2026:HHC:28759 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CARBC No. 90 and 91 of 2025 Decided on : 13.07.2026 CARBC No. 90 of 2025 Balbir Singh .…Petitioner Versus The Executive Engineer, B & R Division, HPPWD, Sarkaghat, District Mandi, HP. …Respondent CARBC No. 91of 2025 The Executive Engineer, B & R Division, HPPWD, Sarkaghat, District Mandi, H.P. ….Petitioner Versus Balbir Singh …Respondent Coram The Hon’ble Mr. Justice Ajay Mohan Goel, Judge. Whether approved for reporting?1 Yes CARBC No. 90 of 2025 For the petitioner : Mr. J.S. Bhogal, Senior Advocate with M/s T.S. Bhogal and Swati Verma, Advocates. For the respondent : M/s S.D. Vasudeva and Ayushi Negi, Deputy Advocate Generals. CARBC No. 91 of 2025 For the petitioner : M/s S.D. Vasudeva and Ayushi Negi, Deputy Advocate Generals. For the respondent : Mr. J.S. Bhogal, Senior Advocate with M/s T.S. Bhogal and Swati Verma, Advocates. 1 Whether reporters of the local papers may be allowed to see the judgment? 2 2026:HHC:28759 Ajay Mohan Goel, Judge (Oral) These two petitions have been filed by the petitioners against the award dated 24.09.2022 passed by the learned Arbitrator in Claim petition titled Balbir Singh vs The Executive Engineer, Division Sarkaghat, HPPWD, in terms whereof, the claim preferred by the claimant was partly allowed. A perusal of the award demonstrates that it was passed by Er.Ashok Kumar Chauhan, who was a retired Engineer-in-Chief from the Himachal Pradesh Public Works Department, i.e. the contesting respondent-Department before learned Arbitrator. Record further demonstrates that learned Arbitrator was appointed unilaterally by the serving Chief Engineer (Mandi Zone), HPPWD, Mandi, vide communication dated 04.03.2021, which is not in dispute. 2. During the course of hearing of these two petitions, learned Senior Counsel appearing for the claimant/ petitioner argued that in the present case, the award in issue is void ab initio and against the Public Policy of India, for the reason that the appointment of the learned Arbitrator, in the facts and circumstances of the case was bad and thus the Award, is non est in the eyes of law. Learned Senior Counsel submitted that in terms of sub section (5) of Section 3 2026:HHC:28759 12 of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred as ‘the Act’ for short), notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or Counsel or the subject-matter of the dispute, was falling under any of the categories specified in the 7th Schedule thereof, such person was ineligible to be appointed as an Arbitrator. Learned Senior Counsel further submitted that proviso to this sub-section saved the appointment of the Arbitrator, provided that the parties, subsequent to the disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing. Learned senior counsel submitted that in terms of the 7th schedule of the Act, no one can be an Arbitrator, who is an employee, consultant, advisor or has any other past or present business relationship with a party. Learned Senior Counsel submitted that in the light of this bar, obviously, the serving Chief Engineer (MZ) HPPWD, Mandi, could not have been an Arbitrator in the case. Learned Senior Counsel further submitted that the issue as to whether a person, who is barred to be an Arbitrator in terms of provisions of 7th Schedule of the Arbitration and Conciliation Act, can appoint an arbitrator, has been answered by Hon’ble 4 2026:HHC:28759 Supreme Court of India in Perkins Eastman Architects DPC and another vs. HSCC (India) Limited, (2020) 20 Supreme Court Cases 760, in which judgment, Hon’ble Supreme Court has been pleased to hold that in case the Authority appointing an Arbitrator is disqualified from being appointed as an Arbitrator, then an Arbitrator so appointed by the said authority is also disqualified to be an Arbitrator. 3. On the other hand, learned Deputy Advocate General submitted that record also suggests that after his appointment as an Arbitrator, learned Arbitrator in terms of order dated 22.04.2021, had conveyed to the parties that he has no interest in the subject matter of the dispute between the parties or any relationship with any of the parties to the arbitration and the parties had conveyed to the Tribunal that they have no objection to the appointment of the Arbitrator, to arbitrate the dispute between the parties. Learned Deputy Advocate General further submitted that as the parties herein had waived off their right to object to the appointment of the Arbitrator in terms of the proviso to Section 12(5) of the Act, the objection taken by learned Senior Counsel for the petitioner/claimant was not sustainable in the eyes of law. 5 2026:HHC:28759 4. I have heard learned Senior Counsel appearing for the claimant as also learned Deputy Advocate General and have also gone through the award as also the record of the learned Arbitrator. 5. In the present case, in terms of the contract entered between the parties, after a dispute arose between the parties, there was unilateral appointment of the learned Arbitrator by the Chief Engineer (MZ), HPPWD Mandi. Said appointment was in terms of communication dated 04.03.2021, which is being reproduced herein below, which reads as under:- “Subject -In the matter of arbitration between Sh. Balbir Singh Govt. contractor Village Tatiha PO & Tehsil Sarkaghat Distt. Mandi HP and State of HP through Executive Engineer, Sarkaghat Division, HP: PWD Sarkaghat for the work Metalling/Tarring and CD on Bag Saroli road km.0/0 to 4/750 (SH: Removal of formation deficiency, CD, P/L soling, M/T, Parapets and road sicie drain in km. 0/0 to 4/750 under NABARD RIDF-XX. against agreement No. 214 for the year 2015-16. 6 2026:HHC:28759 Whereas disputes have arisen between the Executive Engineer. Sarkaghat Division HP:PWD Sarkaghat and Sh. Balbir Singh Govt. contractor Village Tatiha PO & Tehsil Sarkaghat Distt. Mandi HP in respect of above noted work and whereas dispute arisen between the parties are required to be settled under clause 25 of the agreement No.214 for 2015-16 and to be referred to the Sole Arbitration of the person to be appointed by the Chief Engineer (MZ) HP.PWD. Mandi (HP). Therefore, in pursuance of the powers delegated to me under the said clause of the agreement 1, Ajay Gupta, Chief Engineer (MZ), HP.PWD. Mandi, hereby appoint Er. Ashok Kumar Chauhan, Engineer-in-Chief (Retd), as an Arbitrator, to decide and make his award regarding claims / disputes given by the Contractor for the subject cited work and also regarding the counter claim of the Executive Engineer, Sarkaghat Division HP:PWD 7 2026:HHC:28759 Sarkaghat if any, followed subsequently, subject always, however, to their admissibility under Clause-25 of the aforesaid agreement.” 6. Record demonstrates that the appointment of learned arbitrator besides being unilateral by one of the parties, was also by an employee of one of the contesting parties, that is to say the Chief Engineer (MZ), of the Public Works Department between whom and the Claimant a dispute had arisen out of the terms of the contract entered into between it and the Claimant. Therefore, obviously, as the Chief Engineer (MZ), HPPWD, was an employee of one of the parties, in terms of Section 12(5) of the Act, he was ineligible to be appointed as an Arbitrator. In this backdrop, if one peruses the judgment of Hon’ble Supreme Court of India in Perkins Eastman Architects DPC and another vs. HSCC (India) Limited, (2020) 20 Supreme Court Cases 760 (supra), one finds that after referring to the earlier adjudications made by Hon’ble Supreme Court, on the subject, Hon’ble Supreme Court was therein pleased to hold as under:- “17. In TRF Limited4, the Agreement was en- tered into before the provisions of the Amending Act (Act No.3 of 2016) came into force. It was sub- 8 2026:HHC:28759 mitted by the appellant that by virtue of the provi- sions of the Amending Act and insertion of the Fifth and Seventh Schedules in the Act, the Man- aging Director of the respondent would be a per- son having direct interest in the dispute and as such could not act as an arbitrator. The extension of the submission was that a person who himself was disqualified and disentitled could also not nominate any other person to act as an arbitrator. The submission countered by the respondent therein was as under (SCC p. 385, para 701) – “7.1. The submission to the effect that since the Managing Director of the respondent has become ineligible to act as an arbitrator sub- sequent to the amendment in the Act, he could also not have nominated any other per- son as arbitrator is absolutely unsustain- able, for the Fifth and the Seventh Schedules fundamentally guide in determining whether circumstances exist which give rise to justifi- able doubts as to the independence and im- partiality of the arbitrator. To elaborate, if any person whose relationship with the par- 9 2026:HHC:28759 ties or the counsel or the subject-matter of dispute falls under any of the categories specified in the Seventh Schedule, he is ineli- gible to be appointed as an arbitrator but not otherwise.” 18. The issue was discussed and decided by this Court as under(TRF case2 SCCpp.403-04, paras 50-54- “50. First, we shall deal with Clause (d). There is no quarrel that by virtue of Section 12(5) of the Act, if any person who falls under any of the categories specified in the Seventh Sched- ule shall be ineligible to be appointed as the arbitrator. There is no doubt and cannot be, for the language employed in the Seventh Sched- ule, the Managing Director of the Corporation has become ineligible by operation of law. It is the stand of the learned Senior Counsel for the appellant that once the Managing Director be- comes ineligible, he also becomes ineligible to nominate. Refuting the said stand, it is can- vassed by the learned Senior Counsel for the respondent that the ineligibility cannot extend 10 2026:HHC:28759 to a nominee if he is not from the Corporation and more so when there is apposite and requi- site disclosure. We think it appropriate to make it clear that in the case at hand we are neither concerned with the disclosure nor ob- jectivity nor impartiality nor any such other cir- cumstance. We are singularly concerned with the issue, whether the Managing Director, af- ter becoming ineligible by operation of law, is he still eligible to nominate an arbitrator. At the cost of repetition, we may state that when there are two parties, one may nominate an arbitrator and the other may appoint another. That is altogether a different situation. If there is a clause requiring the parties to nominate their respective arbitrator, their authority to nominate cannot be questioned. What really in that circumstance can be called in question is the procedural compliance and the eligibility of their arbitrator depending upon the norms pro- vided under the Act and the Schedules ap- pended thereto. But, here is a case where the Managing Director is the “named sole arbitra- tor” and he has also been conferred with the 11 2026:HHC:28759 power to nominate one who can be the arbitra- tor in his place. Thus, there is subtle distinc- tion. In this regard, our attention has been drawn to a two-Judge Bench decision in State of Orissa v. Commr. Of Land Records and Set- tlement7. In the said case, the question arose, can the Board of Revenue revise the order passed by its delegate. Dwelling upon the said proposition, the Court held: (SCC p. 173, para 25) ‘25. We have to note that the Commissioner when he exercises power of the Board dele- gated to him under Section 33 of the Settle- ment Act, 1958, the order passed by him is to be treated as an order of the Board of Revenue and not as that of the Commissioner in his ca- pacity as Commissioner. This position is clear from two rulings of this Court to which we shall presently refer. The first of the said rul- ings is the one decided by the Constitution Bench of this Court in Roop Chand vs. State of Punjab8. In that case, it was held by the majority that where the State Government had, under Section 41(1) of the East Punjab 12 2026:HHC:28759 Holdings (Consolidation and Prevention of Fragmentation) Act, 1948, delegated its appel- late powers vested in it under Section 21(4)  to an “officer”, an order passed by such an offi- cer was an order passed by the State Govern- ment itself and “not an order passed by any officer under this Act” within Section 42 and was not revisable by the State Government. It was pointed out that for the purpose of exer- cise of powers of revision by the State under Section 42 of that Act, the order sought to be revised must be an order passed by an officer in his own right and not as a delegate of the State. The State Government was, therefore, not entitled under Section 42 to call for the records of the case which was disposed of by an officer acting as its delegate.’ (emphasis in original) 51. Be it noted in the said case, reference was made to Behari Kunj Sahkari Awas Samiti v. State of U.P.9, which followed the decision in Roop Chand v. State of Punjab6. It is 13 2026:HHC:28759 seemly to note here that the said principle has been followed in Indore Vikas Pradhikaran8. 52. Mr Sundaram has strongly relied on Prat- apchand Nopaji11. In the said case, the three- Judge Bench applied the maxim “qui facit per alium facit per se”. We may profitably repro- duce the passage: (SCC p. 214, para 9) “9. … The principle which would apply, if the objects are struck by Section 23 of the Con- tract Act, is embodied in the maxim: “qui facit per alium facit per se” (what one does through another is done by oneself). To put it in an- other form, that which cannot be done directly may not be done indirectly by engaging an- other outside the prohibited area to do the ille- gal act within the prohibited area. It is immate- rial whether, for the doing of such an illegal act, the agent employed is given the wider powers or authority of the “pucca adatia”, or, as the High Court had held, he is clothed with the powers of an ordinary commission agent only.” 14 2026:HHC:28759 53. The aforesaid authorities have been com- mended to us to establish the proposition that if the nomination of an arbitrator by an ineligi- ble arbitrator is allowed, it would tantamount to carrying on the proceeding of arbitration by himself. According to the learned counsel for the appellant, ineligibility strikes at the root of his power to arbitrate or get it arbitrated upon by a nominee. 54. In such a context, the fulcrum of the con- troversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbi- trator, who may be otherwise eligible and a re- spectable person. As stated earlier, we are neither concerned with the objectivity nor the individual respectability. We are only con- cerned with the authority or the power of the Managing Director. By our analysis, we are obligated to arrive at the conclusion that once the arbitrator has become ineligible by opera- tion of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription contained in Section 12(5) of 15 2026:HHC:28759 the Act. It is inconceivable in law that person who is statutorily ineligible can nominate a person. Needless to say, once the infrastruc- ture collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate some- one else as an arbitrator is obliterated. There- fore, the view expressed by the High Court is not sustainable and we say so.” 19. It was thus held that as the Managing Direc- tor became ineligible by operation of law to act as an arbitrator, he could not nominate another per- son to act as an arbitrator and that once the iden- tity of the Managing Director as the sole arbitrator was lost, the power to nominate someone else as an arbitrator was also obliterated. The relevant Clause in said case had nominated the Managing Director himself to be the sole arbitrator and also empowered said Managing Director to nominate another person to act as an arbitrator. The Man- aging Director thus had two capacities under said 16 2026:HHC:28759 Clause, the first as an arbitrator and the second as an appointing authority. In the present case we are concerned with only one capacity of the Chairman and Managing Director and that is as an appointing authority. 20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Limited4 where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or autho- rised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incom- petent, it was because of the interest that he would be said to be having in the outcome or re- sult of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such out- come or decision. If that be the test, similar inva- lidity would always arise and spring even in the second category of cases. If the interest that he 17 2026:HHC:28759 has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Lim- ited4, all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an Arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make ap- pointment of an Arbitrator. 21. But, in our view that has to be the logical de- duction from TRF Limited4. Paragraph 50 of the decision shows that this Court was concerned with the issue, “whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator” The in- eligibility referred to therein, was as a result of operation of law, in that a person having an inter- est in the dispute or in the outcome or decision 18 2026:HHC:28759 thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such per- son cannot and should not have any role in chart- ing out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in the paragraph, further show that cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may de- rive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an in- terest in the outcome or decision of the dispute must not have the power to appoint a sole arbitra- tor. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 19 2026:HHC:28759 2016) and recognised by the decision of this Court in TRF Ltd.2” 7. It is evident from the said judgment of Hon’ble Supreme Court that the person, who is interested in the outcome of decision of the dispute, must not have the power to appoint the Sole Arbitrator. Hon’ble Supreme Court has also held that where a person has become ineligible by operation of law to act as an Arbitrator, he could not nominate another person to act as an Arbitrator and that once the identity of said person as the Sole Arbitrator is lost, the power to nominate some else as an Arbitrator was also obliterated. Hon’ble Supreme Court in para 20 of the judgment has further observed that there can be two kind of situations, i.e. one where the officer himself is named as an arbitrator with an additional power to appoint any other person as an Arbitrator and the second category where the officer is not to act as an Arbitrator himself but is empowered or authorized to appoint any other person of his choice or discretion as an Arbitrator. By referring to its earlier judgment in TRF Ltd. Vs. Energo Engg. Projects Ltd. (2017) 8 SCC 377, Hon’ble Supreme Court further held that if in the first category of cases, the officer was found incompetent, it was 20 2026:HHC:28759 because of the interest that he would be said to be having in the outcome or result of the dispute, the element of validity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision and if that be the test, similar invalidity would always arise and spring even in the second category of cases. Hon’ble Supreme Court further held that if the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. 8. Therefore, it is evident from the said judgment of Hon’ble Court that wherein an officer himself is ineligible to act as an arbitrator, then any Arbitrator appointed by such an ineligible officer, will be an invalid appointment. Therefore, in the light of said judgment of the Hon’ble Supreme Court, this Court has no hesitation in holding that as the Chief Secretary (MZ), HPPWD, Mandi, was ineligible to be appointed as an Arbitrator being the employee of one of the contesting parties and having a direct interest in the outcome of the litigation, he was ineligible to appoint Er. Ashok Kumar Chauhan as an Arbitrator in the matter. Therefore, the 21 2026:HHC:28759 appointment of Er.Ashok Kumar Chauhan as a Sole Arbitrator by the Chief Engineer (MZ) HPPWD was bad in law. On this count, the award passed by said learned Arbitrator being in conflict with Public Policy of India as also law declared by Hon’ble Supreme Court of India in Perkins Eastman (supra) is obviously bad in law and is held as such. 9. As far as the issue raised by learned Deputy Advocate General of waiver and the compliance of the proviso to Section 12(5) of the Act is concerned, this Court is of the considered view that this proviso does not come to the rescue of the State in the facts of this case. 10. The proviso to Section 12(5) of the Act provides that the parties may, subsequent to disputes having arisen between them, waive the applicability of sub-section (5) of Section 12 “by an express agreement in writing”. Therefore, the condition precedent for this proviso to come into force is that subsequent to the dispute having been arisen, there has to be a waiver of the applicability of proviso to Section 12(5) of the Act and this waiver has to be by way of an express agreement in writing. 11. A perusal of the record of the arbitration proceedings demonstrates that there is no express agreement 22 2026:HHC:28759 in writing on record entered into between the parties and executed after the dispute has arisen, to the effect that they are waiving off the applicability of Section 12(5) of the Act. 12. Reliance upon the order passed by the learned Arbitrator dated 22.04.2021 by the learned Deputy Advocate General is not a substitute to the statutory requirement of the proviso to Section 12(5) of the Act. 13. In the absence of there being an express agreement in writing, mentioning therein the waiver on the part of the parties to the applicability of Section 12(5) of the Act in the proceedings, what is contained in the order passed by learned Arbitrator dated 22.04.2021 is of no consequence. 14. In fact, this issue is no more res integra. Hon’ble Supreme Court in Bharat Broadband Network Limited vs. United Telecoms Limited (2019) 5 Supreme Court Cases 755, has been pleased to hold with regard to the applicability of Section 12(5) of the Act that unlike Section 4 of the Arbitration and Conciliation Act, which deals with deemed waiver of the right to object by conduct, the proviso to Section 12(5) of the Act will only apply if subsequent to disputes having arisen between the parties, the parties waive the applicability of sub-section 5 of Section 12 by an express 23 2026:HHC:28759 agreement in writing. Hon’ble Supreme Court has held that Section 12(5) of the Act refers to an express agreement in writing and the expression ‘express agreement in writing’ refers to an agreement made in words as opposed to an agreement which is to be inferred by conduct. Hon’ble Supreme Court has also held that it is thus necessary that there has to be an express agreement in writing and this agreement must be an agreement by which both parties with full knowledge of the fact that the learned Arbitrator is ineligible to be appointed as an arbitrator still go ahead and say that they have full faith and confidence in the arbitrator to continue as such. 15. Thereafter, recently, Hon’ble Supreme Court of India in Bhadra International (India) Pvt. Ltd. And others vs. Airports Authority of India, 2026 SCC Online SC 7, has again been pleased to reiterate that ineligibility of an arbitrator can be waived off only by way of an express agreement in writing and conduct of the parties is inconsequential and does not constitute a valid waiver under the proviso. 16. Therefore, in the light of above discussion, as obviously, the so called waiver to the appointment on the part 24 2026:HHC:28759 of the parties to the appointment of the Arbitrator cannot save the said invalid appointment of the Arbitrator, both these petitions are disposed of by setting aside the award dated 24.09.2022, passed by the learned Arbitrator on the ground that the said award is against the Public Policy of India as well as in contravention to the law declared by Hon’ble Supreme Court of India in judgments referred to herein above as the appointment of the learned Arbitrator was bad in law. The parties are at liberty to have recourse qua the redressal of their grievance in accordance with law. Pending miscellaneous application(s), if any, also stand disposed of accordingly. (Ajay Mohan Goel) July 13, 2026 Judge (narender)