Three arbitrators quitting over fees did not end the ₹3,515 crore NHAI-IRB arbitration, Delhi HC rules
Justice Sachin Datta held that the simultaneous recusal of a tribunal headed by a former Supreme Court judge was a withdrawal from office under Section 15, not a termination under Section 32, rejected the reliance placed by the IRB companies on Harshbir Singh Pannu, and appointed Justice Rajesh Bindal as presiding arbitrator.
In July 2025 all three members of an arbitral tribunal hearing claims of about ₹3,515 crore by IRB Westcoast Tollway against the National Highways Authority of India recused themselves after a disagreement with NHAI over their fees. Fifteen months later the Delhi High Court has held that the walkout did not end the arbitration. Justice Sachin Datta ruled on 16 October 2026 that a recusal, even by every member of a tribunal at once, is a withdrawal from office under Section 15(1)(a) of the Arbitration and Conciliation Act, 1996, to be cured by substitution, and not a termination of proceedings under Section 32. He rejected the IRB companies’ argument, built on Harshbir Singh Pannu v. Jaswinder Singh, that NHAI’s only remedy was to ask the departed arbitrators to recall their own recusal, appointed Justice Rajesh Bindal, a former judge of the Supreme Court, as presiding arbitrator, and directed that the proceedings resume from where they stood on 16 July 2025.
A ₹2,987 crore overstay claim and a collapsed bridge
The concession agreement dates from 25 March 2013. NHAI signed it with IRB Westcoast Tollway Ltd, a special purpose vehicle, for the four-laning of the Goa/Karnataka border to Kundapur section of NH-66, formerly NH-17, from km 93.700 to km 283.300 in Karnataka, under NHDP Phase IV on a design, build, finance, operate and transfer toll basis. IRB Infrastructure Trust, the concessionaire’s current promoter, and IRB Infrastructure Developers Ltd, its former promoter and the successful bidder, were the second and third respondents; neither signed the agreement. The arbitration clause is Article 44.3, and Article 44.3.1 refers to the rules of the International Centre for Alternative Dispute Resolution.
On 8 January 2024 the concessionaire raised what it called interim claims for damages and losses on account of overstay at site beyond the scheduled four-laning date, totalling about ₹2,987.45 crore. Its first notice of arbitration followed on 21 June 2024, nominating Justice P.N. Deshmukh, a retired judge of the Bombay High Court. NHAI nominated Justice V. Ramasubramanian, a former judge of the Supreme Court, on 23 July 2024. On 7 August 2024 the old Kaali Bridge collapsed. NHAI issued a suspension notice on 19 August, which the concessionaire disputed on 26 August; a show cause notice went to the concessionaire and both IRB promoters on 11 September, and the suspension was withdrawn the next day. On 27 September 2024 the concessionaire issued a second notice of arbitration, addressed to NHAI and to the two promoters, over the bridge disputes.
The tribunal came into being on 17 October 2024, when Justice Krishna Murari, a former judge of the Supreme Court, consented to preside. Around the same time the concessionaire and the promoters filed a Section 9 petition in the High Court against the show cause notice; on 18 October 2024 a coordinate bench directed that it be treated as a Section 17 application before the tribunal. In Procedural Order No. 2, recording the hearing of 26 October 2024 as revised the next day, the tribunal fixed a fee of ₹10,00,000 per arbitrator for deciding that application. On 24 December 2024 it allowed the application, holding that the two promoters were veritable parties to the contract and the arbitration. NHAI challenged that order under Section 37(2)(b) in ARB. A. (COMM) 16/2025, which is pending; it raised no objection to the ad hoc fee either before the order or in its memorandum of appeal.
The disputes kept multiplying. A cure-period notice from NHAI on 13 January 2025 produced a third set of claims, which went to conciliation and then, on 3 May 2025, to a third notice of arbitration. On 2 April 2025, more than three months after the Section 17 order, NHAI applied to the tribunal to recall the fee fixed in Procedural Order No. 2, arguing that the ICADR rules provided no separate fee for interim applications. On 21 May 2025 the concessionaire issued a fourth notice, over the deemed modification of the concession period under Article 29. On 16 June 2025 the concessionaire and the promoters filed a consolidated statement of claim covering all four sets of disputes, in stated compliance with Gammon India v. NHAI. With annexures it ran to more than 1,38,000 pages, and the claims were valued at about ₹3,515 crore.
The recusal, and the scramble to rebuild the tribunal
At the hearing on 16 July 2025 the tribunal passed Procedural Order No. 6, circulated by email on 21 July. It recorded that the members “have decided to recuse themselves from further proceedings in the matter”. It did not refer to Section 32 or Section 38, did not use the word terminate, and recorded no finding that continuing the proceedings had become unnecessary or impossible.
Both sides moved to fill the vacancies. On 19 July 2025 NHAI wrote nominating a new arbitrator, who declined the assignment; on 21 July it nominated Justice Uday U. Lalit, the former Chief Justice of India, who consented the same day. On 17 August 2025 the concessionaire nominated Justice Virendrasingh Gyansingh Bisht, a former judge of the Bombay High Court, expressly in view of the recusal of the earlier tribunal; he consented on 22 August. On 10 September 2025 Justice Lalit recused himself, and on 29 September NHAI nominated Justice Sakha Ram Singh, a former judge of the Allahabad High Court, who accepted on 2 October.
Meanwhile the IRB companies had filed a writ petition, W.P.(C) 12165/2025, seeking permission to go back to the original tribunal for re-fixation of its fee under the Fourth Schedule, and a declaration that NHAI’s nomination letters of 19 and 21 July were illegal. The High Court dismissed it on 9 October 2025. In November 2025, with the two nominees unable to agree on a presiding arbitrator, it was the IRB companies that filed ARB. P. 1862/2025 under Section 11(6). A coordinate bench appointed a presiding arbitrator on 1 December 2025, in an order that itself recorded the recusal over a fee disagreement and the fresh nominations that followed. That presiding arbitrator recused by a letter of 5 January 2026, asking the parties to appoint a substitute.
NHAI filed the present petition under Section 11(6) to fill that single vacancy. It came up on 5 February 2026, when notice was issued. The day before, the IRB companies had filed an application before the original tribunal seeking recall of Procedural Order No. 6.
Recusal or termination: the single objection
Mr Atul Nanda, Senior Advocate, appearing for the IRB companies with Ms Rameeza Hakim, Ms Devika Mohan, Mr Uday Khanna, Mr Aalam Bir Singh Nijar, Mr Annamaya Nanda and Mr Pratyush Srivastava, resisted the petition on one ground. Procedural Order No. 6 was in substance an order terminating the proceedings under Section 32(2)(c). Termination is referable only to Section 32; Sections 25, 30 and 38 merely list the circumstances in which it may be resorted to. He relied on paragraphs 209 to 213, 253 to 262, 310 to 316 and 415 of Harshbir Singh Pannu for three propositions: Section 32 is exhaustive of the modes of termination; the arbitral reference is singular, not perpetual, so the same dispute cannot be sent to another tribunal; and a party aggrieved by a termination must first seek recall before the same tribunal and, failing that, approach the court under Section 14(2). Sections 14(1)(b) and 15(1)(a), he argued, contemplate the withdrawal of an individual arbitrator, not of a whole tribunal, which is nothing but a termination. The recusal had been caused solely by NHAI’s unreasonable stand on fees. The writ judgment of 9 October 2025 and the IRB companies’ own Section 11 petition both predated Pannu, and the recall application of 4 February 2026 was filed once Pannu had clarified the proper remedy.
Mr Ankur Mittal, Senior Advocate, appearing for NHAI with Mr Abhay Gupta, Mr Ankur Saboo, Ms Ipshita Dutta and Mr Aviraj Pandey, said the objection rested on mischaracterising the order. It recorded a decision to recuse; it did not purport to terminate anything, cited neither Section 32 nor Section 38, and made no finding of impossibility. In form and substance it was a withdrawal from office, the contingency Section 15(1)(a) addresses. The Act deliberately separates termination of an arbitrator’s mandate under Sections 13 to 15, which leads to substitution, from termination of the proceedings under Section 32, which ends the reference; Sections 15(3) and 15(4) confirm that after substitution the proceedings continue and earlier orders stand. Pannu involved a sole arbitrator who, having fixed his fee under the Fourth Schedule with the parties’ consent, expressly terminated the proceedings under Section 38 for non-payment; its remedial route presupposes a termination order capable of recall and a tribunal capable of considering it, and neither existed here. The IRB companies had themselves nominated a fresh arbitrator after the recusal and filed ARB. P. 1862/2025 to get a presiding arbitrator appointed. Since that arbitrator was appointed by the court under Section 11(6), Section 15(2) required his substitute to come by the same route, and the suggestion that his Section 12 declaration of 22 December 2025 was merely conditional was misconceived, since the Act contemplates no conditional declaration.
Why a withdrawal is not a termination
Justice Datta started from the structure of the Act. Section 15(1)(a) provides that an arbitrator’s mandate terminates where he withdraws from office for any reason. Withdrawal is a complete, self-sufficient event; the arbitrator need not justify it, the Act does not contemplate its recall, and Section 15(2) prescribes the consequence, which is substitution according to the rules that applied to the appointment of the arbitrator being replaced. The Supreme Court had explained this in Yashwith Constructions v. Simplex Concrete Piles in 2006. An arbitrator who has withdrawn retains no authority over the reference; whatever authority subsists passes to the substitute. Section 15(3) lets the reconstituted tribunal decide whether to repeat earlier hearings, and Section 15(4) preserves earlier orders and rulings against invalidity for a change in composition. A reference in which an arbitrator has been substituted is therefore the same reference, which is inherently different from one that has been terminated.
Termination under Section 32, by contrast, does not happen by operation of law or by the arbitrators’ conduct, save where a final award is made. It requires an order of the tribunal under Section 32(2) and, under clause (c), a finding that continuation has become unnecessary or impossible. The judge noted that Pannu itself, at paragraphs 215 to 217, traces Section 32 to Article 32 of the UNCITRAL Model Law, adopted precisely so that proceedings would not terminate automatically without a formal order. Withdrawal and substitution sit in Chapter III of the Act; termination of proceedings sits in Chapter VI. Section 2(1)(d) defines a tribunal as a sole arbitrator or a panel of arbitrators, so a three-member tribunal is an aggregate of three offices, each capable of falling vacant and being filled independently. Nothing in the Act turns three simultaneous withdrawals into a deemed order under Section 32(2)(c), and Section 13(2) of the General Clauses Act, 1897 makes the singular in Section 15 include the plural.
The judge then read Pannu against the IRB companies. At paragraph 109 the Supreme Court had approved the Bombay High Court’s observation in Maharashtra State Electricity Board v. Datar Switchgear that termination of an arbitrator’s mandate is not co-terminus with termination of the proceedings: in the former the arbitrator withdraws and a substitute continues, in the latter the tribunal itself collapses. At paragraph 208 it held that proceedings end in only two ways, a final award or an order under Section 32(2); at paragraph 213 it described Sections 25(a), 30 and 38 as merely enumerating circumstances in which such an order may be passed. Withdrawal under Section 15(1)(a) appears in none of those provisions. And at paragraphs 268 and 269 Pannu expressly recognised that where an arbitrator’s mandate ends by withdrawal, the recourse is a substitute under Section 15, while the Act is silent on remedies only where the proceedings themselves are terminated.
The remedial sequence in paragraphs 310 to 316 of Pannu, a recall application followed if necessary by a petition under Section 14(2), was therefore directed at an express termination order. The three questions the Supreme Court framed all presupposed such an order, and it was in that context that it barred a fresh Section 11 petition. Pannu, the judge said, answers the question “what follows when an Arbitral Tribunal terminates the proceedings?”; it does not answer the question “is the recusal a termination?”. There was a further difficulty. The recall remedy rests on a tribunal’s power of procedural review over its own orders, but a withdrawal is not an order; it is the relinquishment of the very office from which such a power would be exercised. VAG Educational Services v. Aakash Educational Services, discussed in Pannu, did not help either: there the sole arbitrator had passed a termination order under Section 32(2)(a), and the court held he was coram non judice when he later restored the case. That termination order was exactly what was missing here.
Nor did it matter that all three members left together. The Act nowhere treats a plurality of withdrawals differently from one, contains no provision for recalling a recusal, and gives no court power to compel an arbitrator who has withdrawn to resume office. If the members of a tribunal recused because they felt unequipped for a technical subject, the judge observed, it would be incongruous to send the parties back to those same arbitrators to seek a recall. The singular in Sections 14(1) and 15(1) reflects only that withdrawal is inherently the act of the individual who withdraws. Had the tribunal meant to terminate the proceedings for impossibility, it would have done so.
On the text of Procedural Order No. 6, the judge listed four features. Its operative verb was recuse, which Black’s Law Dictionary defines as the removal of oneself as judge in a particular matter, an act directed at the adjudicator’s continuation in office, not at the existence of the proceedings. It referred to no provision under which the proceedings could be terminated. It recorded no finding that continuation had become unnecessary or impossible. And it recorded no default under Section 38, which is attracted when a party fails to pay a deposit the tribunal has fixed, not when the tribunal and a party cannot agree on what the fee should be. The order could not by any stretch be characterised as one under Section 32. It was an informed withdrawal from office by each of the three arbitrators under Section 15(1)(a): the mandate of each ended on 16 July 2025, but the arbitral proceedings did not.
The IRB companies had already treated it as a recusal
That conclusion was enough to dispose of the objection, but the judge added that the respondents’ own conduct put the matter beyond doubt. Their writ petition, in which judgment was reserved on 13 August 2025, sought permission to re-approach the original tribunal for re-fixation of its fee; nowhere did it say the proceedings had ended. Their nomination of Justice Bisht on 17 August 2025 was made in view of the recusal, an act of substitution under Section 15(2) read with Article 44.3, and inconsistent with any claim that the reference was over. Most tellingly, in November 2025 it was the IRB companies who invoked Section 11(6) and obtained a presiding arbitrator from the court on the footing that the reference subsisted. The relief they sought then was in substance the relief NHAI sought now. A party that has invoked the court’s jurisdiction under Section 11(6) on the basis that the reference subsists cannot, when the other side does the same for the same purpose, contend that it does not. The objection was ex facie untenable.
Order
The Court held that Procedural Order No. 6 of 16 July 2025 was not a termination of the proceedings under Section 32 but a withdrawal from office by each of the three members under Section 15(1)(a); that the consequence was substitution under the rules that governed the original appointments, namely Article 44.3.2 of the concession agreement; that the parties had already substituted their nominees and the office of presiding arbitrator, vacant since 5 January 2026, had to be filled again; that Harshbir Singh Pannu supported NHAI rather than the respondents; that the recall application pending before the original tribunal was thoroughly misconceived; and that the respondents, having themselves treated the order as a recusal and invoked Section 11(6), could not now argue the contrary.
The petition was allowed. Justice Rajesh Bindal, former judge of the Supreme Court of India, was appointed presiding arbitrator, to sit with Justice Sakha Ram Singh, NHAI’s nominee, and Justice Virendrasingh Gyansingh Bisht, the respondents’ nominee, to adjudicate the disputes under the concession agreement of 25 March 2013. The appointment is subject to his declaration under Section 12, and the registry was directed to send him a copy of the order forthwith. The proceedings are to commence from the stage at which they stood on 16 July 2025, subject to the tribunal’s discretion. As directed in the order of 1 December 2025, the order remains subject, so far as the two IRB promoters are concerned, to the outcome of NHAI’s pending appeal in ARB. A. (COMM) 16/2025. Nothing in the judgment expresses any view on the merits of the claims, counterclaims or defences, which are left to the tribunal.