* IN THE HIGH COURT OF DELHI AT NEW DELHI + O.M.P. (COMM) 297/2023 M/S S. K. BUILDERS .....Petitioner Through: Mr. Rajshekhar Rao, Sr. Adv.

with Mr. Mayank Sharma, Mr. Anshul Kulshrestha and Mr. Zahid L. Ahmed, Advs.

versus M/S CLS CONSTRUCTION PVT LTD .....Respondent Through: Mr. Kirti Uppal, Sr. Advocate with Mr. Sidharth Chopra, Mr. Harshita Gulati, Ms. Diksha Mathur, Mr. Aditya Raj and Mr. Navneet Thakran, Advocates CORAM:

HON'BLE MR. JUSTICE C.HARI SHANKAR JUDGMENT (ORAL)

% 08.08.2024

1. Arbitral proceedings between the petitioner and the respondent, before a Sole Arbitrator, culminated in an award dated 18 May 2023. The present petition under Section 34 of the Arbitration and Conciliation Act, 1996, $~52 assails the said award.

2. Mr. Rajshekhar Rao, learned Senior Counsel for the petitioner, submits that the impugned award is a nullity as the arbitrator had been unilaterally appointed by the respondent without the consent of the petitioner. The impugned award, resultantly, stands vitiated ab initio.

1“the1996Act”hereinafter

Signature Not Verified Signature Not Verified

3. The disputes between the parties arose in the context of a Memorandum of Understanding² dated 20 December 2019 between the petitioner and the respondent. The MoU was in the nature of a sub- contract by the petitioner on the respondent for construction of a railway platform and certain other structures. Clause 16 of the MoU

envisaged resolution of disputes by arbitration and read thus:

“16. That the parties undertake to fully abide by the terms and conditions set out in this MOU and not to dispute / agitate upon the same hereinafter in future in any manner whatsoever, or in case any misunderstanding or dispute arises pertaining to the terms and conditions of this deed the same shall beresolved by the parties themselves and if the dispute still persist the same shall be resolved and decided by the sole arbitrator as per mutually decided both of parties, Advocate in accordance to the rules, regulations and procedures of the of Arbitration and Conciliation Act, whose decisionshall befinal andbindinguponbothparties tothis deed.”

(Emphasis supplied)

4. Thus, it would be seen that Clause 16 of the MOU itself envisaged arbitration by an Arbitrator to be mutually appointed by both parties. That said, even if the agreement were, as in certain other cases, to have provided for unilateral appointment of an arbitrator, such a covenant could not have been enforced in view of the decision of the Supreme Court in Perkins Eastman Architects DPC v. HSCC (India) Ltd, 3(2020)20SCC760, Bharat Broadband Network Ltd v. United Telecoms Ltd, 4(2019)5SCC755, TRF Ltd v. Energo Engineering Projects Ltd, 5(2017)8SCC377 and Haryana Space Application Centre (HARSAC) v. Pan India Consultants Pvt Ltd, 6(2021)3SCC103. Nonetheless, in the present case, the arbitration agreement

2“MoU”hereinafter

Signature Not Verified Signature Not Verified categorically envisaged bilateral appointment of the arbitrator by consent of parties.

5. The respondent raised certain claims against the petitioner and, on the dispute remaining unresolved, sought reference of the disputes to arbitration. On 21 June 2021, the respondent addressed a notice to the petitioner styled as “NOTICE OF INVOCATION OF ARBITRATION AGREMENET AS CONTAINED IN MEMORANDUM OF UNDERSTANDING DATED 20.12.2019 AND APPOINTMENT OF ARBITRATOR”. Having set out the controversy in dispute, the notice concluded thus :

“…Therefore in view of the above stated facts and circumstances, it is clear that the dispute and differences have arisen out of Memorandum ofUnderstandingdated20.12.2019 betweenyou and our client, we hereby on behalf of our above named Client request your good self to refer the disputes and differences to the ArbitrationofSoleArbitratortobeappointedby mutual consent.

Accordingly, our above named client hereby appoints Sh. M.P.S. Kasana Advocate Enrolment no.D 186/1993 having office at Kasana Place 46, Street No.16, Wazirabad, Delhi – 110 084, as