Delhi High Court Terminates Court-Appointed Arbitrator’s Mandate Under Section 14 Citing Past Professional Links

Introduction:

The Delhi High Court, on July 01, 2025, delivered its judgment in Roshan Real Estates Pvt. Ltd. v. Government of NCT of Delhi[1], through Justice Jasmeet Singh. The Petition was assailing under Section 14 and 15 of the Arbitration and Conciliation Act, 1996 (“the Act”), whereby the petitioner was seeking termination of the mandate of the sole arbitrator appointed by the Court under Section 11(6) of the Act.

Brief Facts:

On 5 January 2019, the Government of NCT of Delhi (“respondent”) awarded a CPWD contract to Roshan Real Estates Pvt. Ltd. (“petitioner”) for ₹71,94,05,800 to construct additional classrooms, laboratories, toilets and allied services at seven government schools in South‑East Delhi. The petitioner completed the work and on 23 May 2022 raised a final bill for ₹20,73,39,891. In March 2023, payment was released but was unilaterally reduced to ₹5,09,52,388, resulting in disputes over the shortfall.

The petitioner invoked the three‑tier dispute resolution mechanism under Clause 25 of the General Conditions of Contract between July 2023 and February 2024, then issued a notice under Section 21 of the Act on 16 December 2024, and filed the case under Section 11 when no arbitrator was agreed. On 10 February 2025, the High Court appointed Mr. B. B. Dhar, a retired CPWD engineer, as sole arbitrator. Subsequently, the petitioner discovered that during his CPWD tenure Mr. Dhar had supervised projects executed by the petitioner. In an earlier dispute between the same parties, the respondent had withdrawn Mr. Dhar’s appointment as arbitrator on similar objections dated 7 and 17 August 2020. Relying on Entry 1 of the Seventh Schedule, the petitioner filed the present petition for termination of Mr. Dhar’s mandate under Sections 14 and 15 of the Act.

Contentions:

The petitioner alleged that the arbitrator’s prior professional association with it during his service as a senior engineer in the Central Public Works Department (CPWD), rendered him ineligible under Entry 1 of the Seventh Schedule and gave rise to a reasonable apprehension of bias. The respondent contended that the arbitrator’s appointment, having been made by the Court, could not be interfered with unless clear statutory ineligibility was shown. It was further argued that the prior interaction was distant, limited, and lacked any decision-making element. At the heart of the dispute lay the interpretation of Section 12(5) read with the Seventh Schedule, and its interplay with Sections 11, 14, and 15 of the Act, particularly in light of the 2015 amendments and relevant Supreme Court precedents on arbitrator disqualification.

Analysis:

The Delhi High Court first addressed whether Section 12(5) of the Act, read with Entry 1 of the Seventh Schedule, disqualified Mr. Dhar from acting as arbitrator. Section 12(5) deems ineligible any person whose past or present relationship with a party matches specified categories, unless the parties waive the disqualification by express post dispute writing. Entry 1 covers persons who are employees, consultants, advisors or have any other past or present business relationship with a party. The 2015 Amendment expanded the list of disqualifications to insulate arbitration from actual or perceived bias. The Court noted that the term “any other past or present business relationship” is not limited by duration or decision-making role; rather, it focuses on potential for reasonable apprehension of bias.

The Court reviewed Supreme Court rulings, beginning with TRF Ltd. v. Energo Engineering Projects Ltd.[2] which held that a sole ‑appointing party with an interest in the dispute cannot have exclusive power to appoint an arbitrator whose impartiality might be compromised. It noted that Perkins Eastman Architects DPC v. HSCC (India) Ltd.[3] clarified that any arbitrator rendered ineligible by operation of Section 12(5) also loses the power to appoint another arbitrator. The bench observed that reliance on these precedents extended beyond unilateral appointments by parties to judicial appointments under Section 11, insofar as statutory safeguards remain applicable to court ‑appointed arbitrators. The Court also cited Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation[4] for the proposition that arbitration panels must inspire confidence through broad based‑ composition, avoiding repeated appointments of arbitrators from a single institutional framework.

Turning to Delhi High Court precedents, the Court discussed Proddatur Cable TV Digi Service v. SITI Cable Network Ltd.[5] and Govind Singh v. M/s Satya Group Pvt. Ltd.[6] In both, past or present association with a party gave rise to reasonable apprehension of bias under Section 12(5). The Court held that these rulings applied irrespective of whether the appointment was unilateral or judicial. The bench emphasized that statutory ineligibility under Section 12(5) is de jure: once a disqualification is shown, the arbitrator cannot continue, and Section 14(1)(a) mandates termination of the mandate. A declaration under Section 12(1), affirming independence and impartiality, does not cure a statutory disqualification under Section 12(5) absent a written waiver.

The respondent’s arguments were then addressed. It contended that Mr. Dhar’s connection was confined to indirect supervision of a single project 17 to 18 years prior, that he held no decision-making role, and that he retired in June 2015. The Court found these facts immaterial to Entry 1, which does not hinge on recency, duration or nature of involvement, but on existence of a professional relationship capable of creating reasonable apprehension of bias. The bench also held that a former employee, without ongoing business relationship, did not fall within Entry 1. The Court observed that the present case differed because Mr. Dhar had a supervisory and business relationship with the petitioner, and the respondent itself had previously withdrawn his appointment upon similar objections.

The bench further noted that the High Court was unaware of the 2020 withdrawal letters when appointing Mr. Dhar under Section 11. These letters demonstrated the respondent’s prior recognition of a reasonable apprehension of bias. Their absence from the record vitiated the appointment. The Court held that these additional facts, once brought to light, triggered statutory disqualification under Entry 1 and rendered Mr. Dhar de jure unable to continue. The bench also referred to HRD Corporation (Marcus Oil & Chemical Division) v. GAIL (India) Ltd.[7], which clarified that ineligibility under Section 12(5) can be addressed under Section 14, even for court appointed‑ arbitrators, and that statutory safeguards of independence cannot be overridden by Section 11 appointments.

Judgment:

Applying the above principles, the Court concluded that Mr. Dhar fell within Entry 1 of the Seventh Schedule due to his past supervisory role over the petitioner’s contracts. This association, irrespective of its age and duration, gave rise to a reasonable apprehension of bias. The absence of any express post dispute written waiver meant that statutory ineligibility persisted. The Court held that Section 11 appointment does not override Sections 12 to 14 or preclude an application under Section 14 for termination of mandate. Accordingly, the petition was allowed and Mr. Dhar’s mandate as sole arbitrator was terminated under Section 14(1)(a). The Court appointed Ms. Justice Rekha Palli (Retired Judge, Delhi High Court) as the new sole arbitrator under the aegis of the Delhi International Arbitration Centre, leaving all pending rights, claims and preliminary objections open for adjudication.

Conclusion:

The decision in Roshan Real Estates v. Government of NCT of Delhi reinforces the principle that any professional or business relationship between an arbitrator and a party, past or present, engages statutory disqualification under Entry 1 of the Seventh Schedule, absent a written waiver post dispute. It clarifies that judicial appointments under Section 11 remain subject to the disqualification regime of Sections 12 to 14 and that a declaration of independence under Section 12(1) cannot cure disqualifications under Section 12(5).

[1] O.M.P.(T)(COMM.) 23/2025.

[2] 2017 8 SCC 377.

[3] 2020 20 SCC 760.

[4] 2017 4 SCC 665.

[5] 2020 267 DLT 51.

[6] 2023 DHC 81‑DB.

[7] 2018 12 SCC 471.