Baid Leasing And Finance Company Limited, Registered Office At vs Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil

Shivraj Samota S/o Shri Ramnarayan Samota, Resident Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil Chaksu, District Jaipur(Rajasthan).

2. Smt Gyarasi Devi Wife Of Mr. Ramnarayan Samota, Resident Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil Chaksu, District Jaipur (Rajasthan).

3. Hazari Lal S/o Shri Ramnarayan Samota S/o Ramnarayan Samota, Resident Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil Chaksu, District Jaipur (Rajasthan).

4. Bahadur Singh S/o Shri Ramnarayan Samota, Resident Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil Chaksu, District Jaipur (Rajasthan). ----Respondents For Appellant(s) : Mr. Jitender Mituka For Respondent(s) : Mr. Bajrang Lal Choudhary HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE SANJEET PUROHIT Order REPORTABLE 18/09/2025

1. The challenge is to the order dated 23.06.2022 passed by the learned Commercial Court No.2, Jaipur Metropolitan Second, whereby the award passed by the Arbitrator in favour of the appellant was set aside on the ground that the arbitrator appointed, namely, the Managing Director of the appellant, could [2025:RJ-JP:38330-DB] (2 of 5) [CMA-2097/2023] not have been appointed as a sole arbitrator in view of the law as settled by the Hon'ble Supreme Court in the case of TRF Ltd. Vs. Energo Engineering Projects Ltd.: (2017) 7 SCR 409.

2. It is the contention of the learned counsel that the TRF Ltd. Case (supra) was although reiterated in the case of Perkins Eastman Architects DPC Vs. HSCC (India) Ltd.: (2019) 17 SCR 275, however, a different view was taken subsequently in the case of Voestalpine Schienen Gmbh Vs. Delhi Metro Rail Corporation Ltd.: (2017) 1 SCR 798. Learned counsel for the petitioner further submits that the matter was referred to the Larger Bench in the case of Central Organisation for Railway Electrification Vs. M/s. ESI-SPIC-SMO-MCML (JV) A Joint Venture Company: (2019) 16 SCR 1234 and while deciding the reference, holding the law as laid down in TRF Ltd. (supra) and Perkins Eastman Architects DPC (supra) to be the correct law, further held that “the law as laid down in the present reference will apply prospectively to Arbitrator appointment to be made after the date of this judgment. This direction will only apply to three-members-Tribunal.”

3. We have given our thoughtful consideration to the submission without going to the aspects and decisions rendered in TRF Ltd. (supra) and Perkins Eastman Architects DPC (supra), it would be apposite to notice the final verdict by the Larger Bench on 08.11.2024 which read as under: "168. In the present reference, we have upheld the decisions of this Court in TRF (supra) and Perkins (supra) which dealt with situations dealing with sole arbitrators. Thus, TRF (supra) and Perkins (supra) have held the field for years now. However, we have disagreed with Voestalpine [2025:RJ-JP:38330-DB] (3 of 5) [CMA-2097/2023] (supra) and CORE (supra) which dealt with the appointment of a three-member arbitral tribunal. We are aware of the fact that giving retrospective effect to the law laid down in the present case may possibly lead to the nullification of innumerable completed and ongoing arbitration proceedings involving three-member tribunals. This will disturb the commercial bargains entered into by both the government and private entities. Therefore, we hold that the law laid down in the present reference will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction only applies to three- member tribunals. J. Conclusion

169. In view of the above discussion, we conclude that: The principle of equal treatment of parties a. applies at all stages of arbitration proceedings, including the stage of appointment of arbitrators; b. The Arbitration Act does not prohibit PSUs from empanelling potential arbitrators. However, an arbitration clause cannot mandate the other party to select its arbitrator from the panel curated by PSUs; c. A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators; d. In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counterbalance because parties do not participate equally in the process of appointing arbitrators. The process of appointing arbitrators in CORE (supra) is unequal and prejudiced in favour of the Railways; e. Unilateral appointment clauses in public- private contracts are violative of Article 14 of the Constitution; [2025:RJ-JP:38330-DB] (4 of 5) [CMA-2097/2023] The principle of express waiver contained f. under the proviso to Section 12(5) also applies to situations where the parties seek to waive the allegation of bias against an arbitrator appointed unilaterally by one of the parties. After the disputes have arisen, the parties can determine whether there is a necessity to waive the nemo judex rule; and The law laid down in the present reference g. will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction applies to three-member tribunals

170. The reference is answered in the above terms"

4. We notice that at the time, when the Arbitrator was appointed in the present case, the law as settled in the case of TRF Ltd. (supra) and Perkins Eastman Architects DPC (supra) was the law of the land. In spite thereto, the Arbitrator appointed was the Managing Director, which could not have been done in view of the law as it was at that relevant point of time even thereafter as well as on today, the law remains the same. Consistency of law, therefore, would apply equally to all the judgments which have been rendered on the basis of the law which was existing on that time. Had there been a new appointment of Arbitrator during the pendency of this petition which would not have been examined by any Court of law, the situation would have been otherwise. In the present case, the decision was rendered by the Commercial Court on 23.06.2022 holding the said award to be in nullity in the eyes of law.

5. We also further notice that the said directions of further reference to apply prospectively to Arbitrator appointments is only with respect to apply to three-member-Tribunal and not otherwise. In the circumstances, the prospectivity law as laid down by the [2025:RJ-JP:38330-DB] (5 of 5) [CMA-2097/2023] Larger Bench (supra) would not affect the award passed by the sole Arbitrator appointed by the Managing Director.

6. The order passed by the Commercial Court dated

23.06.2022, therefore, does not warrant any interference, also the objection raised under Section 37 of the Arbitration Act do not have any course, the civil miscellaneous appeal accordingly dismissed.

7. Pending application(s), if any, also stands disposed of. (SANJEET PUROHIT),J (SANJEEV PRAKASH SHARMA),J GAURAV/AVINASH/69

Shivraj Samota S/o Shri Ramnarayan Samota, Resident Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil Chaksu, District Jaipur(Rajasthan).

2. Smt Gyarasi Devi Wife Of Mr. Ramnarayan Samota, Resident Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil Chaksu, District Jaipur (Rajasthan).

3. Hazari Lal S/o Shri Ramnarayan Samota S/o Ramnarayan Samota, Resident Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil Chaksu, District Jaipur (Rajasthan).

4. Bahadur Singh S/o Shri Ramnarayan Samota, Resident Of Jato Ka Mohalla, Bajdoli, Kumharianwas, Tehsil Chaksu, District Jaipur (Rajasthan). ----Respondents For Appellant(s) : Mr. Jitender Mituka For Respondent(s) : Mr. Bajrang Lal Choudhary HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE SANJEET PUROHIT Order REPORTABLE 18/09/2025

1. The challenge is to the order dated 23.06.2022 passed by the learned Commercial Court No.2, Jaipur Metropolitan Second, whereby the award passed by the Arbitrator in favour of the appellant was set aside on the ground that the arbitrator appointed, namely, the Managing Director of the appellant, could [2025:RJ-JP:38330-DB] (2 of 5) [CMA-2097/2023] not have been appointed as a sole arbitrator in view of the law as settled by the Hon'ble Supreme Court in the case of TRF Ltd. Vs. Energo Engineering Projects Ltd.: (2017) 7 SCR 409.

2. It is the contention of the learned counsel that the TRF Ltd. Case (supra) was although reiterated in the case of Perkins Eastman Architects DPC Vs. HSCC (India) Ltd.: (2019) 17 SCR 275, however, a different view was taken subsequently in the case of Voestalpine Schienen Gmbh Vs. Delhi Metro Rail Corporation Ltd.: (2017) 1 SCR 798. Learned counsel for the petitioner further submits that the matter was referred to the Larger Bench in the case of Central Organisation for Railway Electrification Vs. M/s. ESI-SPIC-SMO-MCML (JV) A Joint Venture Company: (2019) 16 SCR 1234 and while deciding the reference, holding the law as laid down in TRF Ltd. (supra) and Perkins Eastman Architects DPC (supra) to be the correct law, further held that “the law as laid down in the present reference will apply prospectively to Arbitrator appointment to be made after the date of this judgment. This direction will only apply to three-members-Tribunal.”

3. We have given our thoughtful consideration to the submission without going to the aspects and decisions rendered in TRF Ltd. (supra) and Perkins Eastman Architects DPC (supra), it would be apposite to notice the final verdict by the Larger Bench on 08.11.2024 which read as under: "168. In the present reference, we have upheld the decisions of this Court in TRF (supra) and Perkins (supra) which dealt with situations dealing with sole arbitrators. Thus, TRF (supra) and Perkins (supra) have held the field for years now. However, we have disagreed with Voestalpine [2025:RJ-JP:38330-DB] (3 of 5) [CMA-2097/2023] (supra) and CORE (supra) which dealt with the appointment of a three-member arbitral tribunal. We are aware of the fact that giving retrospective effect to the law laid down in the present case may possibly lead to the nullification of innumerable completed and ongoing arbitration proceedings involving three-member tribunals. This will disturb the commercial bargains entered into by both the government and private entities. Therefore, we hold that the law laid down in the present reference will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction only applies to three- member tribunals. J. Conclusion

169. In view of the above discussion, we conclude that: The principle of equal treatment of parties a. applies at all stages of arbitration proceedings, including the stage of appointment of arbitrators; b. The Arbitration Act does not prohibit PSUs from empanelling potential arbitrators. However, an arbitration clause cannot mandate the other party to select its arbitrator from the panel curated by PSUs; c. A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators; d. In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counterbalance because parties do not participate equally in the process of appointing arbitrators. The process of appointing arbitrators in CORE (supra) is unequal and prejudiced in favour of the Railways; e. Unilateral appointment clauses in public- private contracts are violative of Article 14 of the Constitution; [2025:RJ-JP:38330-DB] (4 of 5) [CMA-2097/2023] The principle of express waiver contained f. under the proviso to Section 12(5) also applies to situations where the parties seek to waive the allegation of bias against an arbitrator appointed unilaterally by one of the parties. After the disputes have arisen, the parties can determine whether there is a necessity to waive the nemo judex rule; and The law laid down in the present reference g. will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction applies to three-member tribunals

170. The reference is answered in the above terms"

4. We notice that at the time, when the Arbitrator was appointed in the present case, the law as settled in the case of TRF Ltd. (supra) and Perkins Eastman Architects DPC (supra) was the law of the land. In spite thereto, the Arbitrator appointed was the Managing Director, which could not have been done in view of the law as it was at that relevant point of time even thereafter as well as on today, the law remains the same. Consistency of law, therefore, would apply equally to all the judgments which have been rendered on the basis of the law which was existing on that time. Had there been a new appointment of Arbitrator during the pendency of this petition which would not have been examined by any Court of law, the situation would have been otherwise. In the present case, the decision was rendered by the Commercial Court on 23.06.2022 holding the said award to be in nullity in the eyes of law.

5. We also further notice that the said directions of further reference to apply prospectively to Arbitrator appointments is only with respect to apply to three-member-Tribunal and not otherwise. In the circumstances, the prospectivity law as laid down by the [2025:RJ-JP:38330-DB] (5 of 5) [CMA-2097/2023] Larger Bench (supra) would not affect the award passed by the sole Arbitrator appointed by the Managing Director.

6. The order passed by the Commercial Court dated

23.06.2022, therefore, does not warrant any interference, also the objection raised under Section 37 of the Arbitration Act do not have any course, the civil miscellaneous appeal accordingly dismissed.

7. Pending application(s), if any, also stands disposed of. (SANJEET PUROHIT),J (SANJEEV PRAKASH SHARMA),J GAURAV/AVINASH/69