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M/S Airport Handling Services vs. Indian Institute Of Technology, Kanpur

First Appeal from Order (Commercial) · 2026:DHC:8387-DBDecided 28 Sept 2026New Delhi Bench
FAO (COMM) 231/2026CNR: DLHC010368972026
Justice Anil Kshetarpal · Justice Shail Jain

Background

A small business (MSME) had unpaid dues from IIT Kanpur for years of services rendered, and after conciliation failed, arbitration through the Delhi Arbitration Centre awarded it about Rs. 27.77 lakh. IIT Kanpur challenged the award, arguing, raised for the first time only in its rejoinder, long after arbitration concluded, that the arbitrator (also President of the Delhi State Consumer Disputes Redressal Commission) was barred by her service rules from acting as an arbitrator. The trial court agreed and set aside the award on this sole ground.

Decision Breakdown

The High Court clarified that not every restriction making an arbitrator "unable to act" (Section 14) automatically makes them "ineligible" in the specific, stricter sense under Section 12(5) and the Seventh Schedule (which addresses conflicts of interest/bias). Since the alleged issue was purely a service-condition restriction from her other job, not a Seventh Schedule relationship-based disqualification, it did not require the special written waiver the trial court insisted was missing. As this was the sole ground for setting aside the award, and IIT Kanpur had participated throughout arbitration without objecting, the Court restored the award.

Lesson Learnt

A challenge to an arbitrator's competence based on unrelated service rules from their other job is different from a challenge based on actual conflict of interest or bias, only the latter carries strict disqualification consequences, and such objections should be raised promptly during arbitration, not after losing.

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