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* IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on: 12.09.2024
Judgment pronounced on: 03.02.2025

+ O.M.P. (COMM) 304/2018

ISAR ENGINEERS PRIVATE LTD. ..... Petitioner

Through: Mr Kiran Suri, Sr. Adv. with Mr Hitendra Nath
Rath, Ms Vidushi Garg and Ms Laxmi, Advs.
versus
NTPC-SAIL POWER COMPANY LTD. ..... Respondent
Through: Mr Sanjay Rawat, Adv.

CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH

JUDGMENT

: JASMEET SINGH, (J)

1. This is a petition under Section 34 of the Arbitration and Conciliation

Act, 1996 challenging the ex-parte Award passed by the learned Sole
Arbitrator on 13.12.2017 (hereinafter referred to as the „Impugned Award‟)
received by the petitioner on 15.12.2017.
2. By virtue of the impugned Award, the learned Sole Arbitrator was
pleased to allow and award the counter-claims filed by the respondent.
Facts
3. The brief facts encapsulating the present matter are that:-
a. The petitioner is a company incorporated under the Companies
Act, 2013 engaged in execution of works contract. The respondent is a

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 joint venture of National Thermal Power Corporation and Steel
Authority of India Ltd.
b. The petitioner was awarded the work of “Civil works for
raising of Ash dyke (Lagoon-A from 231M to 235M for Rourkela CPP-
II (2 X 60 MW)” by the Respondent vide Letter of Acceptance dated
06.12.2005. The duration for completion of the work was 12 months
and the contract value was Rs. 2,59,43,975/-.
c. The petitioner submits that there was delay attributable to the
respondent since amongst others delays, the work site was not handed
over in time, drawings were provided late and the rate of additional
quantities of work were not finalized therefore the respondent granted
extension of time but recovered liquidated damages from the petitioner.
d. The respondent on 23.08.2008 terminated the contract. The
petitioner being aggrieved by the termination invoked arbitration under
Clause 56 of the GCC, being the Arbitration Clause.
e. As per the Arbitration Clause, the General Manager/Business
Unit Head was the named Arbitrator to adjudicate the disputes between
the parties. Since he was the supervising/controlling authority with
regard to the contract in question, held various meetings with the
petitioner reviewing the progress of the work and was the authority that
took the decision to terminate the contract, the petitioner requested for
appointment of an independent Arbitrator for adjudication of the
disputes. However, the respondent on 20.12.2010 emphasized that in
terms of clause 56 of the GCC, only the General Manager/Business
Unit Head can be appointed as the Sole Arbitrator to adjudicate the
disputes.

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 f. The petitioner vide letter dated 14.06.2011 once again requested
the respondent for appointment of an independent Arbitrator for
adjudication of the disputes due to the direct involvement of the named
Arbitrator however Shri Debasis Sarkar, the General Manager &
Business Unit Head, NSPCL (NTPC-SAIL Power Company Limited),
Rourkela entered reference on 12.07.2011 while rejecting the request of
the petitioner for appointment of an independent Arbitrator.
g. On 26.07.2011, the petitioner once again requested for
appointment of an independent Arbitrator for adjudication of disputes,
which was rejected by the Arbitrator on 26.08.2011.
h. Aggrieved by the said action, the petitioner filed an Arbitration
Petition No. 59/2011 before Hon‟ble High Court of Orissa, Cuttack
under Section 11 of the Arbitration & Conciliation Act, 1996 seeking
appointment of an independent Arbitrator.
i.On 05.10.2012, the Hon‟ble High Court of Orissa, Cuttack kept the
arbitration proceedings in abeyance, which was subsequently clarified
on 10.03.2017 to state that there was no stay in the matter and the
Arbitrator may proceed.
j.Post the order dated 10.03.2017, the petitioner did not file the
Statement of Claim and the respondent filed the Counter-Claim on
16.08.2017.
k. On transfer of Shri Debasis Sarkar from the post of General
Manager, it is stated by the petitioner that in terms of Clause 56 of the
GCC another Arbitrator was to be appointed by the Chairman and
Managing Director of the NTPC. However, it transpired that after the
transfer of Shri Debasis Sarkar, the successor General Manager of the

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 respondent-company (i.e. Mr Yogendra Singh) assumed jurisdiction to
act as the Sole Arbitrator. On his transfer, Mr Awadhesh Kumar Tiwari,
the new General Manager/Business Unit Head once again
automatically assumed jurisdiction.
l. The petitioner was proceeded ex-parte by the Arbitrator on
28.08.2017.
m. The learned Arbitrator vide the impugned Award was pleased to
allow the Counter-Claims raised by the respondent and directed the
petitioner to pay Rs.1,35,60,291.34/- along with Simple Interest at the
rate of 10% per annum from cause of action, i.e.01.10.2012 till the date
of award and 18% from the date of Award till payment. The costs of
arbitration of Rs. 3 lakhs was also directed to be paid by the petitioner.
n. On 09.03.2018, the Hon‟ble High Court of Orissa, Cuttack
permitted the petitioner to withdraw the petition under section 11 of the
Arbitration and Conciliation Act, 1996 with liberty to raise all
grievances under Section 34 of the Arbitration and Conciliation Act,
1996. Hence, the present petition.
o. On 02.08.2018, this court held that this court has jurisdiction to
deal with the present petition.
p. On 09.12.2019, this Court allowed the I.A. 9391/2018 being an
application seeking condonation of 94 days re-filing the petition.
Submissions
4. The petitioner has challenged the Award on the ground that it is
violative of basic principles of natural justice as the named Arbitrator, i.e.
the General Manager/Business Unit Head of the respondent-company, is
directly and intrinsically involved in execution of the awarded work.

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 5. The petitioner submits that even though prior to the amendment, the
Arbitrator being an employee of one of the parties was not an ipso facto
ground for presumption of bias/lack of independence but the petitioner is
within its rights to levy and prove justifiable apprehensions about the
independence and impartiality of the named Arbitrator when the Arbitrator is
the dealing authority for the contract in question.
6. The petitioner also challenges the automatic transfer of jurisdiction to
the successive/successor General Manager/Business Unit Head of the
respondent, being contrary to clause 56 of the GCC which requires the
Chairman and Managing Director of the NTPC to appoint another person to
act as an Arbitrator. The petitioner submits that the new General
Manager/Business Unit Head of the respondent automatically assumed
jurisdiction without any reference to Chairman and Managing Director of
the NTPC, hence, the composition of the Arbitral Tribunal is contrary to the
arbitration clause.
7. The petitioner submits that since the petition under Section 11 of the
Arbitration & Conciliation Act, 1996 was pending before the Hon‟ble High
Court of Orissa, Cuttack, the petitioner did not file any claim statement
before the Arbitrator. Despite the same, the Arbitrator went on to adjudicate
the counter-claims filed by the respondent.
8. On merits, the petitioner has argued that the Award is unreasoned
because (i) the Arbitrator has not assigned any reason for holding that the
petitioner has abandoned the contract (ii) the Arbitrator has not acted within
the four corners of the contract and (iii) the Arbitrator has awarded an
amount of Rs. 2,05,66,441 (including interest) whereas the balance work
only amounted to Rs. 1,84,78,029/-. Hence, it is against public policy.

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 9. The respondent submits that the despite the order of the Hon‟ble High
Court of Orrisa clarifying that there is no stay in the arbitral proceedings, the
petitioner failed to participate in the arbitral proceedings. Therefore, the
petitioner cannot be permitted to take benefit of its own wrong.
10. Further, the respondent submits that prior to the amendment of 2015,
unilateral appointments were allowed without any restrictions. The
petitioner has failed to show any basis for having justifiable doubts
regarding the independence or impartibility of the appointment by the
petitioner. Therefore, the petitioner was obligated to participate in the
proceedings. The respondent relies on the judgments of the Hon‟ble
Supreme Court in Aravali Power Co. (P) Ltd. v. Era Infra Engg. Ltd., (2017)
15 SCC 32, S.P. Singla Constructions (P) Ltd. v. State of H.P., (2019) 2 SCC
488, Indian Oil Corpn. Ltd. v. Raja Transport (P) Ltd., (2009) 8 SCC 520,
Union of India v. Pradeep Vinod Construction Co., (2020) 2 SCC 464,
Union of India v. Parmar Construction Co., (2019) 15 SCC 682 and M/s
Shree Vishnu Constructions v. Engineer in Chief MES (Civil Appeal No.
3461 of 2023 in SLP (C) no. 5306 of 2022).
Analysis
11. I have heard learned counsel for the parties.
Re: Independence of Arbitrator pre-amendment of 2015
12. The first question that arises for the consideration of this court is
whether the unilateral appointment of Arbitrator done pre-amendment of
2015 can be challenged on the grounds of bias, partiality and lack of
independence of the Arbitrator.
13. The arbitration clause between the parties, i.e. Clause 56 of the GCC,
reads as under:

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 “Except where otherwise provided for in the contract all questions
and disputes relating to the meaning of the specifications, designs,
drawings and instructions herein 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 works or the execution or failure to
execute same whether arising during the progress of the work or
after the completion or abandonment thereof shall be referred to
the sole arbitration of the General Manager of National Thermal
Power Corporation Ltd., and if the General Manager is unable or
unwilling to act, to the sole arbitration of some other person
appointed by the Chairman and Managing Director, National
Thermal Power Corporation Ltd., willing to act as such arbitrator.
There will be no objection if the arbitrator so appointed is an
employee of National Thermal Power Corporation Ltd., and that
he had to deal with the matters to which the contract relates and
that in the course of his duties as such he had expressed views on
or any of the matters in disputes or difference. The arbitrator to
whom the matter is originally referred being transferred or
vacating his office or being unable to act for any reason as
aforesaid at the time of such transfer, vacation of office or inability
to act, Chairman and Managing Director, National Thermal
Power Corporation Ltd. shall appoint another person to act as
arbitrator in accordance with the terms of the Contract. It is also
a term of this Contract that no person other than a person
appointed by C. M D., N. T P. C. Ltd., as aforesaid should act as
arbitrator and if for any reasons, that is not possible, the matter is
not to be referred to arbitration at all.
Subject as aforesaid the provision of the Arbitration Act, 1940 or
any statutory modification or re-enactment thereof and the rules

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 made thereunder and for the time being in force shall apply to the
arbitration proceeding under this Clause.
It is a term of the contract that the party invoking arbitration shall
specify the dispute or disputes to be referred to arbitration under
this clause together with the amount or amounts claimed in
respect of each such dispute.
The arbitrators may from time to time with consent of the parties
enlarge the time, for making and publishing the award.
The work under the Contract shall, if reasonably possible,
continue during the arbitration proceedings and no payment due
or payable to the Contractor shall be withheld on account of such
proceedings. The Arbitrator shall be deemed to have entered on
the reference on the date he issues notice to both the parties fixing
the date of the first hearing. The Arbitrator shall give a separate
award in respect of each dispute or difference referred to him.
The venue of arbitration shall be final, conclusive and binding on
all parties to this contract.
The cost of arbitration shall be borne by the parties to the dispute,
as may be decided by the arbitrator(s).
In the event of disputes or differences arising between one public
section enterprise and a Govt. Department or between two public
sector enterprises the above stipulations shall not apply, the
provisions of B. P. E. Office memorandum No. BPEIGL-
001176/MAN/2[110-75-BPE(GMI-1)] dated 1st January 1976 or
its amendments for arbitration shall be applicable.”
(Emphasis Supplied)

14. A perusal of the arbitration clause shows that the General

Manager/Business Unit Head of the respondent is the named Arbitrator for
adjudicating the disputes arising between the parties and in case of inability
on his part, the Chairman and Managing Director of the respondent
company shall appoint any other person to act as an Arbitrator. There would

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 be no objection if the Arbitrator, so appointed, is an employee of the
respondent company and was the dealing authority.
15. No doubt prior to the amendment of 2015, the fact that the named
Arbitrator is an employee, could not ipso-facto be a ground for bias of the
Arbitrator, as held in the judgment of the Hon‟ble Supreme Court in Aravali
Power Co. (P) Ltd. v. Era Infra Engg. Ltd., (2017) 15 SCC 32, however the
same also held that justifiable apprehension can be raised in case the person
was the controlling or dealing authority with respect to the subject matter in
dispute. The operative portion of the judgment reads as under:-
“22. The principles which emerge from the decisions referred to
above are:
22.1. In cases governed by 1996 Act as it stood before the
Amendment Act came into force:
22.1.1. The fact that the named arbitrator is an employee of one of
the parties is not ipso facto a ground to raise a presumption of bias
or partiality or lack of independence on his part. There can
however be a justifiable apprehension about the independence or
impartiality of an employee arbitrator, if such person was the
controlling or dealing authority in regard to the subject contract or
if he is a direct subordinate to the officer whose decision is the
subject-matter of the dispute.
22.1.2. Unless the cause of action for invoking jurisdiction under
Clauses (a), (b) or (c) of sub-section (6) of Section 11 of the 1996
Act arises, there is no question of the Chief Justice or his designate
exercising power under sub-section (6) of Section 11.
22.1.3. The Chief Justice or his designate while exercising power
under sub-section (6) of Section 11 shall endeavour to give effect to
the appointment procedure prescribed in the arbitration clause.
22.1.4. While exercising such power under sub-section (6) of
Section 11, if circumstances exist, giving rise to justifiable doubts as
to the independence and impartiality of the person nominated, or if

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 other circumstances warrant appointment of an independent
arbitrator by ignoring the procedure prescribed, the Chief Justice
or his designate may, for reasons to be recorded ignore the
designated arbitrator and appoint someone else.”
(Emphasis Supplied)
16. In a similar matter of Ellora Paper Mills Ltd. v. State of M.P., (2022) 3
SCC 1, wherein the Arbitral Tribunal was constituted unilaterally in 2001
(i.e. pre-amendment of 2015) and the arbitral proceedings were stayed till
2017, the Hon‟ble Supreme Court while relying on the judgments of TRF
Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 and Bharat
Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755 held
that the amendment of 2015 will be applicable and the Arbitral Tribunal
appointed unilaterally would have lost its mandate in terms of section 12(5)
read with Seventh Schedule of the Arbitration and Conciliation Act, 1996.
The operative portion of the judgment reads as under:-
“11.3. The learned counsel appearing on behalf of the respondent
has also submitted that in the facts and circumstances of the case,
the decision of this Court in Jaipur Zila Dugdh Utpadak Sahkari
Sangh [Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd. v. Ajay
Sales & Suppliers, (2021) 17 SCC 248 : 2021 SCC OnLine SC 730]
is not applicable. It is submitted that in the said case, the arbitrator
was appointed after amendment of the Arbitration Act, 2015.
However, in the present case, the arbitrator was appointed
approximately 20 years prior thereto and thereafter the arbitration
proceedings commenced and even the appellant also participated. It
is therefore contended that the amended Section 12(5) of the
Arbitration Act which is brought in the statute by way of
amendment in 2015 shall not be applicable retrospectively. It is
submitted that Section 12(5) of the Arbitration Act shall have to be
made applicable prospectively.

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 12. We have heard the learned counsel for the respective parties at
length. Having heard the learned counsel for the respective parties
and on considering the impugned judgment and order [Ellora
Paper Mills Ltd. v. State of M.P., 2021 SCC OnLine MP 2796]
passed by the High Court, the short question which is posed for
consideration of this Court is, whether, the Stationery Purchase
Committee—Arbitral Tribunal consisting of the officers of the
respondent has lost the mandate, considering Section 12(5) read
with Seventh Schedule of the Arbitration Act, 1996. If the answer is
in the affirmative, in that case, whether a fresh arbitrator has to be
appointed as per the Arbitration Act, 1996?
13. It is not in dispute that the High Court earlier constituted the
Arbitral Tribunal of Stationery Purchase Committee comprising of
officers of the respondent viz. Additional Secretary, Department of
Revenue as President, and : (i) Deputy Secretary, Department of
Revenue, (ii) Deputy Secretary, General Administration
Department, (iii) Deputy Secretary, Department of Finance,
(iv) Deputy Secretary/Under Secretary, General Administration
Department, and (v) Senior Deputy Controller of Head Office,
Printing as Members.
14. It may be true that the earlier Arbitral Tribunal—Stationery
Purchase Committee was constituted as per the agreement entered
into between the parties. It is also true that initially the said
Arbitral Tribunal was constituted by the High Court in the year
2001, however, thereafter Stationery Purchase Committee—Arbitral
Tribunal could not commence the arbitration proceedings in view of
number of proceedings initiated by the appellant. There was a stay
granted by the High Court from 4-5-2001 to 24-1-2017 and
thereafter in the year 2019, the present application was preferred
before the High Court invoking Section 14 read with Sections 11
and 15 of the Arbitration Act, 1996 seeking termination of the
mandate of the originally constituted Arbitral Tribunal and to
appoint a new arbitrator.

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 ….
16. As observed hereinabove, the Arbitral Tribunal—Stationery
Purchase Committee consisted of officers of the respondent State.
Therefore, as per Amendment Act, 2015 — sub-section (5) of
Section 12 read with Seventh Schedule, all of them have become
ineligible to become arbitrators and to continue as arbitrators.
Section 12 has been amended by the Amendment Act, 2015 based
on the recommendations of the Law Commission, which specifically
dealt with the issue of “neutrality of arbitrators”. To achieve the
main purpose for amending the provision, namely, to provide for
“neutrality of arbitrators”, sub-section (5) of Section 12 lays down
that notwithstanding any prior agreement to the contrary, any
person whose relationship with the parties or counsel or the
subject-matter of the dispute falls under any of the categories
specified in the Seventh Schedule, he shall be ineligible to be
appointed as an arbitrator. In such an eventuality i.e. when the
arbitration clause is found to be foul with the amended provision,
the appointment of the arbitrator would be beyond the pale of the
arbitration agreement, empowering the Court to appoint such an
arbitrator as may be permissible. That would be the effect of the
non obstante clause contained in sub-section (5) of Section 12 and
the other party cannot insist upon the appointment of the arbitrator
in terms of the arbitration agreement.
17. It cannot be disputed that in the present case, the Stationery
Purchase Committee—Arbitral Tribunal comprising of officers of
the respondent State are all ineligible to become and/or to continue
as arbitrators in view of the mandate of sub-section (5) of Section
12 read with Seventh Schedule. Therefore, by operation of law and
by amending Section 12 and bringing on statute sub-section (5) of
Section 12 read with Seventh Schedule, the earlier Arbitral
Tribunal—Stationery Purchase Committee comprising of the
Additional Secretary, Department of Revenue as President,
and: (i) Deputy Secretary, Department of Revenue, (ii) Deputy

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 Secretary, General Administration Department, (iii) Deputy
Secretary, Department of Finance, (iv) Deputy Secretary/Under-
Secretary, General Administration Department, and (v) Senior
Deputy Controller of Head Office, Printing as Members, has lost its
mandate and such an Arbitral Tribunal cannot be permitted to
continue and therefore a fresh arbitrator has to be appointed as per
the Arbitration Act, 1996.
20. In view of the above and for the reasons stated hereinabove, the
impugned judgment and order [Ellora Paper Mills Ltd. v. State of
M.P., 2021 SCC OnLine MP 2796] passed by the High Court is
contrary to the law laid down by this Court in TRF [TRF
Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4
SCC (Civ) 72] , Bharat Broadband Network [Bharat Broadband
Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755 : (2019) 3
SCC (Civ) 1] and the recent decision of this Court in Jaipur Zila
Dugdh Utpadak Sahkari Sangh [Jaipur Zila Dugdh Utpadak
Sahkari Sangh Ltd. v. Ajay Sales & Suppliers, (2021) 17 SCC 248 :
2021 SCC OnLine SC 730] . It is held that the earlier Arbitral
Tribunal—Stationery Purchase Committee comprising of the
Additional Secretary, Department of Revenue as President, and :
(i) Deputy Secretary, Department of Revenue, (ii) Deputy Secretary,
General Administration Department, (iii) Deputy Secretary,
Department of Finance, (iv) Deputy Secretary/Under Secretary,
General Administration Department, and (v) Senior Deputy
Controller of Head Office, Printing as Members, has lost its
mandate by operation of law in view of Section 12(5) read with
Seventh Schedule and a fresh arbitrator has to be appointed under
the provisions of the Arbitration Act, 1996. The impugned judgment
and order [Ellora Paper Mills Ltd. v. State of M.P., 2021 SCC
OnLine MP 2796] passed by the High Court is therefore
unsustainable and deserves to be quashed and set aside.”

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 17. In the present case, in somewhat similar facts, the named Arbitrator
entered into reference in 2011 and the petitioner repeatedly displayed its
apprehension with the appointment of the Arbitrator, both pre and post
commencement of arbitral proceedings. The petitioner approached the
Hon‟ble High Court of Orissa, Cuttack under section 11 of the Arbitration
and Conciliation Act, 1996 to appoint an impartial and independent
arbitrator since the named Arbitral was the authority dealing with the
contract in question between the parties. The arbitration was initially kept in
abeyance by the Hon‟ble Orissa High Court vide order dated 05.10.2012 and
it was only on 10.03.2017 that a clarification regarding no stay on arbitration
was given by the court. Applying the dicta of Ellora Paper Mills Ltd. v.
State of M.P., (2022), the named arbitrator could not have been permitted to
continue, having become de jure ineligible under section 12(5) of the
Arbitration and Conciliation Act, 1996.
18. The recent judgment of the Hon‟ble Supreme Court in Central
Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) A
Joint Venture Co., 2024 SCC OnLine SC 3219 also upheld the finding that
unilateral appointments are invalid and are liable to be set aside due to the
same being violative of Article 14 of the Constitution of India. However,
only unilateral appointments in terms of three member tribunals were said to
have prospective ruling. The operative portion reads as under:-
“168. In the present reference, we have upheld the decisions of this
Court in TRF (supra) and Perkins (supra) which dealt with
situations dealing with sole arbitrators. Thus, TRF (supra) and
Perkins (supra) have held the field for years now. However, we have
disagreed with Voestalpine (supra) and CORE (supra) which dealt
with the appointment of a three-member arbitral tribunal. We are

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 aware of the fact that giving retrospective effect to the law laid
down in the present case may possibly lead to the nullification of
innumerable completed and ongoing arbitration proceedings
involving three-member tribunals. This will disturb the commercial
bargains entered into by both the government and private entities.
Therefore, we hold that the law laid down in the present reference
will apply prospectively to arbitrator appointments to be made after
the date of this judgment. This direction only applies to three-
member tribunals. J.
Conclusion
169. In view of the above discussion, we conclude that:
a. The principle of equal treatment of parties applies at all stages of
arbitration proceedings, including the stage of appointment of
arbitrators;
b. The Arbitration Act does not prohibit PSUs from empanelling
potential arbitrators. However, an arbitration clause cannot
mandate the other party to select its arbitrator from the panel
curated by PSUs;
c. A clause that allows one party to unilaterally appoint a sole
arbitrator gives rise to justifiable doubts as to the independence
and impartiality of the arbitrator. Further, such a unilateral clause
is exclusive and hinders equal participation of the other party in the
appointment process of arbitrators;
d. In the appointment of a three-member panel, mandating the other
party to select its arbitrator from a curated panel of potential
arbitrators is against the principle of equal treatment of parties. In
this situation, there is no effective counterbalance because parties
do not participate equally in the process of appointing arbitrators.
The process of appointing arbitrators in CORE (supra) is unequal
and prejudiced in favour of the Railways;
e. Unilateral appointment clauses in public-private contracts are
violative of Article 14 of the Constitution;

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 f. The principle of express waiver contained under the proviso to
Section 12(5) also applies to situations where the parties seek to
waive the allegation of bias against an arbitrator appointed
unilaterally by one of the parties. After the disputes have arisen, the
parties can determine whether there is a necessity to waive the
nemo judex rule; and
g. The law laid down in the present reference will apply
prospectively to arbitrator appointments to be made after the date
of this judgment. This direction applies to three-member tribunals.”

19. In the present case, it is the General Manager/Business Unit Head of

the respondent company who was supervising the work in question and was
directly involved in the execution of the work. It is the General
Manager/Business Unit Head of the respondent company with whom the
petitioner‟s had repeated meetings regarding the progress of the work and
the authority that took the decision of termination of the contract. Hence, the
apprehension that the Arbitrator would be biased and partial towards the
respondent cannot be said to be an unjustifiable apprehension. In addition,
the petitioner approached the High Court of Orissa, Cuttack immediately on
getting to know about the appointment of the General Manager/Business
Unit Head of the respondent company apprehending partiality and bias on
part of the Arbitrator.
20. In view of the above discussion, the Impugned Award is liable to be
set aside on this ground alone.
Re: Appointments of Arbitrators contrary to the Arbitration Clause
21. Further, even the appointments of the subsequent Arbitrators,
including Mr. Awadhesh Kumar Tiwari who passed the impugned Award,
are not according to the procedure prescribed in the Arbitration Clause.

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 22. According to the Arbitration clause, the General Manager/Business
Unit Head of the respondent is the named Arbitrator. In the event the
Arbitrator, to whom the matter is originally referred to, is transferred or
vacates his office or unable to act for any reason, the Chairman and
Managing Director, NTPC was to appoint any other person as an Arbitrator
in terms of the contract. No other person other person so appointed by the
Chairman and Managing Director, NTPC could act as the Arbitrator.
However contrary to the same, after Mr. Debasis Sarkar, initially one Mr.
Yogendra Singh, the then General Manager/Business Unit Head of the
Respondent Company acted as the sole Arbitrator and upon his transfer one
Mr. Awadhesh Kumar Tiwari, General Manager/Business Unit Head of the
Respondent Company once again automatically assumed jurisdiction and
acted as the sole Arbitrator.
23. A perusal of the Arbitral record shows that the successive Arbitrators
have been acting independent to the procedure as contemplated under the
arbitration clause. On 04.12.2012, Shri Debasis Sarkar informed that the
next date for the third sitting will be informed. The letter of 04.12.2012
reads as under:-

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 24. Thereafter, a letter was sent by Mr. Yogendra Singh on 12.06.2014
informing the parties the next date of hearing being 23.08.2014. The letter
reads as under:-

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 25. On 23.08.2014, Mr. Yogendra Singh informed that he is being
released from him post and the new Arbitrator will take over. The letter
reads as under:-

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 26. Thereafter, on the next date, i.e. 08.12.2015, Mr. Awadhesh Kumar
Tiwari also on his own volition and automatically assumed jurisdiction. The
letter of the said date is reproduced below:-

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 27. Thereafter, on 28.08.2017, Mr Awadhesh Kumar Tiwari was pleased
to proceed ex-parte against the petitioner. The order is reproduced as under:-

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 28. It is settled law that the Arbitrator is a creature of the contract and has
to function within four corners of contract. If a particular mechanism is
contemplated for his appointment, the same must be followed in its true

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 letter, spirit and intent, failing which the Arbitrator is without jurisdiction
and the appointment is non-est and invalid. This court in M/s. M.V. Omni
Projects (India) ltd. V. Union of India, 2024:DHC:7874 has held as under:-
“25. There is also no merit in the contention that the present
petition is not maintainable because an arbitral tribunal already
stands constituted in terms of the contractual provisions. It has been
consistently held in a series of judgments that where the
appointment procedure is invalid, any proceedings before an
improperly constituted arbitral tribunal are non-est……...”

(Emphasis Supplied)

29. Further, section 34(2)(v)(a) of Arbitration and Conciliation Act, 1996

reads as under:-
“34. Application for setting aside arbitral award.
(2) An arbitral award may be set aside by the Court only if—
(v) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the
parties, unless such agreement was in conflict with a provision of
this Part from which the parties cannot derogate, or, failing such
agreement, was not in accordance with this Part; or”

30. The clause clearly contemplates that in a situation where the

Arbitrator (to whom the matter is originally referred) is transferred, vacates
the office or is unable to act, then only the Chairman and Managing Director
of the NTPC shall appoint another person to act as an Arbitrator in
accordance with the terms of the contract. Nowhere does the Arbitration
clause contemplates the automatic assumption of jurisdiction by the
successor General Manager/Business Unit Head as the Arbitrator.

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 31. The situation in the present case, i.e. Shri Debasis Sarkar having been
transferred and thereafter the successive General Managers/Business Unit
Heads of the respondent, i.e. Mr. Yogendra Singh and Mr. Awadhesh Kumar
Tiwari taking over as Arbitrators by virtue of their office of is clearly in
contravention of the Arbitration Clause.
32. There is no document to show that the subsequent Arbitrators,
especially Mr. AK Tiwari (the Arbitrator who passed the Impugned Award),
were appointed by the Chairman and Managing Director of the NTPC or
even had the consent/concurrence of the Chairman and Managing Director
of the NTPC and hence, the same is violative of the arbitration clause. The
above-reproduced automatic assumption of jurisdiction by the Arbitrators
have no basis in law. The sanctity of appointment of Arbitrator and the scope
of its jurisdiction is solely based on the express agreement between the
parties. The invalidity of the appointment of the arbitrator goes to the root of
the matter and clearly falls within the parameters of section 34(2)(a)(v) of
the Arbitration and Conciliation Act, 1996. Since the appointment
procedure was not followed, the appointment of the subsequent Arbitrators,
including Mr. Awadhesh Kumar Tiwari who passed the award, is non-est and
invalid in law.
Conclusion
33. In view of the above, the Impugned Award dated 13.12.2017 titled
“Mr. Isar Engineers Private Limited v. M/s. NTPC-SAIL Power Company
Limited” is set aside since (i) the appointments of the subsequent Arbitrators,
namely Mr. Yogendra Singh and Mr. Awadhesh Kumar Tiwari, were in
contravention to the appointment procedure contemplated under the contract
and (ii) the appointments were made unilaterally by the respondent.

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 34. Since the Impugned Award is being set aside on the above two
foundational facts, I need not go into the merits of the Award.
35. The present petition is allowed and pending applications are disposed
of.

JASMEET SINGH, J
FEBRUARY 03, 2025
dj

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By:MAYANK
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