Dispute Resolution & Arbitration Monthly Update | July 2025

M/s Mahavir Prasad Gupta and Sons vs Govt. of NCT of Delhi

FAO (COMM) 170/2023 decided on May 31, 2025

Background facts

• M/s Mahavir Prasad Gupta and Sons ("Appellant") was awarded a contract by the Government of NCT of Delhi ("Respondent"), for strengthening Road No. 58 from RUB Vivek Vihar to Road No.72 for a total contract value of INR 5,16,82,612/- ("consideration") ("Project").
• The work commenced with effect from 09.12.2014 and the work which was supposed to be completed in three months was completed only on 21.05.2015.
• In terms of the agreement, the Quality Assurance Unit of GNCTD conducted an inspection of the work site and randomly measured the thickness of the layers at different locations, and found that the actual thickness of some of the layers was significantly below the required aggregate thickness of 165mm. The Appellant submitted the final bill on 16.11.2015, however, the Respondent withheld the Appellant's payments on the ground that the thickness of the constructed road was allegedly less than the prescribed specifications.
• An independent third-party audit was conducted in March 2016 by IIT Roorkee and the Public Works Department which found the work done by the Appellant acceptable and within permissible tolerances.
• Despite this, the Respondent did not pay the Appellant citing dissatisfaction with the Appellant's work. In view thereof, the Appellant invoked arbitration on 18.10.2018 and unilaterally appointed a sole arbitrator, Mr. A.K. Singhal, to adjudicate the disputes.
• The Arbitrator relying on the report submitted by the third-party auditors awarded a sum of INR 1,76,01,359/- in favour of the Appellant along with an interest of 10% per annum from the date of the award till realisation of payment ("Award").
• The Respondent challenged the Award under Section 34 of the Arbitration & Conciliation Act, 1996 ("Act"). The challenge to the Award was allowed and the same was set aside by the court.
• The Appellant then filed the present appeal against the order of the lower court under Section 37 of the Act before the Delhi High Court.

Issue(s) at hand

• Whether unilateral appointment of an Arbitrator by one party renders the arbitral award a nullity under Section 12(5) read with the Seventh Schedule of the Act?
• Can a party, having participated in the arbitration proceedings without at the outset objecting to the Arbitrator's appointment, be deemed to have waived their right to challenge under Section 12(5)?
• Is such a waiver valid if not done by an "express agreement in writing" as required under the proviso to Section 12(5) of the Act?
• Can a challenge to the jurisdiction of the Arbitrator be raised for the first time under Section 34 or 36 of the Act, even if no objection was made earlier?

Findings of the Court

1. On Unilateral Appointment
   
   • The Court reaffirmed the law laid down in TRF Limited vs Energo Engineering Projects Limited (2017) 8 SCC 377 and Perkins Eastman Architects DPC vs HSCC India Limited 2019 SCC OnLine SC 517, that a party who has an interest in the outcome of the decision in an arbitration proceeding must not have the power to appoint the arbitrator since the same is against the principles of impartiality under Section 12(5) of the Act. In a situation where the right to appoint the arbitrator rests solely with one party, that party's selection will inherently carry an exclusive influence in shaping or directing the path of dispute resolution.
   • The Court observed that it has also been held by the Hon'ble Supreme Court that a clause allowing unilateral appointment of an arbitrator gives justifiable doubts as to the independence and impartiality of the sole arbitrator and unilateral appointment clauses are violative of Article 14 of the Constitution of India, specifically in public private contracts.
   • Therefore, the Court held that a unilateral appointment of the sole arbitrator or the presiding arbitrator by a party to the arbitrations seated in India is strictly prohibited and considered as null and void since its very inception, and any proceedings conducted before such unilaterally appointed Arbitral Tribunal would be null and void. Thus, any award passed by a unilaterally appointed Arbitral Tribunal would be unenforceable as the same would be against the public policy of India.
2. On Waiver
   • The Court clarified, that the proviso to Section 12(5) of the Act specifically provides for an "express agreement in writing" allowing a waiver from the disqualification to act as an arbitrator. The Court observed, that the general waiver by conduct under Section 4 of the Act would not be applicable to the unilateral appointment of an arbitrator, which is specifically governed by Section 12 (5) of the Act. The Court held, that as Section 12(5) of the Act is subsequent to Section 4 in the Act sequentially, it would override the general waiver by requirement of waiver by express agreement in writing under Section 12(5) of the Act. The express agreement in writing under Section 12(5) of the Act is an exception to the general rule of waiver under Section 4 of the Act.
   • In view of the catena of judgments, the Court held that mere participation by parties or not objecting to the unilateral appointment of the arbitrator during the arbitration proceedings, would not constitute a valid waiver under the proviso to Section 12 (5) of the Act.
3. On Raising Objection at Section 34/36 Stage
   • The Court relying on various Supreme Court and High Court judgments, including Bharat Broadband, Hindustan Zinc, Govind Singh, and Kotak Mahindra Bank, held that in absence of any express waiver in writing by the party objecting to the unilateral appointment can raise the issue at any time even at the stage of Section 34 proceedings or during the enforcement under Section 36 of the Act.
   • The Hon'ble Court observed and held that Section 34(2)(b) of the Act empowers courts to set aside an award if "the Court finds that", which places an obligation on the courts to ensure that any award passed is not against the Public Policy of India. Therefore, implying that even if any of the parties have not raised an objection regarding the unilateral appointment of the arbitrator at any stage, if the courts while considering the application under Section 34 of the Act find that the award is null and void due to such unilateral appointment of the arbitrator, has power to set aside the award without recording any objection by any of the parties in this regard.
   • Similarly, the Court held that at the stage of execution of the award under Section 36 of the Act read with Order XXI of the Code of Civil Procedure, 1908 ("CPC"), the court can refuse to enforce the award on the grounds that a decree passed by a court which lacks the inherent jurisdiction to pass such a decree would be a nullity. The Court applying the same principles to the award passed by a unilaterally appointed Arbitral Tribunal held that such an award, considered as decree under Section 36 of the Act, must not be enforced by the court, being a nullity having lack of inherent jurisdiction to pass the award.

Mahnoor Fatima Imran & Ors. v. M/s Visweswara Infrastructure Pvt. Ltd. & Ors

2025 INSC 646

Introduction

• In a significant ruling on the evidentiary value of registered sale deeds in property transactions, the Supreme Court has held that mere registration of a sale deed does not confer ownership, particularly where the vendor lacks a valid and lawful title. The Court underscored that ownership must be established through a valid root of title, lawful possession, and strict adherence to statutory requirements, including registration under the applicable land laws.
• The dispute involved 53 acres of land in Raidurg Panmaktha, Telangana, where the petitioners, relying on registered sale deeds derived from an unregistered 1982 agreement, sought protection under Article 226 against dispossession by the Telangana State Industrial Infrastructure Corporation (TSIIC). The Supreme Court restored the judgment of the Telangana High Court's Single Judge, dismissing the petition for lack of valid title and possession.

Background facts

• The dispute concerns approximately 53 acres of land in Survey No. 83/2, Raidurg Panmaktha Village, Ranga Reddy District, Telangana. The petitioners claimed ownership and possession based on registered sale deeds executed by M/s Bhavana Cooperative Housing Society Ltd., which in turn relied on an unregistered sale agreement dated 19 March 1982.
• However, the land had been declared surplus under the Andhra Pradesh Land Reforms Act, 1973, and vested with the State in 1975. Although a "revalidated" version of the 1982 agreement surfaced in 2006, it differed significantly in land extent and consideration, raising questions of authenticity. Notably, Bhavana Society's suit for specific performance filed in 1991 was dismissed in 2001 and not restored.
• Despite this, the petitioners approached the Telangana High Court under Article 226, seeking to restrain the Telangana State Industrial Infrastructure Corporation (TSIIC) from entering the land and demolishing structures. The Single Judge dismissed the petition citing lack of valid title and possession. However, the Division Bench allowed the appeal, prompting the present challenge before the Supreme Court by the State and legal heirs of the original landowners.

Issue(s) at hand?

• Whether a registered sale deed based on an unregistered and inconsistent agreement of sale can confer valid ownership?
• Whether the petitioners had established lawful possession sufficient to seek protection under writ jurisdiction?
• Whether disputes involving defective title and disputed possession can be adjudicated under Article 226 or require recourse to civil remedies?

Findings of the Court

• On Registered Deeds Based on Unregistered Agreements
  The Court held that a registered sale deed does not, in itself, confer ownership if the seller lacks valid title. In this case, the Bhavana Cooperative Housing Society, from whom the petitioners derived their title, based its claim on an unregistered agreement of sale dated 19 March 1982, which was never acted upon within the statutory period under the Registration Act. A revalidated version introduced in 2006 differed materially in land extent and consideration, raising doubts about its authenticity. The Society's earlier suit for specific performance was dismissed for default in 2001, and no credible link to title was established thereafter.
• On Establishment of Possession
  The Court found that the petitioners failed to establish actual or lawful possession of the land. Reliance on interim High Court orders was found insufficient. There was no contemporaneous evidence of possession, such as land revenue records or physical occupation, to support their claim. The Court reiterated that mere reliance on possession claims without factual proof cannot be the basis for relief under Article 226.
• On Maintainability of the Writ Petition and Final Outcome
  Given the absence of valid title and failure to prove possession, the Court held that the petition was not maintainable under Article 226 of the Constitution. The dispute pertained to 53 acres of land in Raidurg Panmaktha, Telangana, which had already been declared surplus and vested with the State in 1975 under the Andhra Pradesh Land Reforms Act. The sale deeds relied upon were derived from a disputed and inconsistent agreement, and the petitioners' claim lacked both legal foundation and factual support. Accordingly, the Supreme Court restored the judgment of the Telangana High Court's Single Judge, who had dismissed the writ petition, and set aside the contrary decision of the Division Bench.

Before the Hon'ble High Court of Delhi Roshan Real Estates Pvt Ltd (Appellant) Vs. Government of Delhi (Respondent)

OMP (T)(COMM) No. 23 of 2025

Background facts

• In the instant case, Roshan Real Estate Pvt. Ltd. ("Petitioner") had been awarded a contract by the Central Public Works Department ("Respondent / CPWD") in 2019 for certain construction-related works across seven government schools. After completion of the said project to the satisfaction of the Respondent, the Petitioner submitted its final bill of ₹20,73,39,891/- in May 2022. However, when payments were eventually made by the Respondent in March 2023, the amount disbursed was unilaterally reduced to ₹5,09,52,388/-, leading to the Petitioner questioning the same.
• Thereafter, following the failure of the contractual dispute resolution process stipulated under Clause 25 of the contract between July 2023 and February 2024, the Petitioner issued a notice under Section 21 of the Arbitration and Conciliation Act, 1996 ("Act") for the initiation of arbitration proceedings. However, no arbitrator was appointed in response to the Section 21 notice and therefore, the Petitioner approached the Hon'ble Delhi High Court ("Hon'ble Court") under Section 11 of the Act, leading to the appointment of Mr. B.B. Dhar ("the appointed arbitrator"), a retired CPWD engineer, as the sole arbitrator.
• Subsequent thereto, the Petitioner discovered that the appointed arbitrator had previously acted as a supervising engineer on several of its past projects for the Respondent and the Respondent had even withdrawn the appointment of the said arbitrator in another dispute in 2020. Aggrieved by the aforesaid, the Petitioner filed the instant petition under Sections 14 and 15 of the Act seeking termination of the mandate of the appointed arbitrator, and appointment of an independent arbitrator.
• The Petitioner alleged that there would be perceived bias and a lack of neutrality if the appointed arbitrator was allow to adjudicate the arbitration proceedings, and therefore the Petitioner sought termination of the arbitrator's mandate. Conversely, the Respondent contended that the arbitrator's prior involvement had occurred over 17 years ago and was of a supervisory nature and therefore did not disqualify him under the Fifth or Seventh Schedule to the Act.

Issue(s) at hand?

• The following issue was put before the Hon'ble Court:
  Whether the past professional association between the appointed arbitrator and the Petitioner disqualifies the arbitrator under the Seventh Schedule to the Act and warrants termination of his mandate under Sections 14 and 15 of the Act.

Findings of the Court

• After considering the submissions advanced by both the parties, the Hon'ble Court began by reaffirming the statutory framework under Section 12(5) read with the Seventh Schedule and Section 14(1)(a) of the Act, which disqualifies any person from acting as an arbitrator if they have had a professional, business, or other specified relationship with any party to the dispute.
• The Hon'ble Court placed emphasis on Entry 1 of the Seventh Schedule, which bars a person from being appointed as an arbitrator if they have had a professional or supervisory relationship with a party, regardless of the passage of time. Further, the Hon'ble Court clarified that the key test under this provision is not the nature or length of the association, but whether such a relationship gives rise to a reasonable apprehension of bias.
• Adidtionally, the Hon'ble Court relied on various precedents including TRF Ltd. v. Energo Engineering Projects Ltd.¹ , Perkins Eastman Architects DPC v. HSCC (India) Ltd.² , Proddatur Cable TV Digi Services³ , and Govind Singh v. M/s Satya Group Private Limited & Anr.⁴ , to reaffirm that actual or perceived bias undermines the integrity of arbitration and any person having an interest in the dispute or a past relationship that may impact independence is disqualified.
• In the context of the instant case, the Hon'ble Court opined that the arbitrator had served as a CPWD Superintendent Engineer during projects executed by the Petitioner, and such role, even though over 17 years old, was deemed sufficient to raise a reasonable apprehension of bias. The Hon'ble Court further observed that no written waiver under the proviso to Section 12(5) had been furnished by the Petitioner. Additionally, the Hon'ble Court also considered the fact that the arbitrator had previously acted as a nominee arbitrator for the Respondent in other disputes contributed to the perception of partiality.
• Accordingly, in light of the aforesaid the Hon'ble Court held that the mandate of the arbitrator could not be salvaged by the fact that he had been appointed vide an order of the Hon'ble Court in a Section 11 petition, as such an appointment cannot not override statutory disqualifications given under the Act. It was also noted that the Respondent had earlier withdrawn the arbitrator's nomination on similar grounds and the arbitrator's declaration under Section 12(1) was not found to cure his ineligibility under Section 12(5), especially in the absence of an express written waiver by the Petitioner.
• Accordingly, the Hon'ble Court allowed the petition and terminated the mandate of the arbitrator, while also appointing a fresh arbitrator to adjudicate the arbitration proceedings.

Footnotes

1. (2017) 8 SCC 377

2. (2020) 20 SCC 760

3. 2020:DHC:354

4. 2023:DHC:81-DB

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