Whether the unilateral appointment of the arbitrator can be challenged for the first time in a Section 34 petition: Delhi High Court

The Delhi High Court has passed a judgement on 08-11-2021 in the case of  Kanodia Infratech Limited v. Dalmia Cement (Bharat) Limited O.M.P. (COMM) 297/2021. Justice Suresh Kumar Kait disposed of the petition.


The present petition has been preferred by the petitioner challenging the Award dated 09.03.2021 passed by the learned Arbitrator in Case Ref. No. 3005/2018, titled as “M/s Dalmia Cement (Bharat) Limited Vs. M/s Kanodia Infratech Limited” on the ground that the learned Arbitrator lacked inherent jurisdiction to entertain and try the disputes being unilaterally appointed by the respondent, which is contrary to the settled proposition of law.

Petitioner- M/s Kanodia Infratech Limited, a company incorporated under the provisions of Companies Act, is involved in the business of producing, grinding, blending, manufacturing, finishing, packaging, repacking, mixing, grading, supply of Portland cement and Portland Pozzolona cement. Respondent- M/s Dalmia Cement (Bharat) Limited is also in the business of manufacturing and marketing of cement.

According to petitioner, the parties to the present petition entered into a Memorandum of Understanding dated 13.12.2016 for use of cement griding plant at village Kurari, Distt. Kaimur (Bhabhua), Bihar by the respondent for conversion of clinker into cement at an agreed rate of conversion and further purchase of the plant itself by the respondent through a Share Purchase Agreement, in terms enumerated in Clause-12 thereof. In furtherance thereto, detailed discussions between the parties took place with regard to legal, financial and technical aspects and after due diligence, respondent vide its email dated 15.02.2017 shared a draft of Share Purchase Agreement and thereby, parties were ad idem on the sale of the said plant through purchase of entire shareholding of the petitioner. Finally, respondent made an offer to take over the share holding of the petitioner in the said plant at a price of Rs.250 crores plus tax implications on the purchase, which is said to have been accepted by the petitioner.

According to petitioner, in addition to above, the petitioner was also liable to release of VAT incentives offered by the State of Bihar, which were to accrue to the respondent upon eventual purchase of the plant. However, since the State Government took longer than expected to release the VAT incentives, the respondent deferred the execution of the proposed Share Purchase Agreement till the first instalment of VAT incentive was received. It was therefore agreed between the parties that the respondent shall operate the said plant till the time VAT incentives are released and thereafter, shall acquire the shareholding of the company and  stationed its employees at the said plant from February, 2017.


This Court is of the opinion that appointment of learned Arbitrator by the respondent was never objected to by the petitioner, who had actively participated in the arbitration proceedings, which is evident from the fact that as many as 45 orders were passed by the learned Arbitrator during pendency of arbitral proceedings. Moreover, the learned Arbitrator himself is a retired Judge of Punjab and Haryana High Court and his integrity cannot be doubted.

Accordingly, the case of petitioner challenging the mandate of Arbitral Tribunal is hereby rejected.

The court relied on various judgments National Highways Authority of India v. ITD Cementation India Ltd., (2015) and also the case of Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. 2021.

In the light of what has been observed by this Court hereinabove, the petition with pending applications, is accordingly disposed of.

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