Court holds unilateral appointments by respondent's officers and mandatory selection from respondent-curated panel violate principles of impartiality and equal treatment under Arbitration and Conciliation Act, 1996.
In a significant judgment delivered on October 16, 2026, the Delhi High Court in the matter of Pramod Kumar Goel v. Union of India invalidated the arbitration appointment mechanism prescribed by the respondent, Union of India (CPWD), and appointed an independent Sole Arbitrator to adjudicate disputes arising from a civil works contract.
The petitioner, Pramod Kumar Goel, engaged under a works contract with CPWD for renovation and furnishing of Punjab & Sind Bank's corporate office, faced disputes regarding the authenticity of Manufacturer's Authorisation Forms submitted for specialized sub-heads. After conciliation efforts failed, the petitioner invoked arbitration by issuing a notice for appointment of arbitrator under Section 21 of the Arbitration and Conciliation Act, 1996 (A&C Act), read with Clause 25 of the agreement.
The respondent contested the invocation on three grounds: reliance on a superseded arbitration clause, non-compliance with prescribed notice proforma, and the nature of disputes as deadwood claims. The Court clarified that at the stage of appointment under Section 11(6) of the A&C Act, the tribunal's jurisdiction is limited to determining the existence of an arbitration agreement and that the precise version of the arbitration clause or the merits of the disputes are matters for the arbitral tribunal to decide under Section 16.
Crucially, the Court scrutinized the appointment mechanism mandated by the CPWD's arbitration clause. The clause designated the Superintending Engineer of CPWD, an officer of the respondent, as the Arbitrator Appointing Authority and restricted the appointment of arbitrators to those from a panel curated solely by the respondent. The Court held, relying on Supreme Court precedents including Perkins Eastman Architects DPC v. HSCC (India) Ltd. and Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), that such appointment mechanisms are unsustainable. It emphasized that an officer interested in the dispute cannot appoint a sole arbitrator, and mandatory selection from a panel curated unilaterally by one party violates the fundamental principle of equal treatment of parties under Section 18 of the A&C Act.
Accordingly, the Court set aside the respondent's appointment mechanism and appointed Ms. Ritika Jhurani, Advocate, as the independent Sole Arbitrator to conduct proceedings under the aegis of the Delhi International Arbitration Centre (DIAC). The arbitrator was directed to comply with disclosure requirements under Section 12 of the A&C Act, and both parties were granted the liberty to raise preliminary objections regarding jurisdiction and arbitrability before the arbitrator. The Court also maintained that all rights and contentions on claims and counterclaims remain open for adjudication on merits by the arbitrator.
This judgment reinforces the judiciary's commitment to ensuring impartiality and fairness in arbitration proceedings, particularly in contracts involving public sector entities. It highlights the need for arbitration clauses to provide a neutral appointment process and safeguards against any party exercising undue influence over the selection of arbitrators.
Bottom Line:
Arbitration and Conciliation Act, 1996 Section 11(6) At referral stage Court is confined to examining existence of arbitration agreement - Dispute as to governing version of arbitration clause does not affect existence of arbitration agreement - Unilateral appointment by officer of respondent and appointment from respondent-curated panel of empanelled arbitrators is invalid - Independent Sole Arbitrator appointed.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 11(6), Section 12(5), Section 16, Section 18, Section 21
Pramod Kumar Goel v. Union of India, (Delhi) : Law Finder Doc Id # 2998884
