The Delhi High Court has upheld a 2006 arbitral award, holding that Section 12(5), introduced in 2015, could not retrospectively invalidate an appointment made under an agreed contractual procedure in 2004. The Court stressed that its ruling does not validate every unilateral appointment or exclude challenges based on bias or other defects under the law then applicable.
New Delhi: The Delhi High Court has rejected a tractor dealer’s challenge to an arbitral award in favour of CNH Industrial (India) Pvt. Ltd., distinguishing an appointment authorised by the parties’ contract before the 2015 amendment from one made without contractual authority [M/s Shivdei Automobiles & Ors. v. CNH Industrial (India) Pvt. Ltd.].
Justice Om Prakash Shukla delivered the judgment on October 29, 2026, dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996. The Court upheld the award dated January 9, 2006, and made no order as to costs.
The dealership dispute
The parties’ dealings began with a September 1998 letter of intent concerning a tractor dealership in Sirsa and Fatehabad, Haryana. A formal dealership agreement followed on January 1, 2002. Disputes arose over outstanding payments, interest and other financial obligations.
The respondent invoked the arbitration clause on June 1, 2004 and appointed retired Justice G.T. Nanavati as sole arbitrator. As recorded in the judgment, the award granted the respondent Rs 1,29,68,643, with interest at 12% per annum from August 1, 2004 until payment.
The dealer and its partners challenged the unilateral appointment, alleged that no notice under Section 21 had been issued, and disputed the arbitrator’s jurisdiction over transactions predating the 2002 agreement.
The law at the time of appointment governs
The Court noted that both the commencement of arbitration in 2004 and the award in 2006 preceded October 23, 2015, when Section 12(5) came into force. It relied on the authorities discussed in the judgment to hold that the later statutory disqualification could not, by itself, invalidate this earlier appointment.
Clause 25 expressly provided for a retired court judge to be appointed by the respondent’s Managing Director. The appointment followed that procedure. The petitioners identified no separate circumstance creating justifiable doubts about the arbitrator’s independence or impartiality, the Court found in paragraph 29.
The qualification in paragraph 30 is central: the result depended on the contract, the appointment date and the grounds actually raised. Earlier appointments remain open to scrutiny for an independent statutory defect or established lack of independence or impartiality under the law applicable at the time.
Separate notice objection rejected
The Court also rejected the argument based solely on the absence of a separate Section 21 notice. It recorded a legal notice, a reply and the June 2004 letter invoking the contractual clause and communicating the appointment.
Applying Bhagheeratha Engg. Ltd. v. State of Kerala, cited in the judgment as (2026) 5 SCC 758, the Court held that the alleged omission did not by itself defeat an otherwise arbitrable claim. The petitioners had neither argued that the claims were time-barred nor demonstrated procedural prejudice. Paragraphs 39–40 preserve the requirements of limitation and the limits of the arbitration agreement.
Earlier dues were preserved by the contract
On the transactions between March 24, 1999 and December 31, 2001, the Court accepted the arbitrator’s view that continued supplies, acceptance of goods and payments supported an ongoing commercial relationship. But it separately examined whether those financial liabilities fell within the written arbitration agreement.
Reading Clause 1.4, which preserved outstanding financial obligations, with the arbitration clause, the Court found the arbitrator’s interpretation plausible. It expressly limited the conclusion to the financial liabilities saved by the agreement, rather than every unrelated claim arising before 2002.
The judgment therefore leaves the award intact while drawing a careful distinction between contractual authority under the earlier regime and the statutory restrictions introduced later.
Case Title: M/s Shivdei Automobiles & Ors. v. CNH Industrial (India) Pvt. Ltd.
Case Number: O.M.P. (COMM) 51/2020
CNR: DLHC010099092020
Court and Bench: Delhi High Court; Justice Om Prakash Shukla
Decision Date: October 29, 2026
Outcome: Section 34 petition dismissed; award dated January 9, 2006 upheld; no order as to costs.