AVNEESH JHINGAN, J. (ORAL)

1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short „the Act‟) seeking setting aside of arbitral award dated 21.12.2017.

2. The short issue is that whether the unilateral appointment of the sole arbitrator is in violation of amended Section 12(5) of the Act.

3. The brief facts are that the petitioner was awarded a work contract by M/s HPCL Mittal Energy Limited, valuing Rs.15,97,99,800/-. The petitioner further gave a sub contract to the respondent vide Letter of Intent dated 28.05.2010. Dispute arose between the parties to the lis. Clause 33 of the General Conditions of Contract (for short „GCC‟) reproduced below provides for dispute resolution through arbitration.

“33.0 ARBITRATION: All disputes between the parties to the contract arising out of or in relation to the contract, other than those for which the decision of the Engineer or any other person is by the contract expressed to be final and conclusive, shall after written notice by either party to the contract to the other party, be referred to sole arbitration of the General Manager or his nominee. The arbitration shall be conducted in accordance with the provisions of the Arbitration and Reconciliation Act, 1996. The parties to the contract understand and agree that it will be no objection that the General Manager or the person nominated as Arbitrator had earlier in his official capacity to deal directly or indirectly with the matters to which the contract relates or that in the course of his official duties had expressed views on all or any of the matters in dispute or difference. The award of the Arbitrator shall be final and binding on the parties to this contract. In the event of the Arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason or his award being set aside by the Court for any reason, it shall be lawful for the General Manager or his successor, as the case may be, either to act himself as the Arbitrator or to appoint another Arbitrator in place of the outgoing Arbitrator in the manner aforesaid. The Arbitrator may, from time to time, with the consent of both the parties to the contract, enlarge the time for making the award. Work under the contract shall be continued during the arbitration proceedings. The venue of the arbitration shall be the place from which the contract is issued or such other place as the Arbitrator at his discretion may determine.”

3.1 The respondent issued a notice invoking arbitration on 28.12.2013 and the petitioner vide letter dated 10.02.2014 appointed the nominee of the General Manager as the sole arbitrator. The arbitral proceedings culminated in award dated 11.01.2016. The award was challenged by both parties before this court under Section 34 of the Act and was set aside on 19.10.2016 but liberty was granted to the parties to proceed with fresh arbitration. A notice dated 10.11.2016 under Section 21 of Act was issued by the respondent and the petitioner vide communication dated 13.12.2016 in pursuance of Clause 33 appointed the nominee of the General Manager as the sole arbitrator. Aggrieved of the impugned award, the present petition is filed.

4. Learned counsel for the petitioner contends that the unilateral appointment of the arbitrator falls in the teeth of the amended Section 12(5) of the Act. The decision rendered by the Supreme Court in Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India, 2026 INSC 6 is relied upon.

5. Per contra, the major part of the award has not been challenged by the petitioner, the payments in pursuance thereto have been made and therefore, the impugned award should be set aside only to the extent of the issues under challenge. It is submitted that during the pendency of the petition under Section 11 of the Act filed by the respondent, an arbitrator was appointed by the petitioner pursuant to which the petition was disposed of thereby confirming the sai