Interim Order 1

Order Details: COPY OF ORDER
Pdf Text: Misc DJ No.517/2025
Government of NCT of Delhi Vs. M/s Maa Bhagwati Associates
08.07.2025
File taken up on application filed by petitioner for restoration of Section 34
Arbitration and Conciliation Act petition.
Present: Sh. Zafar Abbas, Ld. Counsel for petitioner.
The matter was adjourned sine die vide order dated 24.05.2025 as the
petition in hand was filed without compliance of Section 34 (5) of Arbitration
and Conciliation Act, 1996. Ld. Counsel submits that advance copy of the
petition has been sent by registered post and courier apart from service through
whatsapp through Sh. Anuj Aggarwal, partner of the respondent firm with a double
blue tick. In view of the reason cited, the Section 34 Arbitration and
Conciliation Act petition stands restored.
Issue notice of this petition against respondent on PF, RC, authorized
courier/speed post as well as through email and Whatsapp messenger.
Steps be taken within one week.
At this juncture, Ld. Counsel for GNCTD submits that he has moved
an application under Section 36 (3) of A and C Act. A prayer is made that plaintiff
may be granted ex-parte ad interim stay on the award dated 30.12.2024 whereby
claim petition of respondent partnership firm was allowed. There appears to be
serious flaw in the appointment of the Arbitral Tribunal in so far as in first para of
internal page 1 the Arbitrator admits that he was appointed as Sole Arbitrator by
Chief Engineer South PWD.
Ex facie this appointment is in direct contradistinction to amendment
brought by the Legislature in Arbitration and Conciliation Act w.e.f. 23.10.2015
whereby Section 12 (5) and Schedule 7 of Arbitration & Conciliation Act, 1996
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was introduced. The above provision has been interpreted by Hon’ble Supreme
Court as well as Hon’ble High Court of Delhi in following judgments:
1. Delhi Integrated Multi Model Transit Systems vs. Delhi Jal Board, 2021 Latest Caselaw
3048 Delhi;
2. Proddatur Cable TV Digi Services vs. SITI Cable Network Ltd., 2020 Latest Caselaw
328 Delhi;
3. M/s. Omcon Infra Pvt. Ltd. v. Indiabull Investment Advisors Ltd., 2020 Latest Caselaw
2545 Delhi;
4. VSK Technologies Pvt. Ltd. v. Delhi Jal Board, 2021 Latest Caselaw 274 Delhi;
5. Chhaya Rai vs. KLJ Developers Pvt. Ltd., 2021 Latest Caselaw 1440 Delhi.
In case titled Kotak Mahindra Bank Ltd. Vs. Narender Kumar
Prajapat and Ors., 2023 Latest Caselaw 709 Del wherein Division Bench of
Hon’ble Delhi High Court observed that:
“This Court finds no infirmity with the aforesaid view of (District Judge, Commercial
Court). A person who is ineligible to act an Arbitrator, lacks the inherent jurisdiction to
render an Arbitral Award under the A&C Act. It is trite law that a decision, cannot be
considered as valid. Thus clearly such an impugned award cannot be enforced”.
The said order of Division Bench of Hon’ble High Court has been
upheld by Hon’ble Supreme Court in case titled as “Kotak Mahindra Bank
Ltd. Vs. Narendra Kumar Prajapat”, 2023 Latest Caselaw 935 SC. Hon’ble
Apex Court held that an award passed by unilaterally appointed arbitrator is a
nullity and observed that:
“From paragraph 6 of the impugned order, it appears to be an admitted position that the
Arbitrator unilaterally appointed by the petitioner was ineligble to be appointed as an
arbitrator by virtue of Section 12(5) of the Arbitration and Conciliation Act, 1996. Hence
in view of this peculiar factual position, no case for interference is made out in exercise
of our jurisdiction under Article 136 of the Constitution of India. The Special Leave
Petition is accordingly dismissed”.
In case titled Mercedes Benz Financial Services India Private Ltd.
Vs. M/s Khokher Enterprises RFA (Comm.) 5/2023, Hon’ble Delhi High Court
upheld this Court’s order and observed that:
“An award rendered by a person- who is ineligible’ to act as an arbitrator by virtue of
Section 12(5) of the A& C Act – is a nullity, and therefore cannot be enforced”.
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It is important to mention here that this Court while presiding a
Commercial Court in District Shahdara in KKD had imposed a cost of Rs.3 lakhs
on Govt. of NCT of Delhi for carrying out a similar exercise of unilateral
appointment of a retired Principal Secretary, Defence in a similar dispute between
the Government and the contractor. That order of this Court was challenged by
GNCTD before Commercial Appellate Division Bench under Commercial Courts
Act and the order was upheld.
It is argued by Ld. Counsel for the Objector GNCTD that the Arbitral
Tribunal was appointed after a waiver in the writing under proviso to Section 12
(5) of A & C Act was issued. Time sought for producing the same.
Put up for further proceedings on 09.07.2025.
(SURINDER S. RATHI)
District Judge
Commercial Court-11
Central District, THC
Delhi/08.07.2025(A)
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