[Cites 7, Cited by 0]
Delhi High Court
Ahluwalia (Contracts) India Limited vs Aiims Through Superintending Engineer ... on 4 February, 2026
$~6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 04.02.2026
+ ARB.P. 2131/2025
AHLUWALIA (CONTRACTS) INDIA LIMITED
.....Petitioner
Through: Dr. Amit George, Mr. Shashwat
Kabi and Mr. Vaibhav Gandhi,
Advocates
versus
AIIMS THROUGH SUPERINTENDING ENGINEER &
ANR. .....Respondents
Through: Mr. Debarshi Bhadra,
Advocates for R-1 & 2
Mr. Kunal Sabharwal,
Advocate for AIIMS
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
% JUDGEMENT (ORAL)
1. The present petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 ["the Act"], seeking the
appointment of Sole Arbitrator to adjudicate the disputes between the
parties arising out of the Contract dated 29.05.2015 ["Agreement"].
2. The said Agreement contains an Arbitration Clause, being
Clause 67 of the General Conditions of Contract ["GCC"], which
reads as under:
"67.3 Arbitration
67.3.1 Any dispute and differences relating to the meaning of the
specifications, designs, drawings and instructions herein before
mentioned and as to the quality of workmanship or materials used
in the work or as to any other question, claim, right, matter or thing
Signature Not Verified
Digitally Signed
ARB.P. 2131/2025 Page 1 of 7
By:HARVINDER KAUR
BHATIA
Signing Date:07.02.2026
15:10:26
whatsoever in any way arising out of or relating to the contract,
designs, drawings, specifications, estimates, instructions, or these
conditions or otherwise concerning the works or the execution or
failure to execute the same whether arising during the progress of
the work or after the completion or abandonment thereof in respect
of which :-
a) The decision, if any, the Engineer has not become final and
binding pursuant to Sub Clause 6 7. I and
b) Conciliation has not been reached as per the provisions of
Clause 67.2
Shall be referred to the Sole Arbitration of a person appointed by
the Chairman and Managing Director (CMD) of HSCC (I) Ltd.
from the panel of Arbitrators approved by All India Institute of
Medical Sciences, Ansari Nagar, New Delhi. Such Arbitrator shall
be appointed within 30 days of the receipt of letter of invocation of
Arbitration duly satisfying the requirements of this clause.
67.3.2. If the Arbitrator so appointed resigns his appointment, is
unable or unwilling to act due to any reason whatsoever, or dies,
the Chairman and Managing Director aforesaid or in his absence
the person discharging the duties of CMD of HSCC (I) Ltd. may
appoint a new Arbitrator in accordance with these terms and
conditions of the contract, to act in his place and the new Arbitrator
so appointed may proceed from the stage at which it was left by his
predecessor.
67.3.3. It is a term of the contract that the party invoking the
Arbitration shall specify/ the dispute/differences or questions to be
referred to the arbitrator under this clause together with the
amounts claimed in respect of each dispute.
67.3.4 The Arbitrator may proceed with the Arbitration ex-parte, if
either party, in spite of a notice from the Arbitrator, fails to take
part in the proceedings.
67.3.5 The work under the contract shall continue, if required,
during the Arbitration proceedings.
67.3.6 The Arbitrator shall make speaking Award and give reasons
for his decision in respect of each dispute/claim alongwith the sums
awarded separately on each individual item of dispute or difference
Signature Not Verified
Digitally Signed
ARB.P. 2131/2025 Page 2 of 7
By:HARVINDER KAUR
BHATIA
Signing Date:07.02.2026
15:10:26
or claims. The Arbitrator shall make separate award on each
reference made to him.
67.3.7 The award of the Arbitrator shall be final, conclusive and
binding on both the parties.
67.3.8 Subject to the aforesaid, the provisions of the Arbitration &
Conciliation Act, I996 or any statutory modifications or re-
enactment thereof and the Rules made thereunder and for the time
being in force shall apply to the Arbitration proceedings and
Arbitrator shall publish his Award accordingly."
3. The material on record indicates that the Petitioner herein
invoked arbitration in terms of Section 21 of the Act vide legal notice
dated 04.06.2025.
4. This Court is mindful of the limited scope of judicial
interference at the stage of consideration of a petition under Section 11
of the Act. The law governing the scope and standard of judicial
scrutiny under Section 11(6) of the Act is now fairly well settled. A
Coordinate Bench of this Court, of late, in Pradhaan Air Express Pvt.
Ltd. v. Air Works India Engineering Pvt. Ltd.1, has elaborately
examined the contours of jurisdiction exercisable at the stage of
appointment of an arbitrator. After comprehensively analysing the
relevant precedents of the Hon'ble Supreme Court, the Coordinate
Bench succinctly discussed and summarised the legal position, which
reads as under:-
"9. The law with respect to the scope and standard of judicial
scrutiny under Section 11(6) of the 1996 Act has been fairly well
settled. The Supreme Court in the case of SBI General Insurance
Co. Ltd. v. Krish Spinning, while considering all earlier
pronouncements including the Constitutional Bench decision of
seven judges in the case of Interplay between Arbitration
Agreements under the Arbitration & Conciliation Act, 1996 &
1
2025 SCC OnLine Del 3022
Signature Not Verified
Digitally Signed
ARB.P. 2131/2025 Page 3 of 7
By:HARVINDER KAUR
BHATIA
Signing Date:07.02.2026
15:10:26
the Indian Stamp Act, 1899, In re has held that scope of inquiry at
the stage of appointment of an Arbitrator is limited to the extent
of prima facie existence of the arbitration agreement and nothing
else.
10. It has unequivocally been held in paragraph no. 114 in the
case of SBI General Insurance Co. Ltd. that observations made
in Vidya Drolia v. Durga Trading Corpn., and adopted in NTPC
Ltd. v. SPML Infra Ltd., that the jurisdiction of the referral court
when dealing with the issue of "accord and satisfaction" under
Section 11 extends to weeding out ex-facienon-arbitrable and
frivolous disputes would not apply after the decision of Re :
Interplay. The abovenoted paragraph no. 114 in the case of SBI
General Insurance Co. Ltd. reads as under:--
"114. In view of the observations made by this Court
in In Re : Interplay (supra), it is clear that the scope of
enquiry at the stage of appointment of arbitrator is limited
to the scrutiny of prima facie existence of the arbitration
agreement, and nothing else. For this reason, we find it
difficult to hold that the observations made in Vidya
Drolia (supra) and adopted in NTPC v. SPML (supra) that
the jurisdiction of the referral court when dealing with the
issue of "accord and satisfaction" under Section 11
extends to weeding out ex-facie non-arbitrable and
frivolous disputes would continue to apply despite the
subsequent decision in In Re : Interplay (supra)."
11. Ex-facie frivolity and dishonesty are the issues, which have
been held to be within the scope of the Arbitral Tribunal which is
equally capable of deciding upon the appreciation of evidence
adduced by the parties. While considering the aforesaid
pronouncements of the Supreme Court, the Supreme Court in the
case of Goqii Technologies (P) Ltd. v. Sokrati Technologies (P)
Ltd., however, has held that the referral Courts under Section 11
must not be misused by one party in order to force other parties to
the arbitration agreement to participate in a time-consuming and
costly arbitration process. Few instances have been delineated such
as, the adjudication of a non-existent and malafide claim through
arbitration. The Court, however, in order to balance the limited
scope of judicial interference of the referral Court with the interest
of the parties who might be constrained to participate in the
arbitration proceedings, has held that the Arbitral Tribunal
eventually may direct that the costs of the arbitration shall be borne
by the party which the Arbitral Tribunal finds to have abused the
process of law and caused unnecessary harassment to the other
parties to the arbitration.
Signature Not Verified
Digitally Signed
ARB.P. 2131/2025 Page 4 of 7
By:HARVINDER KAUR
BHATIA
Signing Date:07.02.2026
15:10:26
12. It is thus seen that the Supreme Court has deferred the
adjudication of aspects relating to frivolous, non-existent
and malafide claims from the referral stage till the arbitration
proceedings eventually come to an end. The relevant extracts
of Goqii Technologies (P) Ltd. reads as under:--
"20. As observed in Krish Spg. [SBI General
Insurance Co. Ltd. v. Krish Spg., (2024) 12 SCC 1 :
2024 INSC 532], frivolity in litigation too is an aspect
which the referral court should not decide at the stage of
Section 11 as the arbitrator is equally, if not more,
competent to adjudicate the same.
21. Before we conclude, we must clarify that the
limited jurisdiction of the referral courts under Section 11
must not be misused by parties in order to force other
parties to the arbitration agreement to participate in a
time consuming and costly arbitration process. This is
possible in instances, including but not limited to, where
the claimant canvasses the adjudication of non-existent
and mala fide claims through arbitration.
22. With a view to balance the limited scope of judicial
interference of the referral courts with the interests of the
parties who might be constrained to participate in the
arbitration proceedings, the Arbitral Tribunal may direct
that the costs of the arbitration shall be borne by the party
which the Tribunal ultimately finds to have abused the
process of law and caused unnecessary harassment to the
other party to the arbitration. Having said that, it is
clarified that the aforesaid is not to be construed as a
determination of the merits of the matter before us, which
the Arbitral Tribunal will rightfully be equipped to
determine."
13. In view of the aforesaid, the scope at the stage of Section 11
proceedings is akin to the eye of the needle test and is limited to
the extent of finding a prima facie existence of the arbitration
agreement and nothing beyond it. The jurisdictional contours of the
referral Court, as meticulously delineated under the 1996 Act and
further crystallised through a consistent line of authoritative
pronouncements by the Supreme Court, are unequivocally confined
to a prima facie examination of the existence of an arbitration
agreement. These boundaries are not merely procedural safeguards
but fundamental to upholding the autonomy of the arbitral process.
Any transgression beyond this limited judicial threshold would not
only contravene the legislative intent enshrined in Section 8 and
Section 11 of the 1996 Act but also risk undermining the sanctity
and efficiency of arbitration as a preferred mode of dispute
Signature Not Verified
Digitally Signed
ARB.P. 2131/2025 Page 5 of 7
By:HARVINDER KAUR
BHATIA
Signing Date:07.02.2026
15:10:26
resolution. The referral Court must, therefore, exercise restraint and
refrain from venturing into the merits of the dispute or adjudicating
issues that fall squarely within the jurisdictional domain of the
arbitral tribunal. It is thus seen that the scope of enquiry at the
referral stage is conservative in nature. A similar view has also
been expressed by the Supreme Court in the case of Ajay
Madhusudan Patel v. Jyotrindra S. Patel."
(emphasis supplied)
5. Learned counsel for the Petitioner submits that the dispute be
referred to arbitration, to which learned counsel appearing for
Respondent Nos. 1 and 2 raise no objection.
6. The learned counsel for the parties are also ad idem that since
the dispute is stated to be for an amount of approximately Rs. 62
crores, the matter be referred to an Arbitrator under the aegis of the
Delhi International Arbitration Centre ["DIAC"].
7. Accordingly, Justice (Retd.) Rajiv Shakdher (Mobile
No. ), is appointed as the sole Arbitrator.
8. The arbitration would take place under the aegis of the DIAC
and would abide by its rules and regulations.
9. The learned sole Arbitrator may proceed with the arbitration
proceedings, subject to furnishing to the parties the requisite
disclosures as required under Section 12(2) of the Act within a week
of entering of reference.
10. The learned sole Arbitrator shall be entitled to fees in
accordance with the Fourth Schedule of the Act or as may otherwise
be agreed to between the parties and the learned sole Arbitrator.
11. The parties shall share the learned sole Arbitrator's fee and
arbitral costs equally.
12. All rights and contentions of the parties are kept open, to be
decided by the learned sole Arbitrator on their merits, in accordance
Signature Not Verified
Digitally Signed
ARB.P. 2131/2025 Page 6 of 7
By:HARVINDER KAUR
BHATIA
Signing Date:07.02.2026
15:10:26
with law.
13. Needless to state, nothing in this order shall be construed as an
expression of opinion of this Court on the merits of the controversy.
All rights and contentions of the parties in this regard are reserved.
14. The Registry is directed to send a receipt of this order to the
learned Arbitrator through all permissible modes, including through e-
mail.
15. Accordingly, the present Petition, along with pending
application(s), is disposed of in the aforesaid terms.
16. No Order as to costs.
HARISH VAIDYANATHAN SHANKAR, J.
FEBRUARY 4, 2026/rk/kr
