Institutional Rules Prevail Over Party Preference: Delhi High Court mandates nomination only from SAROD’s panel even by non‑members, distinguishing CORE

Introduction

This commentary analyzes the Delhi High Court’s decision in M/s KNR Tirumala Infra Pvt. Ltd. v. National Highways Authority of India (2025 DHC 7488), pronounced on 29 August 2025 by Justice Jasmeet Singh, arising from a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the Act).

The dispute stems from a Hybrid Annuity Mode (HAM) concession for six-laning NH‑140 in Andhra Pradesh. The concession agreement dated 09.05.2018 contains an arbitration clause (Clause 38.3) referring disputes to arbitration under the Rules of the Society for Affordable Redressal of Disputes (SAROD), New Delhi, with a three‑member tribunal and the seat at Delhi.

On disputes arising (hindrances and unpaid bills; claimed at around Rs. 202 crores), the petitioner invoked conciliation and, thereafter, arbitration, nominating Mr. Subhas I. Patel as its party‑appointed arbitrator. NHAI objected on the ground that SAROD’s Rules require party‑appointed arbitrators to be selected from SAROD’s panel. It appointed Hon’ble Mr. Justice (Retd.) Pradeep Nandrajog as its own nominee from SAROD’s panel. The petitioner moved under Section 11(6), seeking recognition of its nomination outside SAROD’s panel.

Key issues included: (i) whether a non‑member of SAROD can nominate an arbitrator outside SAROD’s panel despite an arbitration clause referring disputes to be conducted under SAROD Rules; (ii) the applicability of the Supreme Court’s decision in CORE to panel‑based appointments; (iii) the effect of SAROD’s 26.12.2024 amendments removing membership as a precondition to invoke arbitration; (iv) the scope of judicial scrutiny under Section 11; and (v) whether SAROD was a necessary party.

Summary of the Judgment

The petition was dismissed. The Court held that once parties have agreed to conduct arbitration under SAROD Rules, nomination must be in accordance with those Rules. The petitioner must nominate its arbitrator from SAROD’s panel (Rule 11.4), notwithstanding that it is not a SAROD member.
Rani Constructions (Del HC, 2024) was distinguished: it prevented denial of access to arbitration on the ground of non‑membership; it did not license parties to disregard SAROD’s appointment procedure once SAROD arbitration is invoked. Moreover, SAROD’s 26.12.2024 circular amended Rule 4.4 to remove membership as a precondition, curing the mischief addressed in Rani Constructions.
CORE was held inapplicable: unlike the PSU‑curated, party‑dominant mechanism condemned in CORE, SAROD is an independent arbitral institution maintaining a broad‑based and neutral panel. Requiring appointment from such a panel does not violate equal treatment or independence and impartiality.
Relying on Kamlesh Kumar (2024; affirmed in 2025), SAROD was found not to be under deep or pervasive control of NHAI and thus is an independent institution. The Villupuram Highways (2025) decision was invoked to demonstrate that SAROD’s panel is broad‑based (e.g., 92 arbitrators from diverse backgrounds).
The Court reaffirmed the limited scope of Section 11: it primarily looks to the existence of an arbitration agreement; once established and the appointment procedure is frustrated, the Court enforces the agreed mechanism rather than re‑writing it.
SAROD was not a necessary party because the Court did not examine the validity of SAROD’s Rules; it only enforced the parties’ contract and the applicable institutional rules.
Liberty was given to the petitioner to nominate its arbitrator from SAROD’s panel; the two nominees shall then appoint the presiding arbitrator from the same panel.

Detailed Analysis

1) Precedents and Authorities Cited

Rani Constructions Pvt. Ltd. v. Union of India, 2024 SCC OnLine Del 2164
The petitioner invoked this case to argue that non‑members cannot be compelled to obtain SAROD membership or be fettered by the SAROD panel. The High Court clarified that Rani Constructions addressed a narrow issue: it disapproved denying access to arbitration solely for want of SAROD membership. It did not hold that, once SAROD arbitration is invoked, the parties can ignore SAROD’s rules on appointment. The subsequent SAROD circular dated 26.12.2024 explicitly removed any membership requirement to initiate arbitration, rendering the Rani Constructions concern academic on the facts now arising.
Central Organisation for Railway Electrification v. ECI‑SPIC‑SMO‑MCML (JV), 2024 SCC OnLine SC 3219 (“CORE”)
CORE condemned appointment structures that unequally empower one party (e.g., a PSU) by restricting the counterparty to a narrow, employer‑curated panel and enabling unilateral or dominant appointments. The Delhi High Court distinguished CORE: SAROD appointments are institutional, regulated by neutral rules and a broad, diverse panel curated by an independent body; NHAI does not have a dominant say. Thus, the equal‑treatment and impartiality concerns that animated CORE do not translate to SAROD’s model.
Kamlesh Kumar v. Society for Affordable Redressal of Disputes and Others, 2024 SCC OnLine Del 4856 and Kamlesh Kumar v. SAROD & Ors., 2025 SCC OnLine Del 2055 (DB)
These decisions held that SAROD is an independent body, not under deep or pervasive control of NHAI and not an instrumentality of the State under Article 12. The Court in KNR Tirumala relied on these to underscore institutional independence, thereby negating the “curated by the employer” critique that was central to CORE.
Villupuram Highways Construction (P) Ltd. v. NHAI, 2025 SCC OnLine Del 5167
The Court referenced this decision to show that SAROD’s appointment committee and the composition of its panel are transparent and broad‑based (e.g., 92 empanelled arbitrators including former Supreme Court and High Court Judges, senior bureaucrats, engineers, and experts). This breadth and neutrality defeats allegations of bias or one‑sided control.
SBI GENERAL INSURANCE CO. LTD. v. KRISH SPINNING, 2024 SCC OnLine SC 1754 and Interplay Between Arbitration Agreements under Arbitration, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1
Cited for the limited scope of referral courts under Section 11—primarily a prima facie examination of the existence and validity of the arbitration agreement, while leaving larger issues to the arbitral tribunal.
B.K. Educational Services Pvt. Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633
Relied upon to support the proposition that procedural amendments ordinarily operate retrospectively. In context, the 26.12.2024 amendment removing membership as a precondition applies to the ongoing appointment process.
Statutory Policy: Section 43D(2)(h) of the Act (as amended) recognises the objective to “promote institutional arbitration by strengthening arbitral institutions.” The Court’s approach aligns with this policy by enforcing institutional rules once chosen by contract.

2) The Court’s Legal Reasoning

Section 11’s confined remit and duty to enforce the agreed procedure
The Court reiterated that it is not to undertake fact‑intensive scrutiny at the referral stage. The existence of a valid arbitration agreement was undisputed; the disagreement centered around the appointment procedure. Because the contract unequivocally referred disputes to SAROD arbitration and the petitioner’s correspondence admitted adherence to SAROD Rules, the Court enforced that institutional framework in full. Selective adherence—following some SAROD rules (e.g., fee administration) but discarding Rule 11.4 on panel‑based appointments—was rejected.
Effect of SAROD’s 26.12.2024 amendment
The amendment eliminated membership as a precondition to invoke SAROD arbitration (Rule 4.4), thereby addressing the precise mischief considered in Rani Constructions. Thus, non‑members can validly invoke SAROD arbitration, but once they do, they must comply with all SAROD Rules, including the panel requirement for appointments (Rule 11.4).
Institutional arbitration vs unilateral curation
CORE’s vice lay in empowering a contracting State entity to dominate the appointment process through a narrow list comprising its own officers. By contrast, SAROD’s governing body includes equal representation from NHAI and the National Highways Builders Federation (NHBF), and the panel is assembled by a committee with equal representation, inviting and evaluating empanelment applications transparently. The presence of retired Judges of superior courts and other eminent professionals further insulates the process from institutional bias. Hence, the equal treatment and independence concerns of CORE are not engaged.
Party autonomy is bounded by contract and institutional design
Party autonomy includes the choice to select institutional arbitration. That choice entails acceptance of the institution’s complete rulebook, including any constraints on the appointment process that are neutral, reasonable, and designed to secure independence, impartiality, and efficiency. Permitting parties to cherry‑pick only favourable rules would undermine institutional arbitration and the legislative policy in Section 43D.
Panel breadth and neutrality
Drawing upon Villupuram Highways and the on‑record panel as of 16.01.2025, the Court found SAROD’s panel to be broad‑based, diverse, and neutral. A large, diverse panel affords meaningful choice and reduces apprehensions of bias. If any empanelled individual is disqualified under the Fifth or Seventh Schedules, the Act provides targeted remedies (e.g., Section 12 challenges) without dismantling the institutional architecture.
No necessity to implead SAROD
Because the Court did not sit in judgment over SAROD’s Rules or its institutional functioning, SAROD’s presence was unnecessary. The dispute was purely inter se between the contracting parties concerning their contractual obligations and the application of agreed rules.

3) Impact and Prospective Significance

Reinforcement of institutional arbitration
The decision strongly signals that Indian courts will enforce the entirety of institutional rules when parties have chosen institutional arbitration. This advances the policy objective of developing a robust institutional arbitration ecosystem in India.
Non‑members remain bound by institutional rules once they invoke the institution
Even where institutions, like SAROD, remove membership prerequisites, parties—members and non‑members alike—are equally bound to adhere to all appointment and conduct rules once they opt into the institutional framework.
CORE’s principle is contextual, not absolute
The judgment articulates a key boundary to CORE: its proscription targets one‑sided or employer‑dominated curation and unilateral appointment. It does not forbid panel‑based appointments conducted by independent institutions with broad, neutral panels.
Drafting guidance for public contracts
Contracting agencies and private counterparties should expect that courts will not allow deviations from institutional rules post‑hoc. If parties want non‑panel appointments, the arbitration clause must clearly provide for a different appointment mechanism or opt for an institution permitting such choices. Absent such drafting, courts will hold them to the chosen institution’s rules.
Section 11 petitions will be streamlined
Referral courts are likely to dismiss petitions seeking court‑ordered recognition of out‑of‑panel appointments when institutional rules mandate panel selections, while giving liberty to re‑nominate within the panel. This reduces delay and gamesmanship in constitution of tribunals.
Practical protection remains through targeted challenges
Parties retain the right to challenge any proposed arbitrator’s independence or impartiality under Section 12 read with the Fifth/Seventh Schedules. Thus, the panel requirement coexists with statutory safeguards protecting due process.

Complex Concepts Simplified

Institutional arbitration: Arbitration administered by a specialized institution (e.g., SAROD, ICA, SIAC) under its rules. These rules typically cover appointment of arbitrators, fees, timelines, and procedural management. Selecting institutional arbitration imports the full rulebook unless parties agree otherwise at contract formation.
Party autonomy vs institutional rules: Party autonomy allows parties to choose law, seat, and procedure, including selecting an institution. But once an institution is chosen, its rules govern—party autonomy does not allow selective compliance after disputes arise.
Panel‑based appointments: Some institutions maintain a vetted panel of arbitrators. Requiring appointments from such panels is legitimate if the panel is broad, diverse, and controlled by an independent institution, not the litigant party. CORE objects to narrow, employer‑curated lists that give unilateral control.
Section 11 of the Act: Allows court intervention where agreed appointment procedures fail. The court’s scrutiny is narrow—primarily verifying the existence of an arbitration agreement and enforcing the contractually agreed mechanism rather than deciding merits or complex factual disputes.
Procedural amendments and retrospectivity: Changes affecting procedure (e.g., how appointments are made) often apply to ongoing processes, absent contrary intent. Here, SAROD’s 26.12.2024 circular removing the membership precondition applied to the parties’ live appointment dispute.
Necessary party: A party without whom no effective order can be made. Since the Court was only applying the contract and SAROD’s Rules—not assessing their legality—SAROD’s presence was unnecessary.

Key Takeaways

Once parties have agreed to conduct arbitration under SAROD Rules, all parties—including non‑members—must appoint arbitrators from SAROD’s panel in terms of Rule 11.4.
Rani Constructions ensures access to SAROD even for non‑members; it does not entitle parties to ignore SAROD’s appointment procedures once SAROD arbitration is invoked. The 26.12.2024 amendment further moots the membership barrier.
CORE does not invalidate institutional, panel‑based appointments where the institution is independent and the panel is broad‑based and neutral. The vice in CORE is employer domination and narrow, one‑sided curation.
Courts will enforce the complete institutional architecture preferred by parties, in line with Section 43D(2)(h) promoting institutional arbitration.
Section 11 referrals remain confined; courts will not rewrite appointment procedures to accommodate post‑dispute preferences.
If an empanelled arbitrator has a conflict, the Act’s challenge mechanism (Section 12) furnishes discrete remedies without derailing the institutional mechanism.

Conclusion

The Delhi High Court’s ruling in KNR Tirumala Infra v. NHAI lays down a clear and pragmatic rule for institutional arbitration in India: when parties select an arbitral institution, they commit to its rules in full, including any panel‑based appointment procedures. The Court carefully cabins CORE to its facts, recognizing that its anti‑unilateralism principle is not a blanket ban against all curated panels—only against those that are employer‑controlled and unequal. By emphasizing SAROD’s independence, the breadth and diversity of its panel, and the legislative policy favouring institutional arbitration, the judgment strengthens predictability in the constitution of arbitral tribunals, discourages tactical deviations at the Section 11 stage, and promotes efficient dispute resolution in public‑private infrastructure contracts. The decision should guide future drafting and dispute strategy: choose the forum wisely at contract stage, and once chosen, expect the courts to hold you to it.