This judgment does NOT decide the merits of the contractor's claims or of the Government's counter-claim, and it does not direct a fresh arbitration. It decides only that the arbitrator's appointment was invalid for want of the statutory waiver, so the award and the order upholding it cannot stand; the Court expressly left the appellant's other challenges to the award undealt with.
- Case
- Govt. of NCT of Delhi v. M/s. Ram Krishan Yudhister Prakash
- Court
- High Court of Delhi
- Decision
- Citation
- 2026:DHC:9641-DB
- Bench
- Anil Kshetarpal; Bharat Parashar
- Judgment by
- Bharat Parashar
- Case numbers
- FAO (COMM) 198/2026
- Outcome
- Appeal allowed. The District Judge (Commercial)'s order dated 8 May 2026 dismissing the Section 34 petition and the arbitral award dated 20 January 2025 are set aside; the underlying contract claims remain undecided.
Delhi High Court allows the appeal and sets aside award and order
The Delhi High Court has allowed the Government of NCT of Delhi's appeal against the dismissal of its petition under Section 34 of the Arbitration and Conciliation Act, 1996, and has set aside both the District Judge (Commercial)'s order dated 8 May 2026 and the arbitral award dated 20 January 2025.
The Division Bench of Justice Anil Kshetarpal and Justice Bharat Parashar, with Justice Parashar writing, held that the sole arbitrator, a retired Principal Chief Engineer of the Public Works Department itself, had been appointed unilaterally by one party, and that nothing on record showed the parties had, after the disputes arose, entered into an express agreement in writing waiving Section 12(5) of the Act.
Participation in the proceedings, filing a statement of defence and a counter-claim, and failure to object earlier could not substitute for that statutory waiver, the Court held, so the appointment was invalid and the proceedings and award flowing from it could not be sustained.
Mohalla clinic works, a 2023 reference, and a 2025 award
The dispute arose from a Public Works Department contract for construction of Aam Aadmi Mohalla Clinics at various places under the North-East Circle, PWD, Delhi. The letter of acceptance was issued on 17 December 2018 for Rs. 2,96,84,753, work was to start on 27 December 2018 and finish by 26 April 2019, but it was completed only on 16 March 2020.
The contractor claimed escalation, watch-and-ward and additional-work charges, extra payment for working in foul position, expenses of the extended period, loss of business and interest. Under arbitration clause 25 of the General Conditions of Contract for Central PWD Works, 2014, the Chief Engineer (E), PWD, by a reference letter dated 18 October 2023, nominated Sh. Avendra Kumar Garg, Principal Chief Engineer, PWD (Retd.), as sole arbitrator.
The arbitrator passed an award on 20 January 2025 in favour of the contractor, disallowing a number of its claims but allowing others. The Government challenged the award under Section 34, complaining among other things that its counter-claim had not been adjudicated at all, and raising in its written arguments the specific objection that the unilateral appointment of a retired PWD employee was hit by Section 12(5) read with the Seventh Schedule.
The District Judge (Commercial), North-East District, Karkardooma, dismissed the Section 34 petition in OMP (COMM) No. 4/2025, holding principally that interference under Section 34 is very limited and a plausible view of the arbitrator cannot be replaced, and recording on the appointment objection only that it was devoid of merit because the arbitrator had been appointed with the petitioner's concurrence and the petitioner had participated and contested the matter.
The question: can conduct waive Section 12(5)?
The foremost question before the Division Bench was whether, after the Arbitration and Conciliation (Amendment) Act, 2015, an appointment of the arbitral tribunal by one party, without an express agreement in writing subsequent to the disputes having arisen, amounts to waiving Section 12(5) merely because the appointment followed the parties' earlier agreement.
The Court noted that the issue stood squarely covered by its own decision in FAO(OS)(Comm) No. 246/2026, M/s Ahluwalia Contracts (India) Limited v. Airports Authority of India, pronounced on 25 September 2026, and quoted that judgment's paragraphs 22 to 39 at length.
Section 12(5): three cumulative requirements for waiver
Section 12(5), introduced by the 2015 Amendment, provides that notwithstanding any prior agreement to the contrary, a person whose relationship with the parties, counsel or the subject matter falls under any Seventh Schedule category is ineligible to be appointed as arbitrator, with a proviso that parties may, subsequent to disputes having arisen between them, waive the applicability of the sub-section by an express agreement in writing.
On a plain reading, the Court held, waiver has three essential requirements: it must be subsequent to the disputes having arisen, it must be by agreement between the parties, and it must be express and in writing. The provision does not contemplate waiver by implication or by conduct.
The Court relied on the Supreme Court's decision in Bhadra International, which held that the right to object to an ineligible arbitrator cannot be taken away by mere implication and requires a conscious and unequivocal expression of intent, and that even a procedural order recording that no party objected to the appointment could not amount to waiver. It also relied on Bharat Broadband Network Ltd. v. United Telecoms Ltd., where the Supreme Court held that the party which itself appoints an arbitrator is not thereby precluded from questioning the appointment, and that an appointment letter cannot itself be treated as the express agreement in writing.
No waiver on this record; the objection could be raised late
Applying that law, the Court found it was not in dispute that the retired Principal Chief Engineer of PWD itself was appointed by one party, PWD of the Government of NCT of Delhi, and that the department participated, filed its defence and filed a counter-claim. But there was nothing on record to show that, subsequent to the disputes having arisen, the parties entered into any express agreement in writing consciously waiving Section 12(5).
Participation, filing a defence or counter-claim, or failure to raise an objection before the arbitrator therefore could not be treated as a substitute for the statutory waiver. The Court added that although the Section 34 petition itself had not taken the ground, the written arguments before the District Judge had raised it with case law, and the trial court had failed to address it, discarding it merely because the petitioner had participated.
An objection going to the inherent jurisdiction of the arbitral tribunal may be raised at any stage of challenge to the award, the Court held, following Bhadra International. Since the appointment itself, being unilateral and without the required express written waiver, could not be held valid in law, the subsequent proceedings and any award emanating from them could not be sustained.
Award and Section 34 order set aside; no order as to costs
Because there was no requirement to deal with the appellant's other contentions against the award or the impugned order, the Court set aside the impugned order dated 8 May 2026 and the award dated 20 January 2025, allowed the appeal, and made no order as to costs.
The practical consequence is that the award in the contractor's favour no longer stands, and the dispute returns to the position before the award, with the merits of the claims and the counter-claim undecided by this judgment.
BANTHRY ANALYSISFor law students: why the waiver rule is deliberately strict
Section 12(5) is unusual because it displaces the normal contract-freedom logic of arbitration: even if the parties' original arbitration clause envisaged unilateral appointment by one side, the statute makes a Seventh Schedule person ineligible unless both parties consciously waive that ineligibility in writing after the dispute exists.
The reason, as this judgment explains it, is that waiver here is not a general inference from conduct but a statutorily prescribed mode. Section 4 of the Act, which deals with deemed waiver by conduct, does not supply the waiver that the proviso to Section 12(5) demands.
Note also the sequencing point the Court takes from Titagarh Rail Systems: following a contractual procedure that presupposes waiver cannot itself create the waiver. The written waiver must come first; the procedure follows it, not the other way round.
READING PROMPTSQuestions for a closer reading
- Why does Section 12(5) require an express agreement in writing after disputes have arisen, rather than a waiver inferred from conduct?
- Why did the contractor's argument from the Government's participation, defence and counter-claim fail?
- Why could the objection to the arbitrator's appointment still be raised at the Section 34 stage even though the petition itself had not taken the ground?
