$~16 * IN THE HIGH COURT OF DELHI AT NEW DELHI # CNR No. DLHC010163812026 + ARB.P. 716/2026 & I.A. 10788/2026 MAHAVIR PRASAD GUPTA ANS SONS .....Petitioner Through: Mr. Aseem Mehrotra & Ms. Deeksha Mehrotra, Advs. versus GOVERNMENT OF NCT OF DELHI .....Respondent Through: Mr. Tushar Sannu, Ms. Ankita, Ms. Diksha Punia & Mr. Rehman, Advs. CORAM: HON'BLE MR. JUSTICE AVNEESH JHINGAN O R D E R % 11.08.2026 1. The present petition is filed under Section 11(5) and (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/ Government of NCT of Delhi invited tenders for „Strengthening of Road No. 58, (Maharaja Surajmal Marg) from RUB Vivek Vihar to Junction on Road No. 72 RD (Om to 2220m)‟. The petitioner was the successful bidder and on 25.11.2014 a work order was issued. During the execution of the work, dispute arose between the parties to the lis. The terms and conditions agreed between the parties provided for dispute resolution through arbitration under Clause 25 of the General 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 13/08/2026 at 10:59:31 Conditions of Contract (for short „the GCC‟). 2.1 The arbitration was invoked at the instance of the petitioner and the proceedings culminated in an award dated 12.10.2020 in favour of the petitioner. The respondent challenged the award under Section 34 of the Act on the ground of unilateral appointment of the arbitrator. The award was set aside vide order dated 23.05.2023. The appeal under Section 37 of the Act was dismissed by this court on 31.05.2025 and the challenge before the Supreme Court met the same fate on 02.02.2026. Thereafter, the petitioner issued a fresh notice dated 12.03.2026 for appointment of an arbitrator. On failure to do the needful, the present petition is filed. 3. Learned counsel for the petitioner submits that the parties have agreed to an arbitration clause but the power to appoint the arbitrator is vested with the respondent which is in violation of the amended Section 12(5) of the Act. Reliance is placed upon the decision of the Supreme Court in Hindustan Construction Company Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd. and Ors., 2025 SCC OnLine SC 2578 to contend that the part of the clause providing for appointment of the arbitrator is severable while the arbitration agreement survives. 4. Per Contra, the notice issued under Section 21 of the Act is time barred and that no liberty was sought in the appeal under Section 37 of the Act for commencing a fresh round of arbitration. 5. Before proceeding further, it would be apposite to quote Clause 25 of the GCC. “CLAUSE 25- Settlement of Disputes & Arbitration Except where otherwise provided in the contract, all 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 13/08/2026 at 10:59:31 questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders 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 cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter: (i) If the contractor considers any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in- Charge on any matter in connection with or arising out of the contract or carrying out of the work, to be unacceptable, he shall promptly within 15 days request the Superintending Engineer in writing for written instruction or decision. Thereupon, the Superintending Engineer shall give his written instructions or decision within a period of one month from the receipt of the contractor's letter. If the Superintending Engineer fails to give his instructions or decision in writing within the aforesaid period or if the contractor is dissatisfied with the instructions or decision of the Superintending Engineer, the contractor may, within 15 days of the receipt of Superintending Engineer's decision, appeal to the Chief Engineer who shall afford an opportunity to the contractor to be heard, if the latter so desires, and to offer evidence in support of his appeal. The Chief Engineer shall give his decision within 30 days of receipt of contractor's 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 13/08/2026 at 10:59:31 appeal. If the contractor is dissatisfied with the decision of the Chief Engineer, the contractor may within 30 days from the receipt of the Chief Engineer decision, appeal before the Dispute Redressal Committee (DRC) along with a list of disputes with amounts claimed in respect of each such dispute and giving reference to the rejection of his disputes by the Chief Engineer. The Dispute Redressal Committee (DRC) shall give his decision within a period of 90 days from the receipt of Contractor's appeal. The constitution of Dispute Redressal Committee (DRC) shall be as indicated in Schedule 'F‟. If the Dispute Redressal Committee (DRC) fails to give his decision within the aforesaid period or any party is dissatisfied with the decision of Dispute Redressal Committee (DRC), then either party may within a period of 30 days from the receipt of the decision of Dispute Redressal Committee (DRC), give notice to the Chief Engineer for appointment of arbitrator on prescribed proforma as per Appendix XV, failing which the said decision shall be final binding and conclusive and not referable to adjudication by the arbitrator. It is a term of contract that each party invoking arbitration must exhaust the aforesaid mechanism of settlement of claims/disputes prior to invoking arbitration. (ii) Except where the decision has become final, binding and conclusive in terms of Sub Para (i) above, disputes or difference shall be referred for adjudication through arbitration by a sole arbitrator appointed by the Chief Engineer, CPWD, in charge of the work or if there be no Chief Engineer, the Additional Director General of the concerned region of CPWD or if there be no Additional Director General, the Director General, CPWD. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due 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 13/08/2026 at 10:59:31 any reason whatsoever, another sole arbitrator shall be appointed in the manner aforesaid. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal. It is also a term of this contract that no person, other than a person appointed by such Chief Engineer CPWD or Additional Director General or Director General, CPWD, as aforesaid, should act as arbitrator and if for any reason that is not possible, the matter shall not be referred to arbitration at all. It is also a term of this contract that if the contractor does not make any demand for appointment of arbitrator in respect of any claims in writing as aforesaid within 120 days of receiving the intimation from the Engineer-in-charge that the final bill is ready for payment, the claim of the contractor shall be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of these claims. The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) 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 proceeding under this clause. It is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each dispute and claim referred to him 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 13/08/2026 at 10:59:31 and in all cases where the total amount of the claims by any party exceeds Rs.1,00,000/-, the arbitrator shall give reasons for the award. It is also a term of the contract that if any fees are payable to the arbitrator, these shall be paid equally by both the parties. It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties calling them to submit their statement of claims and counter statement of claims. The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The cost of the reference and of the award (including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator who may direct to any by whom and in what manner, such costs or any part thereof shall be paid and fix or settle the amount of costs to be so paid.” 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 be seen and the rest of the issues are to be considered by the arbitrator. 7. The undisputed fact is that clause 25 of the GCC provides that in case of dispute between the parties the matter shall be referred for arbitration. 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 25 of the GCC providing for appointment of the arbitrator by the respondent is void and does not dent the substantive agreement to arbitrate between the parties. 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 13/08/2026 at 10:59:31 8. The Supreme Court in Hindustan Construction Company Ltd. (supra) 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: "61. 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. *** *** *** 63. The present contract, being a public-private contract, must withstand not only conventional contractual scrutiny but also constitutional scrutiny. As held in CORE Il, arbitral appointments in public contracts must satisfy the requirements of fairness, equality, and non-arbitrariness under Article 14. 64. 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. 65. In light of the above discussion, the following 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 13/08/2026 at 10:59:31 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. 66. 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. The contention of learned counsel for the respondent is that the notice under Section 21 of the Act is time barred lacks merit. The award was passed on 12.10.2020 and the matter remained in litigation till 02.02.2026. Within one month and ten days of the decision of the Supreme Court, notice under Section 21 of the Act was issued. The submission that no liberty was sought in the appeal under Section 37 of the Act for commencing a fresh round of arbitration is of no avail. The award was set aside for violation of Section 12(5) read with Seventh Schedule of the Act. The petitioner is therefore entitled to seek appointment of an arbitrator in accordance with law. 10. Accordingly, the petition is allowed by appointing Justice Ms. Mukta Gupta, Delhi High Court Judge (Retd.) (Mobile No. 9650788600) as the sole arbitrator for adjudication of the disputes which have arisen 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 13/08/2026 at 10:59:31 between the parties. 11. Arbitral proceedings will be held under the aegis of DelhiInternational Arbitration Centre (DIAC). Fee of the Arbitrator shall be fixed as per fee schedule. 12. Before entering upon reference, the learned Arbitrator will complywith Section 12 of the Act. 13. It is made clear that since this Court has not expressed any opinion on the merits of the rival claims of the parties and 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. 14. A copy of this order be forwarded to the learned Arbitrator for information. AVNEESH JHINGAN, J AUGUST 11, 2026 ‘JK’ 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 13/08/2026 at 10:59:31