Delhi HC Terminates Arbitrator’s Mandate | Reasonable Apprehension Of Bias And Entry 1 Ineligibility Cited | Prior Supervisory Relationship Defeats Arbitral Neutrality
Sanchayita Lahkar
The High Court of Delhi Single Bench of Justice Jasmeet Singh allowed a petition seeking termination of an arbitrator’s mandate on grounds of statutory ineligibility under the Arbitration and Conciliation Act, 1996. The Court held that the previously appointed arbitrator was disqualified under Section 12(5) read with Entry 1 of the Seventh Schedule due to a past professional relationship with the petitioner. Stating that the arbitrator had previously served in a supervisory role over projects executed by the petitioner, the Court found that this created a reasonable apprehension of bias. The mandate of the arbitrator was therefore terminated on the ground that he had become de jure ineligible to continue. A new arbitrator was appointed to ensure neutrality in the proceedings.
The Court noted that it was unaware of the earlier association at the time of appointing the arbitrator and no post-dispute written waiver had been executed to cure the ineligibility. The matter was directed to proceed before the newly appointed arbitrator under the rules of the Delhi International Arbitration Centre. The rights and objections of both parties were left open to be adjudicated by the arbitral tribunal.
The petition was filed under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996, by Roshan Real Estates Pvt. Ltd., seeking termination of the mandate of an arbitrator appointed by the Court under Section 11(6) of the Act. The petitioner, a contractor, had been awarded a Central Public Works Department (CPWD) contract for construction works at seven government schools in South-East Delhi for a contract value of ₹71,94,05,800. The works were completed and a final bill of ₹20,73,39,891 was raised by the petitioner on 23.05.2022. However, the respondent released a reduced amount of ₹5,09,52,388 in March 2023, which led to disputes between the parties.
Clause 25 of the General Conditions of the Contract (GCC) provided for a three-tier dispute resolution mechanism: a decision by the Superintending or Chief Engineer, reference to a Dispute Resolution Committee (DRC), and, if unresolved, arbitration. The petitioner followed this mechanism and issued a notice under Section 21 of the Act on 16.12.2024. With no arbitrator appointed in response, the petitioner filed ARB.P. 214/2025 before the High Court under Section 11 of the Act. On 10.02.2025, the Court appointed Mr. B.B. Dhar, a retired CPWD engineer, as the sole arbitrator.
Subsequently, the petitioner discovered that Mr. Dhar had served in a supervisory capacity during previous projects executed by the petitioner. In an earlier arbitration involving the same parties, the respondent had appointed Mr. Dhar as arbitrator but withdrew his appointment following an objection raised by the petitioner, replacing him with another arbitrator.
The petitioner contended that the continued association of Mr. Dhar violated the safeguards on independence and impartiality introduced through the 2015 Amendment to the Arbitration Act. The petitioner referred to Section 12(5) read with Entry 1 of the Seventh Schedule, which disqualifies any person with a past or present business relationship with a party. Relying on judicial precedents including TRF Limited v. Energo Engineering Projects Limited, Perkins Eastman Architects DPC v. HSCC (India) Limited, and Voestalpine Schienen GMBH v. DMRC, the petitioner argued that the arbitrator was de jure ineligible to continue.
The respondent opposed the petition and stated that Mr. Dhar's only prior association with the petitioner dated back 17-18 years to a project involving construction of Lawyers' Chambers in Dwarka. It was submitted that Mr. Dhar, in his role as Superintending Engineer, was not involved in day-to-day project execution. The respondent stated that there was no ongoing professional relationship and that Mr. Dhar had retired in June 2015. Further, the respondent pointed out that the appointment had been made by the Court, not unilaterally by either party. The arbitrator had entered reference on 17.03.2025 and filed a declaration under Section 12 affirming his independence.
Despite these assertions, the petitioner maintained that even a past supervisory relationship, particularly in public works contracts, creates an apprehension of bias. The petition also stated that the same arbitrator had been removed previously by the respondent upon a similar objection, indicating acknowledgment of the concern.
Justice Jasmeet Singh observed: "The present petition under Sections 14 and 15 of the Act seeks termination of the mandate of the sole arbitrator, Mr. B.B. Dhar, appointed by this Court vide order dated 10.02.2025 under Section 11(6) of the Act."
The Court analysed the applicability of Section 12(5) read with the Seventh Schedule. It recorded: "Entry 1 of the Seventh Schedule disqualifies a person who has had past business relationships with a party or served in a managerial or supervisory capacity."
It was noted that: "Although the respondent argues that the only work executed under the general supervision of the appointed arbitrator was over 17 years ago... the fact remains that a business, professional and supervisory relationship existed between the petitioner and the appointed arbitrator."
The Court stated: "The legislative intent underlying Entry 1 is clear - it does not hinge upon the nature or the duration of such business relationship, but rather focuses on whether the existence of such association may reasonably create a perception of partiality."
"This prior professional association, in my considered view, gives rise to a reasonable apprehension of bias in the mind of the petitioner and undermines the appearance of neutrality that arbitration law seeks to ensure."
The Court also recorded: "In another dispute containing an arbitration clause involving the same parties, the appointed arbitrator was initially appointed... but the respondent itself withdrew the said appointment... This prior conduct demonstrates the respondent’s own recognition that the appointment... could give rise to an apprehension of bias."
Citing the Supreme Court in HRD Corporation v. GAIL, the Court held: "Once he becomes ineligible, it is clear that, under Section 14(1)(a), he then becomes de jure unable to perform his functions... an application may be filed under Section 14(2) to the Court to decide on the termination of his/her mandate on this ground."
Addressing the respondent's reliance on Government of Haryana v. G.F. Toll Road Private Limited, the Court distinguished it by stating: "The said judgment was rendered in the context of the pre-amendment regime and concerned a former employee without any business/professional relationship, unlike the present case."
"The appointed arbitrator is not a mere past/former employee, rather, he had a prior supervisory and business/professional relationship with the petitioner."
"The fact that the appointed arbitrator submitted a declaration under Section 12(1) of the Act is not determinative... Where statutory ineligibility is attracted... a declaration does not cure the disqualification."
"No express post-dispute written waiver has been executed by the petitioner... Therefore, the ineligibility... cannot be cured by acquiescence or mere silence."
The Court concluded that the appointment of Mr. B.B. Dhar fell within the scope of statutory ineligibility and thus held: "The petition is allowed and the mandate of Mr. B.B. Dhar hereby stands terminated under Section 14(1)(a) of the Act."
"This Court hereby appoints Ms. Justice Rekha Palli (Retired Judge Delhi High Court) as the Sole Arbitrator to adjudicate the disputes between the parties."
"The arbitration will be held under the aegis and rules of the Delhi International Arbitration Centre, Delhi High Court, Sher Shah Road, New Delhi."
"The remuneration of the learned Arbitrator shall be in terms of DIAC (Administrative Cost and Arbitrators’ Fees) Rules, 2018."
"The learned Arbitrator is requested to furnish a declaration in terms of Section 12 of the Act prior to entering into the reference."
"It is made clear that all the rights and contentions of the parties, including as to the arbitrability of any of the claim, any other preliminary objection, as well as claims/counter-claims and merits of the dispute of either of the parties, are left open for adjudication by the learned arbitrator."
"The parties shall approach the learned Arbitrator within two weeks from today."
Advocates Representing the Parties:
For the Petitioner: Ms. Anusuya Salwan, Advocate
For the Respondent: Mr. Tushar Sannu with Mr. Aman Kumar, Advocates
Case Title: Roshan Real Estates Pvt. Ltd. v. Government of NCT of Delhi
Neutral Citation: 2025: DHC:5130
Case Number: O.M.P.(T)(COMM.) 23/2025
Bench: Justice Jasmeet Singh
