Delhi High Court – Orders
Ms Era Infra Engineering Limited vs Airport Authority Of India on 8 August, 2025
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~39
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 300/2022, I.A. 11331/2022, I.A. 11333/2022
MS ERA INFRA ENGINEERING LIMITED
.....Petitioner
Through: Mr. Anirban Bhattacharya, Mr. Rushil
Anand, Mr. Rajiv, Advs.
versus
AIRPORT AUTHORITY OF INDIA
.....Respondent
Through: Mr. Archit Mishra, Adv.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
ORDER
% 08.08.2025
1. This is a petition filed under section 34 of the Arbitration and
Conciliation Act, 1996 (“1996 Act”) seeking to challenge the Arbitral
Award dated 25.02.2022 in the matter between “Ms Era Infra
Engineering Limited vs. Airport Authority of India“.
2. The petitioner participated in the bidding process initiated by the
respondent for the project titled “Construction of New Integrated
Terminal Building at VSI Airport, Port Blair” and emerged as the L1
bidder. Pursuant thereto, the respondent issued a Letter of Award dated
01.09.2014 in favour of the petitioner, and an Agreement was executed
between the parties on 19.09.2014.
3. The arbitration clause is clause 25 of GCC in the Contract Agreement
which reads as under:-
“CLAUSE 25
Except where otherwise provided in the contract, all questions
and disputes relating to the meaning of the specifications,This is a digitally signed order.
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design, drawings and instruction here-in before mentioned and
as to the quality of workmanship or materials used on the work
or.as to any other question, claim, right, matter or thing
whatsoever, in any way arising out of or relating to the contract,
designs, drawings, specifications, estimates, instructions, orders
or these conditions or otherwise concerning the work or the
execution or failure to execute the same whether arising during
the progress of the work or after the cancellation, termination,
completion or abandonment thereof shall be dealt with as
mentioned herein after:
i) Through Dispute Resolution Committee: Any dispute as
stated above shall be referred in the first place to the
Dispute Resolution Committee (DRC) appointed by the
Executive Director / Member (Planning) / Chairman,
Airports Authority of India.
a. If a dispute of any kind, whatsoever, arises between
the procuring entity and contractor in connection
with or arising out of the contact or the execution of
the works, whether during the execution of the
works or after their completion and whether before
or after the repudiation or termination of the
contract, including any disagreement by either
party with any action, opinion, instruction,
determination, certificate or valuation of the
Engineer, the matter in dispute shall in the first
place, be referred to the Dispute Resolution
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Committee (ORC) appointed by Chairman, AAI.
b. DRC, thus constitute may act as ‘concilator and
will be guided by principles of ‘conciliation’ as
included in part Ill of Arbitration & Conciliation
Act 1996. DRC should take into consideration,
rights and obligations of parties, usage to trade
concerned and circumstances surrounding the
dispute(s), including any previous business
practices between parties. Efforts of DRC should be
to come to an amicable settlement of outstanding
disputes. If parties agree, a written settlement will
be drawn up and signed by the parties. DRC will
authenticate the settlement agreement and furnish a
copy to each party.
c. DRC will give its report with in 45 days of its
constitution.
It is also a term of contract that fees and other expense if
payable to DRC shall be paid equally by both the parties
i.e. AAI and Contractor.
Unless the contract has already been repudiated or
terminated, the contractor shall, in every case, continue to
proceed with the work with all due diligence.
It is also a term of contract that if the contract does not
make any demand for Dispute Resolution committee in
respect of any claim in writing 90 (Ninety) days of
receiving the intimation from the AAI that the bill is ready
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for payment, the claim of contractors) will be deemed to
have been waved and absolutely barred and the AAl shalt
be discharged and released of all liabilities under the
contract in respect of these claims.
………….”
4. Subsequently, disputes arose between the parties. Dissatisfied with the
decision of the Dispute Resolution Committee (DRC), which dismissed
all of the petitioner‟s claims, the petitioner invoked the arbitration
clause.
5. Vide order dated 03.05.2018, the respondent appointed a retired
engineer of the respondent as the Sole Arbitrator. The petitioner filed
OMP (T)(COMM.) 51/2018 before the Hon‟ble High Court of Delhi
under Section 14 of the Arbitration and Conciliation Act, 1996, seeking
termination of the mandate of the learned Arbitrator. However, vide
judgment dated 05.07.2018, the Hon‟ble High Court refused to interfere
with the appointment.
6. Thereafter, the impugned Award dated 25.02.2022 was passed rejecting
the claims of the petitioner and allowing the counter claim of the
respondent. The petitioner intimated the respondent, requesting it to file
its claims in accordance with the provisions of the Insolvency and
Bankruptcy Code, 2016 (“IBC”). The moratorium of the petitioner was
lifted on 11.06.2024 when the NCLT approved the resolution plan of the
petitioner and the CIRP process was completed.
7. During the course of hearing of this petition, on 15.04.2025, learned
counsel for the petitioner was given one weeks‟ time to file a
Vakalatnama along with the fresh amended memo of parties. The same
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have been filed but are not on record.
8. A copy of the same has been handed over in Court today, which is taken
on record.
9. Mr. Bhattacharya, learned counsel for the petitioner has restricted his
arguments only on the ground that the Sole Arbitrator was appointed
unilaterally and hence, the Award passed by the learned Arbitrator is hit
by TRF Ltd. v. Energo Engineering Projects Ltd., (2017) 8 SCC 377
and Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd.,
(2020) 20 SCC 760.
10. He has drawn my attention to paragraph 4 of the Award dated
25.02.2022 which reads as under:-
“4. Member (Planning), Airports Authority of India appointed
me as Sole Arbitrator to adjudicate on disputes and claims
arising due to the disputes, vide letter No. LW/11011/19/2018/70
Dated 02/03.05.2018.”
11. Per Contra, Mr. Mishra, learned counsel for the respondent has drawn
my attention to the Order dated 05.07.2018 passed in O.M.P. (T)
(COMM.) 51/2018, a petition filed under section 14 and 15 of the 1996
Act by the petitioner on the same grounds. Paras 17 and 18 of the said
order are extracted below:-
“17. Section 12(1) of the Act provides for disclosure by the
proposed Arbitrator of circumstances that are likely to give rise
to justifiable doubt as to his independence or impartiality. Fifth
Schedule to the Act illustrates such grounds which give rise to
justifiable doubt as to the independence or impartiality of the
Arbitrator. Section 13 of the Act further states that a challengeThis is a digitally signed order.
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to the Arbitrator would have to be made in accordance with the
procedure agreed between the parties failing which, a party,
intending to challenge the Arbitrator shall, within 15 days after
coming to know about the constitution of the Arbitral Tribunal
or after becoming aware of any such circumstances which give
rise to justifiable doubt as to the independence or impartiality of
such Arbitrator, shall send a written statement of the reason for
challenge to the Arbitral Tribunal. If the challenge is not
successful, in terms of Section 13(4) of the Act, the Arbitral
Tribunal shall continue the arbitral proceedings and make the
Arbitral Award. Such an award, in terms of Section 13(5) of the
Act, can be challenged in accordance with Section 34 of the Act.
Therefore, as the challenge made by the petitioner would fall
under Entry 31 of the Fifth Schedule to the Act, the petitioner
may raise the same before the Arbitrator in accordance with
procedure prescribed in Section 13 of the Act and the present
petition would not be maintainable.
18. In view of the above, I find no merits in the present
petition and the same is accordingly dismissed. The petitioner
shall however, be at liberty to raise all its contentions on the
alleged impartiality of the Arbitrator in accordance with Section
13 read with Section 12 of the Act. I may clarify that this Court
has not gone into the allegations made in the petition in this
regard.”
12. Mr. Mishra states that in view of the said paragraphs, the argument of
the petitioner will not lie. Further, the petitioner himself filed an
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application under Section 29A(5) of the Arbitration and Conciliation
Act, 1996, seeking extension of the mandate of the learned Sole
Arbitrator and hence, the petitioner has given a waiver to the
applicability of section 12(5) proviso of the 1996 Act.
13. I have heard the counsel for the parties.
14. I am unable to agree with the contentions advanced by the learned
counsel for the respondent. The judgment dated 05.07.2018 was
rendered by this Court prior to the pronouncement of the judgment of
the Hon‟ble Supreme Court in Perkins Eastman Architects DPC
(supra). Furthermore, even in the Order dated 05.07.2018, this Court did
not examine the contention relating to the impartiality of the learned
Sole Arbitrator and expressly left the issue open.
15. In the order dated 05.07.2018, it was observed that under section 13 of
the 1996 Act, a party intending to challenge the appointment of
Arbitrator on the grounds giving rise to justifiable doubts as to
independence or impartiality must do so in accordance with the agreed
procedure, or, failing that, by sending a written statement to the Arbitral
Tribunal within fifteen days of becoming aware of such circumstances.
If the challenge fails, the Tribunal proceeds and the Award can
thereafter be challenged in accordance with section 34 of the 1996 Act.
16. The law on unilateral appointment of an Arbitrator is well settled. The
respondent cannot unilaterally appoint an Arbitrator as there will always
be an apprehension of bias and non-neutrality in such arbitration
proceedings. The relevant portion of Perkins Eastman Architects DPC
(supra) has held as under:-
“20. We thus have two categories of cases. The first, similar to
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the one dealt with in TRF Ltd. [TRF Ltd. v. Energo Engg.
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.
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21. …….. 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 Conciliation
(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 judicial decision, it is evident that the unilateral
appointment of an Arbitrator by one party having an interest in the
outcome of the dispute is impermissible in law. In the present case, the
Member (Planning), Airports Authority of India, appointed a retired
engineer as the Sole Arbitrator. Such an appointment, having been made
solely by the respondent (being a party to the dispute), falls squarely
within the mischief contemplated in Perkins Eastman Architects DPC
(supra) and TRF Ltd. (supra). The same has further been clarified by
the Hon‟ble Supreme Court, recently, in Central Organisation for
Railway Electrification v. ECI SPIC SMO MCML (JV), (2025) 4 SCC
641.
18. The principle that emerges from these judgments is that any person or
authority who has a vested or institutional interest in the dispute, or is
connected with one of the parties, cannot have the exclusive right to
appoint a Sole Arbitrator. This is because such exclusivity inherently
carries an apprehension of bias and undermines the neutrality and
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fairness being the foundation of the arbitral process. Therefore, the
appointment made by the Member (Planning) is legally unsustainable
and cannot be upheld.
19. The argument of the learned counsel for the respondent that the
petitioner himself filed a petition seeking extension of mandate of the
learned Sole Arbitrator, hence the petitioner has given a waiver is
misplaced in the view of the judgment of Mahavir Prasad Gupta &
Sons v. State (NCT of Delhi), 2025 SCC OnLine Del 4241 wherein it
was categorically observed that mere participation in section 29A
proceedings does not amount to waiver
“43. Consenting to the extension of the mandate of the
arbitrator under Section 29A(3) of the Act does not
constitute a valid express waiver in writing as required
under the proviso to Section 12(5) of the Act. The view of
the learned Single Judge of the Court in Man Industries
(India) Ltd. (supra) is the correct as participation in the
arbitral proceedings or seeking an extension of the mandate
of the arbitrator does not constitute a valid waiver…..”
20. For the said reasons, the petition is allowed and the Arbitral Award
dated 25.02.2022 is set aside. Further, both parties state that, without
prejudice to their rights and contentions, a Sole Arbitrator be appointed
by this. Hence, with consent of parties, without prejudice to their rights
and contentions, the following directions are issued:-
i) Hon‟ble Mr. Justice Sanjiv Khanna, Former Chief Justice of
India (Mob. No. 9818123334) is appointed as a Sole Arbitrator
to adjudicate the disputes between the parties.
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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 the „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.
21. The present petition is disposed of in the aforesaid terms.
JASMEET SINGH, J
AUGUST 8, 2025/PK
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