CITY LIFELINE TRAVELS PRIVATE LIMITED  Vs DELHI JAL BOARD

ARB.P.4 /2021 Page 1 of 13
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 27.01.2021
+ ARB.P. 4/2021

CITY LIFELINE TRAVELS PRIVATE
LIMITED ….. Petitioner

Versus

DELHI JAL BOARD ….. Respondent
Advocates who appeared in this case:
For the Petitioner: Ms. Manmeet Arora, Ms. Samapika Biswal
and Mr. Harkirat Singh, Advocates.
For the Respondent: Mr. Ramesh Singh and Mr. R. A. Iyer,
Advocates.

CORAM
HON’BLE MR JUSTICE VIBHU BAKHRU

JUDGMENT
VIBHU BAKHRU, J

1. The petitioner has filed the present application under Section
11(6) of the Arbitration and Conciliation Act, 1996 (hereafter ‘the
A&C Act’), inter alia, praying that a Sole Arbitrator be appointed to
adjudicate the disputes that have arisen between the parties in relation
to an Agreement dated 27.08.2012 entered into between the parties for
2021:DHC:298

ARB.P.4 /2021 Page 2 of 13
performing the work of “Water Tanker Supply Services (WTSS)” for
Zone -VII (hereinafter ‘the Contract’).
2. The respondent (hereafter ‘DJB’) issued a Request for Proposal
(RFP) bearing NIT No.07/RPC -I/(2011 -12) inviting competitive
tenders from agencies for operating Stainless Steel (SS) Water Tanker
Services on hire basis for the purposes of supplying water through
vehicle mounted water tankers in order to facilitate supply of potable
drinking water to different areas in Delhi. Such services were to be
provided in five different Zones – Zone I, Zone II, Zone V, Zone VII
and Zone VIII on identical terms. The subject dispute relates to Zo ne
VII.
3. The petitioner submitted its bid pursuant to the RFP. After
negotiations, an offer made by the petitioner was accepted and the
DJB issued a Letter of Intent (LoI) dated 16.07.2012. Thereafter, the
DJB issued a Work O rder under the cover of its letter dated
21.08.2012 and on 27.08.2012, the parties entered into a formal
agreement with respect to performance of the work “Water Tanker
Supply Services (WTSS) for Zone -VII.”
4. The petitioner claims that it has been diligently performing the
contract, ho wever, the DJB has failed to make payments of the
invoices raised by the petitioner. The petitioner claims that it had
issued a notice calling upon the DJB to release the payments
outstanding for the months of August, September and October, 2020
and had a lso made representations in this regard. However, the
2021:DHC:298

ARB.P.4 /2021 Page 3 of 13
petitioner claims that the DJB has failed to address the issues raised by
it.
5. In view of the disputes that have arisen between the parties, the
petitioner issued a notice dated 20.11.2012 invoking the Arbitration
Agreement as set out in Clause 8.1.2 of the Contract. It also suggested
the name of a former Chief Justice of this Court for being appointed as
an Arbitrator.
6. Thereafter, on 25.11.2020, the petitioner filed a petition (OMP
(I) (COMM.) 389/2 020) under Section 9 of the A&C Act before this
Court seeking certain interim measures of protection. The said matter
was listed for hearing on 01.12.2020 and 02.12.2020. On 02.12.2020,
this Court issued notice but did not grant any interim relief, as pr ayed
for by the petitioner. The petitioner has also preferred an appeal –
FAO(OS)(COMM.) 175/2020 – under Section 37 of the A&C Act –
challenging the said order dated 02.12.2020.
7. The name of the Sole Arbitrator as suggested by the petitioner
was not acc epted by the DJB. However, the DJB sent a letter dated
15.12.2020 responding to the petitioner’s notice dated 20.11.2020,
whereby the petitioner had invoked the Arbitration Clause. The DJB
proposed names of two persons, one being a former Chief Justice of
the Patna High Court and the other being a former Judge of this Court
to be appointed as Arbitrators. However, the same were not acceptable
to the petitioner. Therefore, on 24.12.2020, the petitioner moved this
application for appointment of an Arbitrator .
2021:DHC:298

ARB.P.4 /2021 Page 4 of 13
8. After the petitioner had filed the present application, the DJB
issued a letter dated 31.12.2020 nominating Justice (Retired) Iqbal
Ahmed Ansari as a Sole Arbitrator to adjudicate the disputes between
the parties. It is material to note that he was one of the two persons
who were proposed by the DJB for being appointed as an Arbitrator,
in its letter dated 15.12.2020
9. The respondent does not dispute the existence of the Arbitration
Clause contained in Clause 8.1.2 of the Contract is relevant and is set
out below: –
“8.1 DISPUTE RESOLUTION
1) Any dispute arising out of or in connection with this
Agreement shall in the first instance be dealt with in
accordance with the escalation procedure as set out
in the Governance Schedule.
2) Any dispute or difference whatsoever arising
between to this Contract out of or relating to the
construction, meaning, scope, operation or effect of
this Contract or the validity of the breach thereof,
which cannot be resolved through the application of
the provisions of the Gover nance Schedule, shall be
referred to a sole Arbitrator to be appointed by
mutual consent of both the parties herein. If the
parties cannot agree on the appointment of the
Arbitrator within a period of one month from the
notification by one party to the ot her of existence of
such dispute, then the Arbitrator shall be nominated
by DJB. The provisions of the Arbitration and
Conciliation Act, 1996 will be applicable and the
award made there under shall be final and binding
2021:DHC:298

ARB.P.4 /2021 Page 5 of 13
upon the parties hereto, subject to legal remedies
available under the law. Such differences shall be
deemed to be a submission to arbitration under the
Indian Arbitration and Conciliation Act, 1996 or of
any modifications, Rules or re -enactments thereof.
The Arbitration proceedings will b e held at Delhi,
India.”
10. Ms. Arora, learned counsel appearing for the petitioner referred
to the decisions of the Supreme Court in Perkins Eastman Architects
DPC &Anr. v. HSCC (India) Limited : Arbitration Application No 32
of 2019 decided on 26.11.2019 and a decision of this Court in
Prodd atur Cable TV Digi Services v. C iti Cable Network Limited:
(2020) 267 DLT 51 and contended that the unilateral appointment of
an Arbitrator by the DJB was not permissible.
11. Mr Singh, learned counsel appearing for the DJB countered the
aforesaid submissions. He contended that the decision of the Supreme
Court in Perkins Eastman Architects DPC &Anr. v. HSCC (India)
Limited (supra ) was not applicable in the facts of the present case. He
submitted that the said decision must be read in a restricted manner.
And, the said decision would be applicable only in cases under Section
11(6)(a) of the A&C Act, that is, in cases where there had been failure
on the part of a party to act in accordanc e with the agreed procedure
for appointment of an Arbitrator.
12. He submitted that the said decision must also be read in context
with an earlier decision of the Supreme Court in TRF Ltd. v. Energo
Engineering Projects Ltd.: (2017) 8 SCC 377 . He submitted that in
2021:DHC:298

ARB.P.4 /2021 Page 6 of 13
Perkins Eastman Architects DPC &Anr. v. HSCC (India) Limited
(supra ), the issue before the Court was regarding ineligibility of an
Arbitrator to act as such under Section 12(5) of the A&C Act. He
submitted that there was no dispute that a person w hose relationship
with any of the parties fell within the categories as specified in the
Seventh Schedule of the A&C Act would be ineligible to be appointed
as an Arbitrator. He submitted that the said rationale was further
extended by the Supreme Court i n TRF Ltd. v. Energo Engineering
Projects Ltd. (supra ) and the Supreme Court held that once a person is
ineligible by operation of law to act as an Arbitrator, he also cannot
nominate another to nominate an Arbitrator. The Court had held that
“it was inco nceivable in law that person who is statutorily ineligible
can nominate a person .” Mr. Singh submitted that the said decision
was rendered in context of an Arbitration C lause, which provided that
disputes and differences between the parties would be referr ed to
“sole arbitration of the Managing Director of buyer or his nominee” .
He submitted that in the case of Perkins Eastman Architects DPC &
Anr. v. HSCC (India) Limited (supra ), the Arbitration C lause
provided for an arbitration “by a sole arbitrator appointed by the
CMD HSCC within 30 days from the receipt of the request”.
However, the CMD , HSCC , had failed to appoint an Arbitrator within
the period specified and therefore, the concerned authori ty had lost its
right to appoint an Arbitrator. He s ubmitted that the decision was also
founded on Section 12(5) of the A&C Act which, inter alia, rendered
an employee of any party ineligible to act as an Arbitrator. Thus, the
said decisions would not be applicable in the present case.
2021:DHC:298

ARB.P.4 /2021 Page 7 of 13
13. He earnestly contended that in the facts of the present case, the
DJB had appointed a former Chief Justice of the Patna High Court as
an Arbitrator from the panel of A rbitrators maintained by it and
therefore, the question of an Arbitrator being ineligible under Section
12(5) of the A&C Act did not arise. He relied on the decision of the
Supreme Court in Central Organization for Railway Electrification v.
ECI-SPIC -SMO -MCML : Civil Appeal Nos. 9486 -9487 of 2019
decided on 17.12.2019 and c ontended that in cases where an
Arbitrator has been appointed from a panel of Arbitrators , the
appointment was necessarily required to be in terms of the agreement
between the parties. He submitted that in this case, the DJB had a
right to nominate an Arbitrator and therefore, the appointment of the
Arbitrator could not be faulted. He also referred to the decision of the
Supreme Court in Standard Corrosion Controls Pvt. Ltd. v. Sarku
Engineering Services SDN BHD: (200 9) 1 SCC 303 and contended
that a party could not approach the court under Section 11 of the A&C
Act without following the procedure as agreed upon .
14. Ms Arora countered the aforesaid submissions. She submitted
that the contention that the Arbitrators suggested by the DJB were
from its panel is incorrect. She also referred to an Office Order being
OO No.26 dated 17.12.2020, issued by the Office of the Law Offi cer,
DJB and submitted that the said Office Order, for including the names
of two former Judges suggested by the DJB on their panel, was issued
on 17.12.2020 which was after the date when their names had been
suggested by the DJB.
2021:DHC:298

ARB.P.4 /2021 Page 8 of 13
15. She also referred to a circular dated 25.08.2020, which sets out
the procedure to be adopted for appointment of an Arbitral Tribunal in
light of the judgments passed by the Supreme Court and the High
Court. The said circular indicates that the concerned engineering
officer is r equired to file a request to the High Court for appointment
of an Arbitrator from the panel maintained by the Delhi International
Arbitration Centre (DIAC) or at its own discretion.
16. Mr. Singh countered the aforesaid submissions and stated that
averments t o the aforesaid effect were not included in the petition filed
by the petitioner but were made in the rejoinder and therefore, the DJB
had no opportunity to traverse the said averments. However, he stated
on instructions that although the order including the names of the two
Arbitrators suggested by the DJB was passed on 17.12.2020 and the
decision to include them in the panel had already been taken on file on
15.12.2020, that is, the date on which their names were suggested to
the petitioner. He further submitted the Circular dated 25.08.2020 had
no application in cases where the procedure for appointment of the
Arbitrators had been agreed between the parties
17. It is not necessary for this Court to examine the question
whether the names of the Arbitrators suggested had been included on
the panel of Arbitrators maintained by the DJB subsequent to them
being suggested to the petitioner. This is because the Arbitration
Clause does not provide for appointment of Arbitrators from any
panel. It is equally unnec essary to examine the scope of the Circular
2021:DHC:298

ARB.P.4 /2021 Page 9 of 13
dated 25.08.2020 as the scope of examination in these proceedings is
limited.
18. The contention that the decision in the case of Perkins Eastman
Architects DPC & Anr. v. HSCC (India) Limited (supra ) ought to be
read in a restrictive manner is not persuasive. On the contrary, the
said decision must be read in expansive manner. The efficacy of
arbitration as an alternate dispute resolution mechanism rests on the
foundati on that the disputes would be adjudicated by independent and
impartial arbitrators. The decision in Perkins Eastman Architects
DPC & Anr. v. HSCC (India) Limited (supra ) recognizes the
importance of ensuring that Arbitrators not be appointed by persons
who are otherwise interested in the matter so as to obviate any doubt
as to the impartiality and independence of the Arbitral Tribunal. The
necessity for instituting necessary safeguards for the same cannot be
understated.
19. In any view, the said issue is no longer res integra in view of
the decision of a Coordinate Bench of this Court in Proddatur Cable
TV Digi Services v. Citi Cable Network Limited (supra ). In that case,
the Court has observed as under: –
“25. ………The argument of the respondent that in the
Arbitration Clause before the Supreme Court in the case
of Perkins was with regard to the power of a Managing
Director to appoint an Arbitrator whereas in the present
case it is the Company only merits rejection. First and
foremost, one has to see the rationale and the reasoning
behind the judgment in the case of Perkins (supra). The
2021:DHC:298

ARB.P.4 /2021 Page 10 of 13
Supreme Court held that the Managing Director was
ineligible from appointing an Arbitrator on the simple
logic that a Managing Director of a Company would
always have an interest in the outcome of the arbitration
proceedings. The interest in this context takes the shape
of bias and partiality. As a natural corollary, if the
Managing Director suffers this disability, even if he was
to appoint another person as an Arbitrator, the thread of
biasness, partiality and interest in the outcome of the
dispute would continue to run. Seen in this light, it can
hardly be argued that the judgment in Perkins (supra)
will not apply only because the designated Authority
empowered to appoint an Arbitrator is other than a
Managing Director. ”
20. The aforesaid decis ion has also been followed in several other
decisions. In M/s Omcon Infrastructure Pvt. Ltd. v. Indiabulls
Investment Advisors Ltd. : OMP(T)(COMM.)35/2020 , another
Coordinate Bench of this Court considered an order passed by an
Arbitrator rejecting the pet itioner’s application under Section 12 of the
A&C Act. In that case, the Arbitrator had been unilaterally appointed
by the respondent. The petitioner contended that the unilateral
appointment of an Arbitrator by the respondent company was contrary
to the decision of the Supreme Court in Perkins Eastman Architects
DPC & Anr. v. HSCC (India) Limited (supra ). The Arbitrator
rejected the said contention by holding that the decision of the
Supreme Court in Perkins Eastman Architects DPC & Anr. v. HSCC
(India) Limited (supra ) was not applicable as the authority to appoint
an Arbitrator was not vested with any designated employee but with
the respondent company. This Court did not accept this view. The
2021:DHC:298

ARB.P.4 /2021 Page 11 of 13
Court referred to the decision in the case of Proddatur Cable TV Digi
Services v. Citi Cable Network Limited (supra ) and held as under: –
“9. ……. The ratio of the decision in Perkins
Eastman Architects DPC & Anr. (supra) cannot be
read in such a narrow manner as has been sought to be
done by the learned Arbitrator. In my view, once the
Managing Director of the Respondent Company was
ineligible to appoint the arbitrator in the light of the
decision in Perkins Eastman Archi tects DPC
&Anr.(supra) , the same would also bar the Company
itself from unilaterally appointing the sole arbitrator.”
21. The reliance placed by Mr. Singh on the decision in the case of
Central Organization for Railway Electrification v. ECI (supra ) is
mispla ced. In that case, the Arbitration Clause provided for the
Arbitral Tribunal to be constituted by Gazetted Railway Officers or
three retired Railway Officers above a certain rank. The petitioner
(Railways) was required to send names of four empanelled re tired
Railway Officers and the contractor was required to suggest two
names out of the said panel for appointment as its nominee. The
General Manager was required to appoint one of the names out of the
two names as suggested by the contractor as the contr actor’s nominee
and the remaining Arbitrator from the panel or outside the panel. The
Supreme Court noted that the procedure adopted also took into
account the option of the contractor. The Court was of the view that
since the agreement provided for the a ppointment of an Arbitral
Tribunal out of the panel of serving/retired officers, the procedure as
agreed by the parties ought to have been followed. In the present case,
2021:DHC:298

ARB.P.4 /2021 Page 12 of 13
the Clause does not entail any such procedure for suggesting any
names out of the pan el of Arbitrators maintained by the DJB.
Therefore, the contention that the decision of the DJB to nominate an
Arbitrator must be sustained since the Arbitrator appointed was one
from the panel maintained internally, is unpersuasive. The question
whether the DJB maintains a panel of Arbitrators is its internal matter.
The Arbitration Clause does not contemplate the appointment of any
Arbitrator from the panel of Arbitrators maintained by the DJB and
therefore, the decision in the case of Central Organizati on for
Railway Electrification v. ECI (supra ) is, wholly inapplicable in the
facts of the present case.
22. It is also relevant to mention that in Union of India v. M/s
Tantia Construction s Limited : SLP (C) 12670/2020 decided on
11.01.2021 , a three judge bench of the Supreme Court upheld the
decision of the High Court to appoint an independent Arbitrator and
had dismissed the Special Leave Petition. However, since reliance
had been placed by the petitioner on the deci sion in Central
Organization for Railway Electrification v. ECI (supra ), the Supreme
Court had requested the Chief Justice of India to constitute a larger
Bench to look into the correctness of the said decision. The said order
is reproduced below: –
“Havi ng heard Mr. K.M. Nataraj, learned ASG
for sometime, it is clear that on the facts of this case, the
judgment of the High Court cannot be faulted with.
Accordingly, the Special Leave Petition is dismissed.
However, reliance has been placed upon a recent th ree-
2021:DHC:298

ARB.P.4 /2021 Page 13 of 13
Judge Bench decision of this Court delivered on
17.12.2019 in Central Organisation for Railway
Electrification vs.M/s ECI -SPIC -SMO -MCML (JV) A
Joint Venture Company , 2019 SCC OnLine 1635. We
have perused the aforesaid judgment and prima facie
disagree with it for the basic reason that once the
appointing authority itself is incapacitated from
referring the matter to arbitration, it does not then follow
that notwithstanding this yet a ppointments may be valid
depending on the facts of the case.
We therefore request the Hon’ble Chief Justice to
constitute a larger Bench to look into the correctness of
this judgment.
Pending application stands disposed of. ”

23. In view of the above, the present petition is allowed and Justice
BS Chauhan, a former judge of the Supreme Court of India, is
appointed as the Sole Arbitrator to adjudicate the disputes that have
arisen between the parties in respect of the Contract. Thi s is subject to
the Arbitrator making a necessary disclosure under Section 12(1) of
the A&C Act and not being ineligible under Section 12(5) of the A&C
Act.
24. The parties are at liberty to approach the Arbitral Tribunal for
further proceedings.

VIBHU BAKHRU, J
JANUARY 27, 2021
MK

2021:DHC:298