$~7 * IN THE HIGH COURT OF DELHI AT NEW DELHI # CNR No. DLHC010122342026 + ARB.P. 539/2026, I.A. 8463/2026 & I.A. 8464/2026 M/S RAMA CONTRACTOR .....Petitioner Through: Mr. Aman Dhyani, Ms. Kanchan Semwal & Ms. Somya Gupta, Advs. versus GOVERNMENT OF NCT OF DELHI & ANR. .....Respondents Through: Mr. Raghvendra Upadhyay, Ms. Purnima Jain, Mr. Madhur & Mr. Yash Singh, Advs. CORAM: HON'BLE MR. JUSTICE AVNEESH JHINGAN O R D E R % 14.09.2026 1. This 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 brief facts are that the respondent invited tenders in 2018 for the work of construction of additional SPS class rooms under (Priority-II). The petitioner was the successful bidder. On 07.03.2019, the letter of acceptance was issued and subsequently, the agreement was executed between the parties. The period for completion was 270 days for a value of Rs.39,98,81,617/-. The work was completed on 06.10.2022 after a delay of about 1029 days. Disputes arose between the parties concerning, inter alia, non-payment/short payment of bills, illegal deductions, withholding of security deposits, prolongation of the contract, and escalation of costs. The petitioner invoked the arbitration under clause 25(ii) of the agreement vide 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 18/09/2026 at 10:54:55 notice dated 17.09.2024 under Section 21 of the Act. On failure to do the needful, the present petition is filed. 2.1 The relevant portion of clause 25(ii) of the agreement is reproduced below: “CLAUSE 25 (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, PWD, in charge of the work or if there be no Chief Engineer, the Administrative Head of the said PWD. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to 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 PWD or the Administrative Head of the PWD, 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 for 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 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 18/09/2026 at 10:54:55 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 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, subject 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.” 3. Learned counsel for the respondents on instructions has no serious objection for referring the matter to arbitration. 4. 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. 5. The undisputed fact is that clause 25 of the agreement 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 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 18/09/2026 at 10:54:55 portion of clause 25 of the agreement providing for appointment of the arbitrator by the respondent is void and does not dent the substantive agreement to arbitrate between the parties. 6. 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: "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 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 18/09/2026 at 10:54:55 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 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.". 7. Accordingly, the petition is allowed by appointing Justice Mr.Vivek Puri (Retd.) (Mobile No. 8558800190) as the sole arbitrator for adjudication of the disputes which have arisen between the parties. All pending applications are also disposed of. 8. Arbitral proceedings will be held under the aegis of Delhi International Arbitration Centre (DIAC). Fee of the Arbitrator shall be fixed as per fee schedule. 9. 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 18/09/2026 at 10:54:55 10. 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. 11. A copy of this order be forwarded to the learned Arbitrator for information. AVNEESH JHINGAN, J SEPTEMBER 14, 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 18/09/2026 at 10:54:55