[Cites 13, Cited by 0]
Delhi High Court
Salil Kumar vs India Tourism Development Corporation ... on 23 March, 2026
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 23.03.2026
+ ARB.P. 1871/2025
SALIL KUMAR .....Petitioner
Through: Mr. Meenal Garg, Adv.
(through VC)
versus
INDIA TOURISM DEVELOPMENT CORPORATION
LIMITED .....Respondent
Through: Mr. Anish Chawla, Adv.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
AVNEESH JHINGAN, J. (ORAL)
1. This petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 (for short „the Act‟) for
appointment of the arbitrator.
2. The brief facts are that on 20.12.2011, the respondent awarded
the work of construction of a memorial of Smt. Vidyavati Ji, mother
of Shaheed Bhagat Singh at village Moranwali, District Hoshiarpur,
Punjab to the petitioner.
2.1 On 18.04.2019, the respondent unilaterally appointed a sole
arbitrator and the proceedings culminated in award dated 09.05.2020.
The arbitrator partly allowed the claims filed by the petitioner and
dismissed the counter claims of the respondent.
2.2 Both the parties filed petition under Section 34 of the Act
against the award. The petition filed by the petitioner under Section 34
of the Act was dismissed by this court on 14.09.2021. The petitioner
succeeded in an appeal under Section 37 of the Act and the award
being violative of Section 12(5) of the Act was set aside on
02.04.2025 in view of the setting aside of the award by this court. The
petition filed by the respondent under Section 34 of the Act was
dismissed as infructuous on 19.04.2025. On 06.05.2025, the petitioner
issued a notice under Section 21 of the Act and thereafter this petition.
3. Learned counsel for the respondent relies upon clause 48 of the
contract to contend that arbitration either had to be by the Managing
Director/Chief Engineer of the respondent or their nominee. In case
the nominee could not proceed with the arbitration, the dispute shall
not be referred to arbitration at all.
4. Learned counsel for the petitioner relies upon the decision of
the Supreme Court in Hindustan Construction Company Ltd. V.
Bihar Rajya Pul Nirman Nigam Limited and Others 2025 SCC
OnLine SC 2578 decided on 28.11.2025 to contend that a similar
clause of a contract between a Public Sector Undertaking (PSU) and a
private company was held to be violative of Article 14 of the
Constitution of India and severable from the clause of arbitration.
5. At this stage, learned counsel for the respondent submits that in
the case relied upon by the learned counsel for the petitioner a consent
for appointment of arbitrator in proceedings under Section 11 was
given and there was an intent of the parties to resolve the dispute by
arbitration, whereas no such consent is there in this case.
6. The relevant portion of the clause of arbitration i.e., clause 25 in
the case of Hindustan Construction Company Ltd. (supra) before
the Supreme Court is reproduced below:
"12.9. ...It is also a term of this contract that no person
other than a person appointed by such Managing
Director or administrative head of the Nigam as
aforesaid should act as arbitrator and if for any reason
that is not possible, the matter shall not be referred to
arbitrator at all. ..."
6.1 The Supreme Court held that the exclusive power with the
contractee to appoint arbitrator should be severed and is unenforceable
but the agreement of arbitration survives. It is held that the contract
between public-private company should pass the test of fairness,
equality and non-arbitrariness under Article 14 of the Constitution of
India. The portion of clause 25 that for any reason the arbitration by
the arbitrator appointed by the contractee is not possible the matter
shall not be referred to arbitration at all violates Section 18 of the Act.
The relevant paragraphs of the judgment are reproduced:
"12.12. Accordingly, the portion of Clause 25 that vests
exclusive appointment power in one party and forecloses
arbitration in default of such appointment must be
severed as void and unenforceable. However, the
substantive agreement to arbitrate survives by virtue of
the doctrine of severability.
12.14. The present contract, being a public-private
contract, must withstand not only conventional
contractual scrutiny but also constitutional scrutiny. As
held in CORE II, arbitral appointments in public
contracts must satisfy the requirements of fairness,
equality, and non-arbitrariness under Article 14.
12.15. The sub-clause in Clause 25 which provides that
"if for any reason the matter shall not be referred to
arbitration" is vague, uncertain, and arbitrary. The
expression "for any reason" confers an unguided and
absolute veto, particularly objectionable in a public
contract. Such a clause fails the test of manifest
arbitrariness and violates Section 18 of the Act, which
mandates equal treatment of parties.
12.16. In light of the above discussion, the following
propositions emerge:
(i) The parties' conduct clearly demonstrates their
intention to arbitrate, satisfying the requirement of
Section 7(4)(c);
(ii) Clause 25, in its substantive form, constitutes a valid
arbitration agreement;
(iii) The unilateral and exclusionary appointment
mechanism is void and severable; and
(iv) This Court is empowered under Section 11(6) to
cure the defect and appoint an independent arbitrator.
12.17. Accordingly, it is held that a valid and subsisting
arbitration agreement exists between the parties. Clause
25, when read in its entirety and construed in accordance
with the doctrine of severability, satisfies the statutory
requirements of an arbitration clause under Section 7 of
the Act. The contrary finding of the High Court is
unsustainable in law and is liable to be set aside."
7. In view of the decision of the Supreme Court, the objection
raised by the respondent that arbitrator cannot be appointed by this
Court, is unsustainable, the distinction sought to be raised is ill-
founded. The arbitration clause having similar language was held to
be in violation of Article 14 of the Constitution of India and Section
18 of the Act and severed from clauses of arbitration. The consent
given by the parties in the case before the Supreme Court at the stage
of Section 11 is not a relevant consideration.
8. Learned counsel for the respondent relies upon paragraph
12.16(i) of Hindustan Construction Company Ltd. (supra) to
contend that the consent given in Section 11 proceeding was
considered, the contention lacks merit. The agreement between the
parties to arbitrate the dispute satisfying the requirement of Section 7
of the Act is derived from the surviving part of clause 25 after
severing the part of the clause vitiated of Article 14 of the Constitution
of India and Section 18 of the Act.
9. The petition is allowed by appointing Justice Mr. Krishna
Kumar Lahoti (Retd.) (Mobile No.9425152000) as the sole arbitrator
for adjudication of the disputes which have arisen between the parties.
10. The fees of the learned Arbitrator will be governed by Schedule
IV of the Act. Before entering upon reference, the learned Arbitrator
will comply with Section 12 of the Act.
11. It is made clear that since this Court has not expressed any
opinion on the merits of the rival claims of the parties, it will be open
for the parties to file their respective claims/counter claims before the
learned Arbitrator which will be considered in accordance with law.
12. A copy of this order be forwarded to the learned Arbitrator for
information.
AVNEESH JHINGAN, J
MARCH 23, 2026
'ha'
Reportable:- Yes
