Citation: Newton Engineering and Chemicals Limited v. Indian Oil Corporation Ltd., FAO (COMM) 50/2026, Delhi High Court (Justices Anil Kshetarpal and Bharat Parashar), decided on 06.10.2026 | 2026:DHC:8752-DB
A mechanism under which one party prepares a panel of arbitrators and the other party can only select one name from it is not an equal appointment process. Selecting a name from that panel is not an “express agreement in writing” waiving the ineligibility under the proviso to Section 12(5) of the Arbitration Act, and participating in the arbitration cannot cure the defect. Since this goes to the tribunal’s jurisdiction, it can be raised even at the Section 34 stage, and an award by an invalidly constituted tribunal cannot stand.
The Delhi High Court has set aside an arbitral award in favour of Indian Oil Corporation, holding that an arbitrator picked by a party from a panel of three names supplied by IOC is not a valid appointment, since there was no written waiver after the dispute arose.
Newton Engineering and Chemicals had supplied heat exchangers for IOC’s Haldia refinery project, but the contract was terminated in January 2019 over delay in supply, and disputes arose. In May 2019, IOC gave Newton a panel of three names and asked it to select the Sole Arbitrator. In January 2020, Newton selected Shri A.K. Srivastava “as per clause 34.1” of the General Purchase Conditions, with a note that the letter was “solely” to inform IOC of the name and to seek approval. Both sides then took part in the arbitration, and in August 2023 the award allowed IOC’s claim of about Rs 6.3 lakh plus GST with 9% interest. The District Judge rejected Newton’s challenge on the merits. Justices Anil Kshetarpal and Bharat Parashar allowed the appeal. They held that the question is not about the merits but about the jurisdiction of the tribunal. Under the proviso to Section 12(5) of the Arbitration Act, the ineligibility of an arbitrator can be waived only by an “express agreement in writing” made after the disputes arise, and not by conduct or participation in the proceedings. They relied on the Supreme Court’s Bhadra International ruling and the Division Bench’s Mahavir Prasad Gupta. They also relied on the Constitution Bench ruling in CORE, which held that a party cannot be forced to choose from a panel curated by the opposite party, since this denies equal say in constituting the tribunal. The court said that Newton “could choose A, B or C, but it could not choose D,” and that its letter of January 2020 did not mention waiver or Section 12(5) and was only a selection under the contract. The court explained that CORE‘s prospective direction was limited to three-member tribunals and does not save this appointment of a Sole Arbitrator. It set aside the District Judge’s order and the award, and left the parties free to start fresh arbitration, without examining the merits.