$~7 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ARB.P. 542/2026, I.A. 8491/2026 & I.A. 8492/2026 M/S ASIAN PROPACK .....Petitioner Through: Mr. Anshu Mahajan, Mr. Vikas Aggarwal and Ms. Anjali Sharma, Advs. versus INDIAN OIL CORPORATION & ORS. .....Respondents Through: Mr. Amit Meharia, Ms. Tannishtha Singh and Ms. Priya S. Bhalerao, Advs. CORAM: HON'BLE MR. JUSTICE AVNEESH JHINGAN O R D E R % 22.07.2026 1. The present petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short „the Act‟) for appointment of an arbitrator. 2. The relevant facts, discerned from the record, reveal that the respondent/ Indian Oil Corporation Ltd. on 17.09.2021, invited tenders for sales of polymer- below utility/ waste material from PPMC/PNC, IOCL, Panipat, Haryana. The petitioner was the successful bidder and on 07.12.2021 a Letter of Intent (LOI) was issued. The petitioner furnished a security deposit of approximately Rs.41,00,000/- and thereafter the respondent issued a work order dated 16.12.2021. During the execution of the contract, dispute arose between the parties to the lis. 2.1 The petitioner on 08.01.2026 issued a notice under Section 21 of the Act invoking arbitration under Clause 14 of the General Purchase Agreement (for short „GPA‟). On failure to do the needful, the present This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/07/2026 at 13:30:29 petition was filed. 3. Learned counsel for the petitioner contends that the respondent failed to comply with the contractual terms with regard to intimation of availability of material and illegally forfeited the security deposit. Reliance is placed on Clause 14 of the GPA providing for appointment of an arbitrator. 4. Per Contra, the objections raised relate to the merits of the case. 5. Before proceeding further, it would be apposite to quote Clause 14 of the GPA. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/07/2026 at 13:30:29 6. The scope of the reference court under Section 11 of the Act is well defined. The existence of an arbitration clause and a prima facie dispute is to This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/07/2026 at 13:30:29 be seen and the rest of the issues are to be considered by the arbitrator. 7. The notice dated 08.01.2026 issued by the petitioner under Section 21 of the Act indicates a dispute between the parties. Clause 14 of the GPA provides that in case of dispute between the parties the matter shall be referred for arbitration of the Director or a nominee appointed by it. The law is well settled that the official of a party to the dispute can neither be appointed as an arbitrator nor can appoint an arbitrator. The portion of Clause 14 of the GPA providing for the Director or a nominee appointed by it to be an arbitrator is void and does not dent the substantive agreement to arbitrate between the parties. 8. The Supreme Court in Hindustan Construction Company Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd. and Ors., 2025 SCC OnLine SC 2578 dealt with an arbitration clause providing that no person other than a person appointed by the Managing Director or administrative head of the Nigam should act as arbitrator and if such appointment is not possible then the matter is not arbitrable. It was held that the exclusive power with the contractee to appoint arbitrator is unenforceable and should be severed but the agreement of arbitration survives. The portion of the clause 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 below: “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. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/07/2026 at 13:30:29 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.” 9. Accordingly, the petition is allowed by appointing Ms. Radhika Bishwajit Dubey, Advocate (Mobile No:9810982979) 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. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/07/2026 at 13:30:29 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 JULY 22, 2026 Ch This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 31/07/2026 at 13:30:29