Delhi High Court: Express Waiver Without Knowledge of Tribunal Composition Is No Waiver; Unilateral Appointments Struck Down, Directs Fresh Arbitration Under Its Oversight
Isabella Mariam
The High Court of Delhi Single Bench of Justice Jasmeet Singh held that the letter dated 23.02.2024 submitted by the petitioner does not constitute a valid waiver under Section 12(5) of the Arbitration and Conciliation Act, 1996. The Court consequently set aside the Arbitral Tribunal constituted by the respondent and granted a period of one week to the parties to either mutually appoint a Sole Arbitrator or nominate their respective Arbitrators. If the parties fail to do so, the Court indicated its intention to appoint the Arbitral Tribunal itself. The Court further clarified that any waiver under the proviso to Section 12(5) must be made after the constitution of the Arbitral Tribunal and with full knowledge of the individuals appointed.
The petitioner was awarded contractual works for construction under three separate agreements dated 17.06.2016 with the respondent, the Union of India through the Dy Chief Engineer, Northern Railway. Due to arising disputes, the contracts were terminated by the respondent on 26.12.2018 and 19.05.2018. Pursuant to Clause 64 of the General Conditions of Contract (GCC), the petitioner raised disputes and sought arbitration. The respondent appointed three serving railway employees as Arbitrators.
The petitioner, represented by Mr. Subodh Kr. Pathak and others, appeared before the Arbitral Tribunal for seven hearings and subsequently filed the current petition under Section 14 of the Arbitration and Conciliation Act, 1996, seeking termination of the Tribunal’s mandate. The petitioner contended that the Tribunal had been constituted unilaterally by the respondent, contravening established legal principles.
The respondent, represented by Mr. Ruchir Mishra and his team, argued that the petitioner had waived its right to challenge under Section 12(5) by a letter dated 23.02.2024, enclosing Annexure-XV, which explicitly waived the applicability of Section 12(5) and agreed to proceed with the arbitration process.
The petitioner countered that the waiver was not valid as it was executed before the Arbitrators were appointed and without knowledge of who would serve as Arbitrators. Furthermore, the Tribunal had repeatedly asked the petitioner to submit a waiver during the 7th and 9th hearings held on 19.10.2024 and 02.12.2024, respectively. The petitioner refused to submit any further waiver and informed the Tribunal that it had filed the present petition before the Delhi High Court.
The petitioner’s counsel relied on the Supreme Court’s decision in Bharat Broadband Network Ltd v. United Telecoms Ltd. and the Constitution Bench judgment in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML JV, arguing that a waiver under Section 12(5) must be made after the appointment of Arbitrators and with knowledge of their identities.
The respondent cited the Bombay High Court decision in Truly Pest Solution (P) Ltd v. Railways, contending that the petitioner had already submitted to the arbitration process and could not later challenge it under Section 12(5). The respondent also stated that the petitioner had participated in multiple hearings before filing this petition.
The petitioner distinguished the Bombay High Court decision by pointing out that in that case, the petitioner had raised objections only at the stage of challenging the award, while in the present case, the challenge was raised immediately after the Tribunal’s constitution.
The Court observed that the central question requiring consideration was whether the waiver executed by the petitioner on 23.02.2024 constituted a valid waiver under the proviso to Section 12(5) of the Arbitration and Conciliation Act, 1996.
Justice Jasmeet Singh recorded in the judgment that “the waiver contemplated in the proviso of section 12(5) of the 1996 Act applies not to the manner or the mechanism under which the Arbitral Tribunal is to be constituted but to the constitution or individual members of the Arbitral Tribunal.” It was further stated that “Any waiver under the proviso to Section 12(5) of 1996 Act before the details of the Arbitrators or Arbitral Tribunal is known to the party is no waiver in the eyes of law.”
The Court extensively referred to the Supreme Court’s decision in Bharat Broadband, which clarified that an express agreement in writing must refer to a person who is interdicted by the Seventh Schedule and despite such ineligibility, the parties agree to appoint him as Arbitrator. The Court quoted the judgment in Bharat Broadband noting that “Section 12(5), on the other hand, is a new provision which relates to the de jure inability of an arbitrator to act as such. Under this provision, any prior agreement to the contrary is wiped out by the non obstante clause in Section 12(5).”
Referring to the judgment in Central Organisation for Railway Electrification, the Court stated that “Unilateral appointment clauses in public-private contracts are violative of Article 14 of the Constitution for being arbitrary in addition to being violative of the equality principle under the Arbitration Act.” The Court also quoted the Supreme Court’s observation that “The possibility of bias is real in situations where an arbitration clause allows a government company to unilaterally appoint a sole arbitrator or control the majority of the arbitrators.”
Justice Jasmeet Singh observed that the members of the Arbitral Tribunal in the present case were serving employees of the respondent and therefore fell squarely within the bar under Entry 1 of the Seventh Schedule of the Arbitration and Conciliation Act. It was held that “Such clauses strike at the core of neutrality contemplated under the 1996 Act.”
The Court further observed that the petitioner had not waived the applicability of Section 12(5) after the constitution of the Arbitral Tribunal, and that the waiver executed on 23.02.2024 could only pertain to the mechanism of appointment and not to the individual Arbitrators.
The Court concluded its judgment by recording the following directions: “For the reasons noted above, the petition is allowed and the letter dated 23.02.2024 is no waiver in the eyes of law. Consequently, the Arbitral Tribunal appointed by the respondent is set aside.”
It was further directed that the counsels for the petitioner and the respondent were granted one week to agree on the name of a Sole Arbitrator or to nominate their respective Arbitrators. The Court observed that if the parties failed to do so, it would appoint the Arbitral Tribunal itself.
The matter was posted for further hearing on 22.05.2025
Advocates Representing the Parties
For the Petitioners: Mr. Subodh Kr. Pathak, Mr. Amit Sinha, Mr. Pawan Kumar Sharma, Mr. Niraj Kumar, Advocates
For the Respondents: Mr. Ruchir Mishra, Senior Panel Counsel with Mr. Rajkumar Maurya, GP, Mr. Sanjiv Kr. Saxena, Mr. Mukesh Shukla, Ms. Poonam Shukla, Ms. Reba Jena Mishra, Ms. Harshita Sharma, Advocates
Case Title: M.V. Omni Projects (India) Ltd. v. Union of India Through Dy Chief Engineer, Northern Railway
Neutral Citation: 2025: DHC:3814
Case Number: O.M.P. (T) (COMM.) 5/2025, 6/2025, 7/2025
Bench: Justice Jasmeet Singh
[Read/Download order]
