The dispute arose from a licence granted by DMRC to Pankaj Associates for operating parking sites at the Dwarka Sector 21 and Dwarka Sector 11 Metro stations.
Under the arbitration clause, disputes that could not be resolved through conciliation were to be referred to a sole arbitrator nominated by DMRC. The clause expressly stated that there would be no objection if the arbitrator appointed was an employee of DMRC.
Arbitration was invoked in June 2014. On March 24, 2015, DMRC appointed Ashu Sharma, its Senior Additional General Manager (Financial), as sole arbitrator.
Section 12(5) of the Arbitration Act and the seventh schedule, which introduced statutory disqualifications concerning the relationship of an arbitrator with the parties, came into force only on October 23, 2015.
The arbitrator eventually rejected the claims of Pankaj Associates and allowed DMRC’s counterclaim for about ₹40.15 lakh along with interest.
A district judge subsequently set aside the award in October 2024 after accepting Pankaj’s argument that the serving DMRC employee was ineligible to act as arbitrator under Section 12(5).
The High Court disagreed.