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The waiver u/s 12(5) of the A&C Act has to be by an express agreement in writing: High Court of Delhi

Unlike Section 4 of the Act which deals with deemed waiver of the right to object by conduct, the proviso to Section 12(5) will only apply if subsequent to disputes having arisen between the parties, the parties waive the applicability of sub-section (5) of Section 12 by an express agreement in writing. Section 12(5) refers to an “express agreement in writing”. The expression “express agreement in writing” refers to an agreement made in words as opposed to an agreement which is to be inferred by conduct and the same was upheld by High Court of Delhi through the learned bench led by Justice Vibhu Bakhru in the case of A K BUILDERS vs. DELHI STATE INDUSTRIAL INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. [O.M.P. (T) (COMM.) 12/2022] on 25.02.2022.

The facts of the case are that it was stipulated that the contract work would be completed within a period of sixteen months. The petitioner submitted its bid for the said work and was awarded the Contract for executing the work in question by a Letter of Award. The execution of the work was inordinately delayed. The petitioner claims that the work was completed and therefore, he had raised a Final Bill and the same was cleared.

Consequently, certain disputes arose between the parties in connection with the Contract in question and the petitioner invoked the Arbitration Clause by a notice. The petitioner has filed the present petition seeking termination of the mandate of the learned Arbitrator on the ground that he is ineligible to act as an Arbitrator.

The petitioner’s counsel submitted that a plain reading of the letter, whereby the Chief Engineer, DSIIDC had appointed the learned Arbitrator, indicates that he had done so in exercise of his powers conferred under Clause 25 of the GCC and not by consent, as is contended by the learned counsel on behalf of DSIIDC. However, it is not disputed that the petitioner had requested the concerned authority to act in terms of the said Clause.

According to the facts and circumstances of the case, court held that the contention that the petitioner is precluded from raising any objections on this ground as the petitioner had participated in the arbitral proceedings, is unmerited. A petition under Section 14 of the A&C Act, on the ground that an Arbitrator is ineligible under Section 12(5) of the A&C Act to act as an arbitrator, is maintainable.

The Court observed, “Unlike Section 4 of the Act which deals with deemed waiver of the right to object by conduct, the proviso to Section 12(5) will only apply if subsequent to disputes having arisen between the parties, the parties waive the applicability of sub-section (5) of Section 12 by an express agreement in writing. Section 12(5) refers to an “express agreement in writing”. The expression “express agreement in writing” refers to an agreement made in words as opposed to an agreement which is to be inferred by conduct. There is no scope for entertaining the submission that the petitioner had, by his conduct, impliedly waived its right under Section 12(5) of the A&C Act. The waiver under Section 12(5) of the A&C Act has to be by an express agreement in writing.”

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Judgment reviewed by – Shristi Suman

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