[ad_1]
Delhi High Court – Orders
M/S Haque Construction Company vs Union Of India on 30 July, 2025
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 907/2025
M/S HAQUE CONSTRUCTION COMPANY .....Petitioner
Through: Mr. Abhishek Pandey, Adv.
versus
UNION OF INDIA .....Respondent
Through: Mr. Bhagvan Swarup Shukla, CGSC
with Mr. Sarvan Kumar, Adv
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
ORDER
% 30.07.2025
1. This is a petition filed under Section 11 of the Arbitration and
Conciliation Act, 1996, seeking the appointment of an Arbitrator to
adjudicate the disputes between the parties.
2. The brief facts of the case are that the respondent invited tenders for
upgradation of MP’s 2024 Flats/Bungalows under Sub Div. I of PaWD-1
and Sub-Div-I of DED-201 dg 2024-2S (Sub-Head: Upgradation of Balance
Bungalows Windsor Place, HCM Lane Telegraph Lane & Atul Grove Road
Bungalows under Sec-II in respect of services of Civil and Electrical
Works).
3. In response to the said tender, the petitioner submitted its bid and was
declared the successful bidder. Pursuant thereto, a Letter of Acceptance
dated 07.09.2024 and a Letter of Start dated 17.09.2024 were issued by the
respondent in favour of the petitioner. Subsequently, Agreement No.
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 15/08/2025 at 22:28:04
60/EE/PAWD-I/A-1/2024-25 was executed between the Petitioner and the
Respondent. Clause 25 of the said Agreement contains an arbitration clause.
4. However, the respondent was dissatisfied with the work performed by
the petitioner and issued a show-cause notice dated 08.04.2025. Thereafter,
the Contract was terminated by the respondent on 25.04.2025, and the
performance bank guarantee, along with the security deposit, was encashed.
5. The Petitioner invoked the Arbitration Clause 25.2 on 27.05.2025 and
thereafter filed the present petition.
6. Even though the reply has been filed, the same is not on record.
7. Mr. Shukla, learned CGSC has handed over the reply in court today
which is taken on record.
8. He states, that there are no disputes between the petitioner and the
respondent and with respect to the petitioner’s claim concerning the
encashment of the bank guarantee, it is submitted that the matter stands
resolved by the order dated 26.07.2025 passed by the learned District Judge,
Commercial Court, who has held that the bank guarantee has been correctly
encashed by the respondent.
9. He further states that as regards the claim of Rs. 2,16,50,586/- is
concerned, the respondent had already asked the petitioner to rectify the bill,
and as and when the same will be rectified, it can be paid by the respondent
as per law. It is also stated claims 1, 2 and 7 of the petitioner are not
relevant, wherein claim 7 is towards the cost of Arbitration, which has not
yet commenced.
10. Mr. Pandey, learned counsel for the petitioner, states that the
respondent is only delaying the proceedings and the petitioner has disputes
subsisting between the parties which need to be settled through arbitration.
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 15/08/2025 at 22:28:04
11. I have heard the learned counsel for the parties.
12. In the present case, the arbitration clause reads as under:
“25.1 Conciliation: If the contractor considers any work demanded
of him to be outside the requirements of the contract, or disputes
any drawing, record or decision given in writing by the Engineer-
in-Charge; or if the Engineer-in-Charge considers any act or
decision of the contractor on any matter in connection with or
arising out of the contract or carrying out of the work to be
unacceptable and disputed; such party may promptly refer such
disputes and amount claimed for each dispute to the Conciliator
(Special Director General or the Additional Director General
concerned with the work, as applicable) in the proforma prescribed
in Appendix XVII mentioned in Schedule F, under intimation to the
other party. The Conciliator may then request each party to submit
to him a brief written statement describing the disputes and the
points at issue. Each party shall send a copy of such statement to
the other party. At any stage of the conciliation proceedings, the
Conciliator may request a party to submit to him such additional
information as he deems appropriate. When it appears to the
Conciliator that there exist elements of a settlement which may be
acceptable to the parties, he shall formulate the terms of a possible
settlement and submit them to the parties for their observations.
After receiving the observations of the parties, he may re-formulate
the terms of a possible settlement in the light of such observations.
If the parties reach agreement on a settlement of the disputes, they
may draw up and sign a written settlement agreement on non-
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 15/08/2025 at 22:28:04
judicial stamp paper as per Stamp Act. The Conciliator shall
authenticate the settlement agreement and furnish a copy thereof to
each party. The termination of conciliation proceedings shall be in
accordance with Section 76 of The Arbitration and Conciliation
Act, 1996. No party shall be represented before the said Conciliator
by an advocate or legal counsel. The conciliation proceedings shall
be completed within 45 days from the receipt of reference. This time
may be enlarged by 15 days by the Conciliator. The conciliation
proceedings shall be deemed to have been terminated at the end of
60 days from the receipt of reference.
25.2 Arbitration: If the aforesaid conciliation proceedings fail or
the Conciliator fails to give proposal for settlement within the
aforesaid period, either party may promptly give notice in the
proforma prescribed in Appendix XVIII, under intimation to the
other party, to the Chief Engineer or the Superintending Engineer
concerned with the work (as applicable), hereinafter referred to as
the Arbitrator Appointing Authority as indicated in Schedule F, for
appointment of Arbitrator.
However, a party may seek appointment of Arbitrator without
taking recourse to the process of conciliation mentioned in sub-
clause 25.1 above. In the event of either party giving a notice to the
Arbitrator Appointing Authority for appointment of Arbitrator, the
said Authority shall appoint Arbitrator as per the procedure given
below and refer such disputes to arbitration.
(a) Number of Arbitrators: If the contract amount is less than
Rs.100 crore, the disputes may be referred for adjudication by aThis 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 15/08/2025 at 22:28:04
sole Arbitrator. If the contract amount is Rs.100 crore or more, the
disputes may be referred to an Arbitral Tribunal of three
Arbitrators.
(b) Qualification of Arbitrators: It is a term of this contract that
each member of the Arbitral Tribunal shall be Graduate Engineer
with experience in execution of public works engineering contracts,
and he should have worked earlier at a level not lower than the
Chief Engineer (equivalent to level of Joint Secretary to the
Government of India). The aforesaid educational qualification and
work experience shall be mandatory for appointment as Arbitrator.
The age of Arbitrator at the time of appointment shall not exceed 75
years. An Arbitrator may be appointed notwithstanding the total
number of active arbitration cases with him.
(c) Parties to select Arbitrator: Based on the criteria specified
above, a list of empanelled Arbitrators has been prepared in
CPWD, and the parties shall have option to select an Arbitrator
from the list sent to them.
25.3 Appointment of Sole Arbitrator: The parties may opt for
appointment of the Arbitrator of the Ministry of Housing and Urban
Affairs. In such cases, the party seeking arbitration has to submit
an express agreement in writing as per Appendix XIX towards
waiver of Section 12(5) of the Arbitration and Conciliation Act,
1996 along with the notice for appointment of Arbitrator in the
proforma prescribed in Appendix XVIII, under intimation to the
other party. The Arbitrator Appointing Authority shall, within 30
days of receipt of the said notice, appoint Arbitrator of the Ministry
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 15/08/2025 at 22:28:04
of Housing and Urban Affairs as Arbitrator in the matter, provided
the other party also submits waiver of Section 12(5), ibid in
Appendix XIX within 7 days of the receipt of the said notice. Where
any one of the parties does not opt for the Arbitrator of the Ministry
of Housing and Urban Affairs, or does not submit the waiver
agreement, the Arbitrator Appointing Authority shall propose five
Arbitrators from the list of CPWD Empanelled Arbitrators to the
party seeking arbitration under intimation to the other party within
15 days of receiving the notice. The party seeking arbitration shall
give his choice for one of them within 15 days of receiving the list,
and the Arbitrator Appointing Authority shall appoint the chosen
person as the Sole Arbitrator within 15 days of the receipt of
choice.
It is a term of this arbitration agreement that if the parties fail to
select, within the period prescribed above, an Arbitrator of their
choice from the list of CPWD Empanelled Arbitrators forwarded to
them, the Arbitrator Appointing Authority shall himself select and
appoint Arbitrator from the said list.
25.4 Appointment of Arbitral Tribunal of three Arbitrators: The
Arbitrator Appointing Authority shall prepare two separate lists of
five Arbitrators each from the list of CPWD Empanelled
Arbitrators, and send one to the party seeking arbitration and other
to the responding party, within 15 days of the receipt of notice. The
parties will then choose any one Arbitrator from the list provided to
them within 15 days of receipt of the list. The Arbitrator Appointing
Authority shall then appoint those chosen by the respective 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 15/08/2025 at 22:28:04
as Arbitrators and also a third Arbitrator from the list of CPWD
Empanelled Arbitrators to act as presiding Arbitrator, within 15
days of receipt of choice from both the parties. It is a term of this
arbitration agreement that if the parties fail to select, within the
period prescribed above, an Arbitrator of their choice from the list
of CPWD Empanelled Arbitrators forwarded to them, the
Arbitrator Appointing Authority shall himself select and appoint
Arbitrator from the said list.
25.5 Applicable Law: The provisions of the Arbitration and
Conciliation Act, 1996 (Act 26 of 1996) and any further statutory
modification or re-enactment thereof shall be applicable. Further,
the fast-track procedure for arbitration contained in Section 29B of
the said Act shall apply.
…….”
13. A perusal of the clause shows that the petitioner can directly seek the
appointment of an Arbitrator without undergoing the conciliation process.
Additionally, it states that the respondent has the right to appoint the
Arbitrator.
14. The letter dated 04.06.2025 annexed along with the reply shows that it
is the respondent who has referred names of 5 Arbitrators to the petitioner to
choose any one of them.
15. The same is contrary to the judgment of the Supreme Court in Bharat
Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755,
wherein the Hon’ble Court held as under:
“14. From a conspectus of the above decisions, it is clear that
Section 12(1), as substituted by the Arbitration andThis 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 15/08/2025 at 22:28:04
Conciliation (Amendment) Act, 2015 [“the Amendment Act,
2015”], makes it clear that when a person is approached in
connection with his possible appointment as an arbitrator, it is
his duty to disclose in writing any circumstances which are
likely to give rise to justifiable doubts as to his independence or
impartiality. The disclosure is to be made in the form specified
in the Sixth Schedule, and the grounds stated in the Fifth
Schedule are to serve as a guide in determining whether
circumstances exist which give rise to justifiable doubts as to
the independence or impartiality of an arbitrator. Once this is
done, the appointment of the arbitrator may be challenged on
the ground that justifiable doubts have arisen under sub-section
(3) of Section 12 subject to the caveat entered by sub-section
(4) of Section 12. The challenge procedure is then set out in
Section 13, together with the time-limit laid down in Section
13(2). What is important to note is that the Arbitral Tribunal
must first decide on the said challenge, and if it is not
successful, the Tribunal shall continue the proceedings and
make an award. It is only post award that the party challenging
the appointment of an arbitrator may make an application for
setting aside such an award in accordance with Section 34 of
the Act.
15. 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) 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 15/08/2025 at 22:28:04
moment any person whose relationship with the parties or the
counsel or the subject-matter of the dispute falls under the
Seventh Schedule. The sub-section then declares that such
person shall be “ineligible” to be appointed as arbitrator. The
only way in which this ineligibility can be removed is by the
proviso, which again is a special provision which states that
parties may, subsequent to disputes having arisen between
them, waive the applicability of Section 12(5) by an express
agreement in writing. What is clear, therefore, is that where,
under any agreement between the parties, a person falls within
any of the categories set out in the Seventh Schedule, he is, as a
matter of law, ineligible to be appointed as an arbitrator. The
only way in which this ineligibility can be removed, again, in
law, is that parties may after disputes have arisen between
them, waive the applicability of this sub-section by an “express
agreement in writing”. Obviously, the “express agreement in
writing” has reference to a person who is interdicted by the
Seventh Schedule, but who is stated by parties (after the
disputes have arisen between them) to be a person in whom
they have faith notwithstanding the fact that such person is
interdicted by the Seventh Schedule.”
16. Similarly in Perkins Eastman Architects DPC v. HSCC (India)
Ltd., (2020) 20 SCC 760, the Hon’ble Court held as under:
“20. We thus have two categories of cases. The first, similar to
the one dealt with in TRF Ltd. [TRF Ltd. v. Energo Engg.
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 15/08/2025 at 22:28:04
Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72]
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
authorised 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 incompetent, it was because of
the interest that he would be said to be having in the outcome
or result 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 outcome or decision. If that be the test, similar
invalidity would always arise and spring even in the second
category of cases. 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. We are conscious
that if such deduction is drawn from the decision of this Court
in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8
SCC 377 : (2017) 4 SCC (Civ) 72] , 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 appointment of an
arbitrator.
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 15/08/2025 at 22:28:04
21. But, in our view that has to be the logical deduction
from TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017)
8 SCC 377 : (2017) 4 SCC (Civ) 72] Para 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
ineligibility referred to therein, was as a result of operation of
law, in that a person having an interest in the dispute or in the
outcome or decision 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 person cannot and should
not have any role in charting 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 derive 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 interest in the outcome or
decision of the dispute must not have the power to appoint a
sole arbitrator. That has to be taken as the essence of the
amendments brought in by the Arbitration and ConciliationThis 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 15/08/2025 at 22:28:04
(Amendment) Act, 2015 (3 of 2016) and recognised by the
decision of this Court in TRF Ltd. [TRF Ltd. v. Energo Engg.
Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72]”
17. In view of the above, it is clear that there cannot be unilateral
appointment of an Arbitrator.
18. The argument that since the bank guarantee has been encashed, there
is a finding that the same has correctly been done is misconceived. The bank
guarantees are encashed on the principles relating to encashment of bank
guarantee, wherein the petitioner is required to show irreparable loss and
injury which cannot be compensated in terms of money to seek restrain on
its encashment. The fact whether the bank guarantee has been rightly or
wrongly encashed is always a dispute which needs to be adjudicated by the
Arbitrator.
19. Additionally, the arbitration clause between the parties is admitted
and the fact that the petitioner has demanded amounts due and payable to it
and the fact that the same have not been paid, in itself is a dispute. Thus, I
am inclined to allow the petition.
20. For the said reasons, the petition is allowed and disposed of with the
following directions:
i) Mr. Shyam Sharma (Adv.) (Mob. No. 9810153965) is
appointed as a Sole Arbitrator to adjudicate the disputes
between the parties.
ii) The arbitration will be held under the aegis and rules of the
Delhi International Arbitration Centre, Delhi High Court, Sher
Shah Road, New Delhi (hereinafter, referred to as theThis 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 15/08/2025 at 22:28:04
‘DIAC’).
iii) The remuneration of the learned Arbitrator shall be in terms of
DIAC (Administrative Cost and Arbitrators’ Fees) Rules,
2018.
iv) The learned Arbitrator is requested to furnish a declaration in
terms of Section 12 of the Act prior to entering into the
reference.
v) 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.
vi) The parties shall approach the learned Arbitrator within two
weeks from today.
JASMEET SINGH, J
JULY 30, 2025/DM
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 15/08/2025 at 22:28:04
[ad_2]
Source link