1. Appeal under Section 37 of the A&C Act challenging dismissal of objections to arbitral award on ground of invalid constitution of tribunal. (Para 1 , 2 )
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2026 Supreme(Del) 1078
2026 DHC 8752
IN THE HIGH COURT OF DELHI AT NEW DELHI
Anil Kshetarpal, Bharat Parashar, JJ.
Newton Engineering And Chemicals Limited - Appellant
Versus
Indian Oil Corporation Ltd. - Respondent
FAO (COMM) 50 of 2026, CM APPL. 11407 of 2026, CM APPL. 11408 of 2026, CM APPL. 11409 of 2026, CM APPL. 11410 of 2026, CM APPL. 15817 of 2026
Decided On : 06-10-2026
Advocates Appeared :
For the Appellant : Mr. Akash Nagar, Mr. Samarpit Chauhan, Mr. Tarun Yadav, Mr. Shishir Mehra and Mr. Prateek Tiwari, Advs.
For the Respondent : Mr. Shikhar Srivastava and Ms. Prerna Singh, Advs.
Advocates:
For the Appellants/Petitioners: Akash Nagar, Samarjit Chauhan, Tarun Yadav, Shishir Mehra, Prateek Tiwari
For the Respondents: Shikhar Srivastava, Prerna Singh
For the Appellants/Petitioners: Akash Nagar, Samarjit Chauhan, Tarun Yadav, Shishir Mehra, Prateek Tiwari
For the Respondents: Shikhar Srivastava, Prerna Singh
A curated-panel appointment mechanism violates the principle of equal treatment. Selection from such a panel or subsequent participation in proceedings does not constitute the 'express agreement in writing' required under Section 12(5) of the Arbitration and Conciliation Act to waive statutory ineligibility.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 12(5) - Waiver of ineligibility - Statutory requirement of an express agreement in writing subsequent to disputes having arisen - Waiver cannot be inferred from conduct, acquiescence, or participation in arbitral proceedings (Paras 18, 20, 34).
(B) Arbitration and Conciliation Act, 1996 - Section 18 - Equal treatment of parties - Application to the stage of appointment of arbitrators - Mechanism where one party maintains a curated panel and requires the opposite party to select from it is invalid as it lacks effective counterbalance and equal participation in the constitution of the Tribunal (Paras 25, 26, 37).
(C) Communication of selection from a panel - Merely informing the other party of the name selected from a provided panel does not constitute an express agreement in writing to waive statutory requirements under Section 12(5) (Paras 29, 31, 32).
Facts of the case:
A contract for the supply of equipment was terminated. Following disputes, the respondent suggested a panel of three persons for appointment as a sole arbitrator. The appellant selected one candidate from the said panel. An arbitral award was eventually rendered. The appellant challenged the award under Section 34 of the Act, but the petition was dismissed by the trial court. The appellant then preferred an appeal under Section 37, challenging the constitution of the arbitral tribunal.
Findings of Court:
The court found that the appointment mechanism was structurally defective as the respondent retained exclusive power to determine the field of candidates. The communication sent by the appellant to select a name did not manifest a conscious and unequivocal relinquishment of statutory rights through an express written agreement subsequent to the disputes.
Issues: Whether the selection of a sole arbitrator from a panel curated by the respondent, followed by participation in proceedings, constitutes a valid appointment or a valid express waiver under the proviso to Section 12(5) of the Act.
Ratio Decidendi: The mandatory statutory prohibition under Section 12(5) overrides any prior contractual agreement. A waiver of such prohibition must be an express agreement in writing made after disputes arise. Selection from a curated panel does not constitute such an agreement, nor does subsequent participation in proceedings cure the jurisdictional defect of an invalidly constituted tribunal, as the principle of equal treatment must be preserved at the appointment stage.
Result: Appeal allowed. Judgment dated 05.04.2025 and arbitral award dated 17.08.2023 set aside. Parties granted liberty to commence fresh arbitral proceedings.
Legal Category Hierarchy
- arbitration
- practice and procedure
Table of Contents
2. Dispute over whether unilateral panel appointment of sole arbitrator without express written waiver under Section 12(5) is valid. (Para 12 , 13 , 14 , 15 )
3. Selection from party-curated panel does not constitute equal participation; express written waiver post-dispute is required, not mere conduct. (Para 17 , 18 , 19 , 20 , 24 , 25 , 26 , 27 , 28 , 33 , 34 , 35 )
4. Waiver under Section 12(5) proviso requires an express agreement in writing post-dispute; participation or selection does not substitute. (Para 30 , 31 , 32 , 38 )
5. Appeal allowed. Impugned judgment and arbitral award set aside; parties may commence fresh arbitration in accordance with law. (Para 44 , 45 , 46 )
6. Does selection of an arbitrator from a panel curated unilaterally by the other party constitute an express waiver under Section 12(5) of the A&C Act?
No. Selection from a unilateral panel does not constitute an express agreement in writing waiving Section 12(5); the statutory requirement remains unsatisfied. (Para 24 , 25 , 26 , 27 , 30 , 31 , 32 )
7. Can participation in arbitral proceedings cure the invalidity of an arbitrator's appointment due to ineligibility under Section 12(5)?
No. Participation cannot cure the defective appointment; the objection to inherent lack of jurisdiction can be raised even later, and waiver must be express. (Para 20 , 21 , 22 , 34 )
8. Does the principle of equal treatment under Section 18 apply to the constitution of an arbitral tribunal?
Yes. Equal treatment extends to the appointment stage; parties must have an equal say in constituting the tribunal, not merely a limited choice from a curated panel. (Para 19 , 25 , 26 , 27 )
9. What is required for a valid waiver of ineligibility under Section 12(5) of the A&C Act?
An express agreement in writing, made after disputes arise, containing a clear and unequivocal relinquishment of the statutory right; conduct is insufficient. (Para 17 , 18 , 19 , 33 )
JUDGMENT
ANIL KSHETARPAL, J.:
1. The present Appeal under Section 37, (Hereinafter referred to as 'Section 37') of the Arbitration and Conciliation Act, 1996, (Hereinafter referred to as 'A&C Act'), read with Section 13(1A) of the Commercial Courts Act, 2015, has been preferred by the Appellant, M/s Newton Engineering and Chemicals Ltd., assailing the judgment dated 05.04.2025, (Hereinafter referred to as 'Impugned Judgment') passed by the learned District Judge in OMP (COMM) No.104/2023, whereby the petition, (Hereinafter referred to as 'Section 34 Petition') preferred by the Appellant under Section 34, (Hereinafter referred to as 'Section 34') of the A&C Act was dismissed and the arbitral award dated 17.08.2023, (Hereinafter referred to as 'Award') passed by the Sole Arbitrator, Shri A.K. Srivastava, was upheld. The Award had allowed a claim of Rs.6,30,054/- along with Rs.1,13,409/- towards GST, with simple interest at the rate of 9% per annum from the date of the Award till realization, in favour of the Respondent, Indian Oil Corporation Ltd.
2. Although the Appellant had challenged the Award before the learned District Judge primarily on merits, the controversy which arises for consideration before this Court concerns the constitution of the Arbitral Tribunal and, in particular, the manner in which the Sole Arbitrator came to be appointed. The question which falls for consideration is whether the Respondent, having itself furnished a panel of three persons and having required the Appellant to select one of them as the Sole Arbitrator, could constitute the Arbitral Tribunal in that manner, in the absence of an express agreement in writing, subsequent to the disputes having arisen, waiving the applicability of Section 12(5), (Hereinafter referred to as 'Section 12(5)') of the A&C Act.
3. The Appellant contends that the answer must be in the negative. It is submitted that the fact that the Appellant selected Shri A.K. Srivastava from the three names furnished by the Respondent does not convert the appointment mechanism into a consensual one.
4. The Respondent, on the other hand, seeks to contend that the Arbitrator was selected by the Appellant itself and that the communication dated 27.01.2020 constitutes consent to the appointment. Reliance is placed upon the fact that the Appellant thereafter participated in the arbitral proceedings and submitted its Statement of Claim.
FACTUAL MATRIX:
5. The Appellant had submitted its offer dated 03.01.2017 for supply of Heat Exchangers (CS) for the Respondent's VDU-II Revamp Project at its Haldia Refinery. The offer was accepted by the Respondent vide Letter of Acceptance, (Hereinafter referred to as 'LOA') dated 21.09.2017. Thereafter, Purchase Order was issued on 01.03.2018. The Purchase Order contemplated transportation of the Heat Exchangers to the Haldia Project and was governed by the General Purchase Conditions, (Hereinafter referred to as 'GPC'). The Estimated Delivery Date was 20.07.2018, being ten months from the date of the LOA.
6. The contract continued beyond the aforesaid date. Disputes thereafter arose between the parties concerning delay in supply. The Respondent ultimately terminated the contract on 31.01.2019 at the risk and cost of the Appellant. In the meantime, the Respondent had issued a fresh tender for the same Haldia Project on 23.10.2018, issued a LOA in favour of M/s CICB Chemicon Pvt. Ltd. on 26.12.2018 and thereafter issued a Purchase Order to the said new contractor on 04.01.2019.
7. The Appellant issued a legal notice dated 26.03.2019. The Respondent, vide its communication dated 03.05.2019, suggested a panel of three persons for appointment as Sole Arbitrator. The relevant communication expressly states that it was issued for the limited purpose of enlisting a "panel of independent and impartial arbitrator" and that the three names were being suggested "to enable your Client to select the Sole Arbitrator". The three names suggested were Shri M.B. Lal, Shri A.K. Sr
