[Cites 6, Cited by 0]
Delhi High Court
Manisha Projects Pvt Ltd vs Union Of India on 18 March, 2026
$~38
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 18.03.2026
+ O.M.P. (COMM) 558/2025
MANISHA PROJECTS PVT LTD .....Petitioner
Through: Mr. Ankur Mahindro, Mr.
Rohan Taneja, Mr. Ankush
Satija, Mr. Mohit Dagar, Mr.
Raghav Kalra, Mr. Animesh
Dubey, Ms. Creesha Shastri,
Ms. Jhanak Setia and Ms.
Radhika Agarwal, Advocates.
versus
UNION OF INDIA .....Respondent
Through: Mr. Sandeep Kumar Mahapatra
CGSC along with Ms.
Mrinmayee Sahu, Mr.
Tribhuvan, Mr. Abhimanyu
Asija, Advocates along with
Mr. Jagdish Kumar, Assistant
Executive Engineer.
Mr. Chetan Jadon, GP.
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
% JUDGEMENT (ORAL)
HARISH VAIDYANATHAN SHANKAR, J.
1. The present petition has been filed under Section 34 of the
Arbitration and Conciliation Act, 19961 seeking to challenge the
Arbitral Award dated 15.08.20252, passed by the learned Arbitral
Act
Impugned Award
Tribunal in the matter titled "Manisha Projects Pvt. Ltd. v. Union of
India", wherein the claims of the Petitioner were allowed to the tune
of Rs. 31.4 lakhs as against the claims of Rs. 7.2 crores.
2. The sole ground urged in support of the prayer seeking to set
aside the Impugned Award is that the Award, having been rendered
pursuant to a unilateral appointment of the Arbitrator, as mandated
under the arbitration clause contained in the Agreement dated
08.02.2019, is contrary to the settled position of law in this regard.
3. The Arbitration Clause, with respect to the said Agreement is
contained in the General Conditions of the Contract, specifically in
clause 64. The relevant portion of the same is reproduced herein under
for ready reference:
"64. (3) Appointment of Arbitrator :
64. (3) (a)(i) In cases where the total value of all claims in question added
together does not exceed Rs. 25, 00, 000 (Rupees twenty five lakh only), the
Arbitral Tribunal shall consist of a Sole Arbitrator who shall be a Gazetted
Officer of Railway not below JA Grade, nominated by the General Manager. The
sole arbitrator shall be appointed within 60 days from the day when a written and
valid demand for arbitration is received by GM
64. (3) (a)(ii) In cases not covered by the Clause 64(3)(a)(i), the Arbitral
Tribunal shall consist of a Panel of three Gazetted Railway Officers not below
JA Grade or 2 Railway Gazetted Officers not below JA Grade and a retired
Railway Officer, retired not below the rank of SAG Officer, as the arbitrators.
For this purpose, the Railway will send a panel of more than 3 names of
Gazetted Railway Officers of one or more departments of the Railway which
may also include the name(s) of retired Railway Officer(s) empanelled to work
as Railway Arbitrator to the contractor within 60 days from the day when a
written and valid demand for arbitration is received by the GM Contractor will
be asked to suggest to General Manager at least 2 names out of the panel for
appointment as contractor's nominee within 30 days from the date of dispatch of
the request by Railway. The General Manager shall appoint at least one out of
them as the contractor's nominee and will, also simultaneously appoint the
balance number of arbitrators either from the panel or from outside the panel,
duly indicating the 'presiding arbitrator' from amongst the 3 arbitrators so
appointed. GM shall complete this exercise of appointing the Arbitral Tribunal
within 30 days from the receipt of the names of contractor's nominees. While
nominating the arbitrators, it will be necessary to ensure that one of them is from
the Accounts Department. An officer of Selection Grade of the Accounts
Department shall be considered of equal status to the officers in SA grade of
other departments of the Railway for the purpose of appointment of arbitrator."
4. Mr. Ankur Mahindro, learned counsel appearing on behalf of
the Petitioner submits that the Hon'ble Supreme Court had the
occasion to deal with a similar clause in the case of Central
Organization for Railway Electrification v. ECI SPICV SMO
MCML (JV) A Joint Venture Company3, wherein the Hon'ble
Supreme Court has clearly held that the procedure envisaged under the
said arbitration clause was impermissible in law insofar as it provided
for a unilateral appointment of the Arbitrators.
5. He would further submit that the Hon'ble Division Bench of
this Court in Mahavir Prasad Gupta and Sons v. Govt. of NCT of
Delhi4 and the Hon'ble Supreme Court in Bhadra International
(India) Pvt. Ltd. and Ors. v. Airports Authority of India5, have
categorically held that, in the absence of an express waiver in writing
as contemplated under the proviso to Section 12(5) of the Act, any
unilateral appointment of an Arbitrator would be impermissible in
law.
6. Per contra, learned CGSC appearing on behalf of the
Respondent submits that the Impugned Award cannot be construed to
be a case of unilateral appointment of the Arbitrator since Paragraph
1.2 of the said Award clearly records the no objection of the Petitioner
as respects the constitution of the Arbitral Tribunal. The said
paragraph reads as follows:
"1.2 The Arbitral Tribunal entered into reference on 05.04.2025
with the issue of Arbitration Notification No. 1. All the 3
Arbitrators had sent their respective declaration as per Section 12
of the Arbitration and Conciliation Act, 1996 to both the parties.
However, they again declared in the first meeting held on
10.04.2025 that there were no circumstances or any interest
whatsoever in any of the parties or in relation to the subject matter
2024 SCC OnLine SC 3219
2025 SCC OnLine Del 4241
2026 SCC OnLine SC 7
in dispute that may give rise to any justifiable doubt about the
Arbitrator's independence or impartiality or bias in the matter. Both
the Claimant and the Respondent confirmed that they have full
faith in the Arbitral Tribunal and have no objection whatsoever
against the AT."
(Emphasis supplied)
7. Learned counsel for the Respondent therefore submits that in
view of the clear consensus accorded by the Petitioner, the present
contention regarding unilateral appointment is not maintainable.
8. We have heard the learned counsel appearing on behalf of both
the parties and with their able assistance, had the opportunity to peruse
the necessary papers and the law in this regard.
9. This Court is of the view that the law with regard to unilateral
appointment of an Arbitrator has been succinctly settled by the
Hon'ble Supreme Court in its various judgments. It is now trite that
unless there exists a clear and express waiver in writing, as
contemplated under the proviso to Section 12(5) of the Act, any
unilateral appointment of an Arbitrator would be impermissible in
law. Consequently, any Award rendered pursuant to such unilateral
appointment would stand vitiated by the very defect in the constitution
of the Arbitral Tribunal.
10. Furthermore, the arbitration clause in the present case is also
almost identical to that of the clause which is considered by the
Hon'ble Supreme Court in Central Organization for Railway
Electrification (supra), wherein appointment of an Arbitral Tribunal
under the said clause was held to be bad in law and therefore the
orders appointing the Arbitral tribunal were set aside.
11. As a result of the above discussion, this Court is of the view that
the present Petition needs to be allowed and the Arbitral Award is set-
aside.
12. Accordingly, the present Petition, along with pending
Application(s), if any, stands disposed of in the above terms.
HARISH VAIDYANATHAN SHANKAR, J.
MARCH 18, 2026/tk/dj
