days of leaving towards the damages as stated above, Aakash Institute (Lucknow Centre) shall have the right to recover the same along with interest @ Z p.a. through legal process (Z=PLR + 3%; where PLR is Prime Lending Rate of Aakash institute (Lucknow Centre) Bankers).
The above damages are not punitive but only a part compensation for the huge loss of face, reputation, brand equity, mind equity, future business losses due to your quitting without completing the academic year & leaving the students in a lurch. The damages are payable at the sole discretion of Centre Director of the Institute.
(e) After the expiry of the initial & minimum contract period, this contract will continue subject to clause 6(b) above for another term of 3 (three) years subject to the candidate being capable of rendering effective services.
(f) Corollary of clause (6) and 7(a) if in the last year of the contract period or extension thereof at Aakash Institute (Lucknow Centre), an employee does not submit his resignation between 15th February to 28th ARBTN 220/18 27 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 February, it will be assumed that he/she is willing to continue his/her job for another term of three years subject to the conditions contained in this manual."
13. Apart from the above, in Clause 7 (g) it is mandated as under:
"You will submit three undated blank cheques in favour of Aakash Institute.
You hereby authorize Aakash Institute (Lucknow Centre) for the filling up of the date and amount on the cheques and thereafter to encash the said cheques. In case of noncompliance of the contract terms contained in this manual, the cheques become payable immediately. That the said cheques shall not be treated as a security cheque(s) for legal or any other purposes as it is issued by you in order to discharge of your liability which may occur on account of damages as mentioned under clause 7(d) of the agreement. I, Vivek Rai undertake to keep sufficient balance in my bank account on which the above mentioned cheque are drawn to ensure the encashment of the said cheques. Cheque nos are 328569, 328570 and 328571 drawn Punjab National Bank, Aliganj, Lucknow, (UP) Signature...................
In case, the above said cheque gets dishonoured on its presentation to the banker for the reason of insufficient funds, a/c closed, stop payment or any other reason, you shall be deemed to commit an offence u/s 138 of N.I. Act and the appropriate proceedings shall be ARBTN 220/18 28 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 initiated against you before the appropriate courts of law.
Aakash Institute (Lucknow Centre) is further authorized to take appropriate legal action to recover the balance amount if any. Wilful & intentional breach of this contract would attract liability upon the employee for compensatory & exemplary damages in addition to contractual liabilities mention in clause 7(d) and 7(k) and under any other provision of this manual."
14. The above clauses appear to the Court to be wholly unconscionable and opposed to public policy and, therefore, hit by Section 23 of the Contract Act. An award based on the above clauses which promise the Respondent to recover an unconscionable sum would be clearly opposed to the public policy of India and likely to be interfered with under Section 34 (2) (b) (ii) of the Act."
(Underlined by me)
30. Now, I am reproducing the relevant clauses of agreement in question in the present case [Service Rules for the employees of FIITJEE Ltd. as Faculty Members (Salary and Terms & Conditions)];
Clause 16 (b): In the event you wish to quit FIITJEE before the expiry of the contract period, you are required to give notice in writing giving clear 6 months time to FIITJEE so that such period co-terminates with expiry of the academic session. The said notice is required to be delivered through the Centre Director/Incharge or Head of the Department at the office of the Managing Director ARBTN 220/18 29 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 of FIITJEE at Delhi and obtain a valid receipt so that there would be no ambiguity regarding the contents of your notice and its serving upon FIITJEE... Clause 16 (c): In case you are unable to adhere to the said mandatory notice period, you would be liable to pay FIITJEE a minimum pre-estimated & pre-determined damage to the tune of double the gross salary for each months of unexpired notice period or the remaining period of the academic year, whichever is higher e.g. if a person quits on 31st October, he/she will be required to pay 7 x 2x rupees as damages to FIITJEE (the value of x will be gross monthly salary). Such liability would be automatically incurred once the breach is committed by the employee & no notice in this regard would be served upon you or surety to claim the said pre-determined & pre-estimated damages. You & your surety would be jointly & severally liable to pay the same within 7 (seven) days of your leaving.
If FIITJEE does not receive the payments within 7 days of leaving towards the damages as stated above, FIITJEE shall have the right to recover the same alongwith interest @ x p.a. Through legal process (x= PLR+3%; where PLR is Prime Lending Rate of FIITJEE Bankers). The above damages are not punitive but only a part compensation for the huge loss of face, reputation, brand, equity, mind equity, future business losses due to your ARBTN 220/18 30 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 quitting without completing the academic year & leaving the students in a lurch.
Clause 16(d): After the expiry of the initial & minimum contract period, this contract will continue subject to clause 15 (b) above and till the person attains the age of superannuation i.e. 60 years, subject to terms and conditions contained in this manual. After the superannuation the some people with extraordinary achievements may be given extension to continue for such period the candidate is capable of rendering effective services.
Clause 16(e): Corollary of clause 15 and 16 (a) is that if in the last year of the contract period or extension thereof at FIITJEE, an employee does not submit his resignation by 30th November, it will be assumed that he/she is willing to continue for another term of 3 years subject to the conditions contained in this manual. Clause 16(g): ...The first cheque submitted by you shall be towards the total training expenses on you as mentioned in 16 (b) above and the second cheque, equivalent to 12 months gross salary during probation period as per the offer/ calculation of salary sheet, towards a part discharge of your liabilities towards damages as per clause 16 (c) and 16 (e) above. In case of breach of contract, FIITJEE is mandated to encash the two separate undated cheques deposited at the time of joining. You and the surety both agree to ARBTN 220/18 31 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 authorise FIITJEE for the filing up of dates and further authorise to encash the said cheques in case of non compliance of contract terms contained in this manual... FIITJEE is further authorised to take appropriate legal action without prejudice to their rights to recover the amount by way of above specified undated cheques. Willful & intentional breach of this contract would attract liability upon the employee and surety for compensatory & exemplary damages in addition to contractual liabilities mention in 16 (b), 16 (c) and under any other provisions of this manual.
31. It is apparent that the clauses of Service Rules for the employees of FIITJEE Ltd. as Faculty Members (Salary and Terms & Conditions) applicable to petitioner are almost similar clauses which were held to be unconscionable and opposed to public policy by Hon'ble High Court of Delhi in Vivek Rai supra. Hon'ble High Court in Vivek Rai supra concluded by noting as follows;
17. It shocks the judicial conscience that the Arbitrator mechanically proceeded to pass an Award in favour of the Respondent on the basis of the aforementioned patently illegal clauses of the contract. The Court is unable to sustain the impugned Award of the learned Arbitrator. Accordingly, the impugned Award is hereby set aside. The petition is allowed but in the circumstances with no order as to costs. (Underlined by me)
32. This court accordingly holds that various clauses of the agreement are hit by the provisions of Sections 23 and 28 of the ARBTN 220/18 32 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025 Indian Contract Act, 1872 and an award based on the above clauses would be clearly opposed to the public policy of India and is liable to be interfered with under Section 34 (2) (b) (ii) of the Act.
CONCLUSION
33. For all the aforesaid reasons, the impugned arbitral Award dated 30.11.2017 passed by the learned Arbitrator can not be sustained in law and is accordingly set aside. The petition under Section 34 of Arbitration & Conciliation Act, 1996 is allowed.
34. Parties to bear their own costs.
35. File be consigned to record room after due compliance.
Announced in the open court on this 26th day of September, 2025. This Judgment consists of 33 of signed pages.
Digitally signedby ABHISHEK ABHISHEK SRIVASTAVA SRIVASTAVA Date: 2025.09.26 17:38:42 +0530 (Abhishek Srivastava) Distt. Judge-05, Central, THC, Delhi ARBTN 220/18 33 of 33 Prashant Johri Vs. Fiitjee Ltd. & Anr.
Judgment dated 26.09.2025