M/S Telecommunications Consultants India Ltd. (A Govt. Of India Enterprise) vs M/S Vista Information Systems Private Ltd.

Court
Delhi High Court

$~42
* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Date of decision: 15.10.2026

# CNR No. DLHC010267372023
+ FAO(OS) (COMM) 140/2023, CM APPL. 35663/2023, CM
APPL. 1874/2024 & CM APPL. 6096/2026

M/S TELECOMMUNICATIONS CONSULTANTS INDIA
LTD. (A GOVT. OF INDIA ENTERPRISE) .....Appellant
Through: Mr. Viraj Datar, Sr. Adv. with
Ms. Karnnika A Seth, Mr.
Gurneev Singh, Mr. Garvit
Mathur, Advs.
versus

M/S VISTA INFORMATION SYSTEMS PRIVATE LTD.
.....Respondent
Through: Mr. Saurav Aggarwal, Mr.
Omar Ahmed, Mr. Asav Rajan,
Mr. Ajay Sharma, Mr. Devang
Shrotriya, Mr. Kashish Chadha,
Advs.

CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
HON'BLE MS. JUSTICE SHAIL JAIN

AVNEESH JHINGAN, J. (ORAL)
1. This appeal is filed under Section 37 of the Arbitration and
Conciliation Act, 1996 (for short ‘the Act’) against the judgment dated
18.04.2023 passed by the learned Single Judge in O.M.P. (COMM)
481/2019 dismissing the petition filed under Section 34 of the Act.
2. The brief facts are that the appellant, Telecommunications
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Consultants India Limited (hereinafter ‘TCIL’) is a Government of
India enterprise. The respondent is a company incorporated under the
Companies Act, 1956. The parties to the lis entered into an agreement
dated 02.05.2012 for completion of the residual obligations under the
earlier contracts.
2.1 Disputes arose between the parties regarding the release of
amounts payable under the agreement. Clause 6 of the agreement
provides for resolution of disputes through arbitration by a sole
arbitrator appointed by the Chairman and Managing Director (CMD)
of TCIL and in the eventuality of the parties failing to agree on the
sole arbitrator, the appointment shall be made by the International
Centre for Alternative Dispute Resolution (for short ‘ICADR’), New
Delhi. Clause 6 of the agreement is reproduced below:
“This Agreement shall be governed by and construed in
all respects in accordance with the laws of India. The
Parties shall attempt to resolve any dispute arising out of
or in connection with this Agreement by mutual
consultation. Failing such resolution, any and all disputes,
issues or claims arising out of, or in connection with, or
with respect to the validity, interpretation and
enforcement of the Agreement, including the breach
thereof, shall be referred to and finally resolved by
binding arbitration in accordance with the provisions of
the Arbitration and Conciliation Act, 1996 or any
statutory amendment or re-enactment thereof for the time
being in force which shall be applicable to such
arbitration proceedings under the Agreement. The arbitral
tribunal shall consist of a sole arbitrator, who will be
appointed by CMD, TCIL. If the parties fail to agree on
the sole arbitrator, then the arbitral tribunal shall consist
of a sole arbitrator, who will be appointed by
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International Centre of Alternative Dispute Resolution
(ICADR), New Delhi. Such arbitration shall take place at
New Delhi, India in the English language. Each Party
shall be responsible for its own legal costs during the
course of arbitration. Only the common costs such as
arbitrator’s fees and venue expenses shall be shared
equally between the Parties.”

2.2 The arbitration was invoked at the instance of the respondent by
notice dated 21.11.2018. TCIL vide letter dated 19.12.2018 appointed
the sole arbitrator. The arbitral proceedings culminated in an award
dated 01.07.2019 (hereinafter ‘impugned award’).
2.3 TCIL challenged the award under Section 34 of the Act. The
learned Single Judge dismissed the petition vide judgment dated
18.04.2023. Hence, the present appeal.
3. Learned counsel for TCIL submits that the appointment of the
sole arbitrator is in violation of Section 12(5) read with the Seventh
Schedule of the Act and consequently the impugned award and the
judgement is liable to be set aside. Reliance is upon the decision of the
Supreme Court in Bhadra International (India) Pvt. Ltd. v. Airports
Authority of India, 2026 INSC 6 and the decision of this Court in
Mahavir Prasad Gupta and Sons v. Government of NCT of Delhi,
2025 SCC OnLine Del 4241 to contend that the unilateral appointment
of an ineligible arbitrator is void ab initio and the objection can be
raised even at this stage.
3.1 The submission is that waiver under the proviso to Section
12(5) of the Act must be by an express agreement in writing between
the parties, after the disputes have arisen and cannot be inferred from
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the appointment or participation in the arbitral proceedings, no such
waiver was given in the present case.
4. Per contra, the proviso to Section 12(5) of the Act is not
applicable. The submission is that the respondent accepted the
appointment made by TCIL and the alternative mechanism under
clause 6 of the agreement for appointment through ICADR was not
invoked. Further that the appointment mechanism under the
agreement is different from the unilateral appointment considered in
TRF Ltd. v. Energo Engineering Projects Ltd., (2017) 8 SCC 377,
Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20
SCC 760 and Bharat Broadband Network Ltd. v. United Telecoms
Ltd., (2019) 5 SCC 755. It is contended under clause 6 of the
agreement the arbitrator cannot be appointed without the consent of
the other party and it is not a case of unilateral appointment.
4.1 The contention is that the objection to the appointment of the
sole arbitrator was not raised before the arbitral tribunal or the learned
Single Judge and is being raised for the first time in the present
appeal.
5. Heard learned counsel for the parties at length. No other
contentions than those noted above are pressed.
6. Before proceeding further, it would be apposite to quote the
following decisions:
6.1 The Supreme Court in Bhadra International (supra) dealt with the
following three issues:
“29….i. Whether the sole arbitrator could be said to have
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become “ ineligible to be appointed as an arbitrator ” by
virtue of sub-section (5) of Section 12 of the Act, 1996?

ii. Whether the parties could be said to have waived
the applicability of sub-section (5) of Section 12 of the
Act, 1996, by way of their conduct, either expressed or
implied?

iii. Whether the appellants could have raised an
objection to the appointment of the sole arbitrator for the
first time in an application under Section 34 of the Act,
1996?”

Held:
“123…i. The principle of equal treatment of parties
provided in Section 18 of the Act, 1996, applies not only
to the arbitral proceedings but also to the procedure for
appointment of arbitrators. Equal treatment of the parties
entails that the parties must have an equal say in the
constitution of the arbitral tribunal.

ii. Sub-section (5) of Section 12 provides that any person
whose relationship with the parties or counsel, or the
dispute, whether direct or indirect, falls within any of the
categories specified in the Seventh Schedule would be
ineligible to be appointed as an arbitrator. Since, the
ineligibility stems from the operation of law, not only is a
person having an interest in the dispute or its outcome
ineligible to act as an arbitrator, but appointment by such
a person would be ex facie invalid.

iii. The words “an express agreement in writing” in
the proviso to Section 12(5) means that the right to object
to the appointment of an ineligible arbitrator cannot be
taken away by mere implication. The agreement referred
to in the proviso must be a clear, unequivocal written
agreement.
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iv. When an arbitrator is found to be ineligible by virtue
of Section 12(5) read with the Seventh Schedule, his
mandate is automatically terminated. In such
circumstance, an aggrieved party may approach the court
under Section 14 read with Section 15 for appointment of
a substitute arbitrator. Whereas, when an award has been
passed by such an arbitrator, an aggrieved party may
approach the court under Section 34 for setting aside the
award.
v. In arbitration, the parties vest jurisdiction in the
tribunal by exercising their consent in furtherance of a
valid arbitration agreement. An arbitrator who lacks
jurisdiction cannot make an award on the merits. Hence,
an objection to the inherent lack of jurisdiction can be
taken at any stage of the proceedings.”

6.2 The Division Bench of this court in Mahavir Prasad Gupta and
Sons v. Govt. of NCT of Delhi , 2025 SCC OnLine Del 4241 dealt
with the following issues:
“74…a) When a party itself has unilaterally appointed
the arbitrator, whether that party can object to the
unilateral appointment of the arbitrator at any stage
during or after the arbitration proceedings?

b) If a party has unilaterally appointed an arbitrator,
can that party be deemed to have given express waiver in
writing under Section 12(5) of the Act while making the
appointment itself?”
The court concluded:
“84….a) Mandatory Requirement: Any arbitration
agreement providing unilateral appointment of the sole or
presiding arbitrator is invalid. A unilateral appointment
by any party in the arbitrations seated in India is strictly
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prohibited and considered as null and void since its very
inception. Resultantly, any proceedings conducted before
such unilaterally appointed Arbitral Tribunal are also
nullity and cannot result into an enforceable award being
against Public Policy of India and can be set aside under
Section 34 of the Act and/or refused to be enforced under
Section 36 of the Act.
b) Deemed Waiver: The proviso to Section 12(5) of
the Act requires an express agreement in writing. The
conduct of the parties, no matter how acquiescent or
conducive, is inconsequential and cannot constitute a
valid waiver under the proviso to Section 12(5) of the
Act. The ineligibility of a unilaterally appointed arbitrator
can be waived only by an express agreement in writing
between the parties after the dispute has arisen between
them. Section 12(5) of the Act is an exception to Section
4 of the Act as there is no deemed waiver under Section 4
of the Act for unilateral appointment by conduct of
participation in the proceedings. The proviso to Section
12(5) of the Act requires an ‘express agreement in
writing’ and deemed waiver under Section 4 of the Act
will not be applicable to the proviso to Section 12(5) of
the Act.
c) Award by an Ineligible Arbitrator is a
Nullity: An award passed by a unilaterally appointed
arbitrator is a nullity as the ineligibility goes to the root of
the jurisdiction. Hence, the award can be set aside under
Section 34(2)(b) of the Act by the Court on its own if it
‘finds that’ an award is passed by unilaterally appointed
arbitrator without even raising such objection by either

party.
d) Stage of Challenge: An objection to the lack of
inherent jurisdiction of an arbitrator can be taken at any
stage during or after the arbitration proceedings including
by a party who has appointed the sole or presiding
arbitrator unilaterally as the act of appointment is not an
express waiver of the ineligibility under proviso to
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Section 12(5) of the Act. Such objection can be taken
even at stage of challenge to the award under Section 34
of the Act or during the enforcement proceedings under
Section 36 of the Act.”
7. After amendment of Section 12(5) of the Act an employee of a
party in dispute can neither be appointed arbitrator nor can nominate
or appoint any other person as an arbitrator. The unilateral
appointment of an arbitrator in the absence of an express agreement in
writing between the parties to waive applicability of Section 12(5) of
the Act is void ab initio . The filing of the statement of claim or
participation in the arbitral proceedings cannot be construed as waiver
under the proviso to Section 12(5) of the Act.
8. The issue to be determined is whether after the dispute arose
was there an express waiver in writing by the parties that the
provisions of Section 12(5) of the Act shall not apply.
9. The respondent issued a notice dated 21.11.2018 under Section
21 of the Act requesting TCIL to appoint an arbitrator under clause 6
of the agreement. The contention that the arbitrator was appointed at
the request of the respondent, no objection was raised by respondent
to the name proposed and the appointment was not unilateral, lacks
merit. From a reading of the notice, it is evident that there was no
express waiver by the respondent to the applicability of Section 12(5)
of the Act. Moreover, the appointment of an arbitrator by TCIL and
not objected to by the respondent shall not tantamount to an express
waiver and is based on the conduct of the parties. Supreme Court in
Bhadra International (India) Pvt. Ltd (supra) held that waiver has to
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be express and in writing, not be implied from conduct of the parties.
10. The Supreme Court in Bhadra International (India) Pvt. Ltd
(supra) held that waiver involves a conscious decision to abandon the
existing legal right and can be made only by a person fully aware of
such right. A legal right cannot be taken away by implications. The
waiver has to be an unequivocal expression and it cannot be lost sight
of that by such waiver the restriction imposed by Section 12(5) of the
Act is sought to be overcome.
11. There is no prescribed format under the proviso to Section 12(5)
of the Act for an express agreement in writing but it shall not mean
that the waiver can be inferred by implication or through conduct. It
would be relevant to quote the following paragraph from Bhadra
International (India) Pvt. Ltd. (supra):
“84. Undoubtedly, the statute does not prescribe a format
for the agreement. However, the absence of a prescribed
format cannot be construed to mean that the waiver may
be inferred impliedly or through conduct. We say so
because the legislature has consciously prefaced the term
“ agreement ” with the word “ express ” and followed it
with the phrase “ in writing ”. This semantics denote the
intention of the legislature that the waiver under the
proviso to Section 12(5) must be made only through an
express and written manifestation of intention.”

12. The matter needs to be considered from another angle. The
express consent in writing under proviso to Section 12(5) of the Act
has to be of both the parties and after the disputes have arisen. It is not
the case set up by the respondent that TCIL expressly agreed in
writing to waive the applicability of Section 12(5) of the Act. The
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waiver has to be express and cannot be construed or inferred by
relying on the fact that the appellant appointed the arbitrator. The
Division Bench of this court in Mahavir Prasad Gupta and Sons
(supra) held that an appointment of an ineligible person as an
arbitrator is void ab-initio and can be challenged by the party making
such appointment. The relevant paragraphs of the judgment are:
“ 81. Accordingly, the party that unilaterally appointed the
arbitrator cannot be deemed to have agreed in writing to
waive the ineligibility of the arbitrator by act of
appointment. When appointment itself is ineligible under
the provisions of Section 12(5) of the Act read with
Seventh Schedule of the Act, it does not take away the
right of the party to challenge such an appointment
merely because that party had made the appointment in
absence of express agreement in writing between the
parties to waive the applicability of Section 12(5) of the
Act.
82. Hence, a party which unilaterally appointed the
arbitrator has right to object to such appointment
irrespective of fact that that party itself made the
appointment of the arbitrator. Mere fact of making
appointment in writing will not make the ineligible
appointment a valid appointment unless there is express
agreement in writing waiving such ineligibility.
83. Although it appears disingenuous, a party appointing
an the sole or presiding arbitrator unilaterally can
challenge the award on the ground that the award has
been rendered in contravention of Section 12(5) of the
Act read with Seventh Schedule of the Act
notwithstanding that the said party itself made such an
appointment. When the Arbitral Tribunal inherently
lacked jurisdiction to act, the arbitration proceedings
are void ab initio , rendering the award unenforceable
irrespective of which party made such unilateral
appointment. The arbitral proceedings and an award made
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by an unilaterally appointed sole or presiding arbitrator,
who is de jure ineligible to be appointed as an arbitrator
by virtue of the Seventh Schedule of the Act are void ab
initio . The waiver under the proviso to Section 12(5) of
the Act must be express and subsequent to the disputes
having been arisen between the parties. Hence, the party
which appointed the sole or presiding arbitrator
unilaterally can also challenge the award under Section
34 of the Act on the ground of such ineligibility.”

13. In view of the law laid down by the Supreme Court in Bhadra
International (supra) and the decision of this Court in Mahavir
Prasad Gupta (supra) the unilateral appointment of the sole arbitrator
by TCIL in violation of Section 12(5) of the Act read with the Seventh
Schedule is void ab initio. This issue of ineligibility of arbitrator
goes to the root of the jurisdiction and can be raised for the first time
in an appeal under Section 37 of the Act, even at the stage of
execution.
14. The appeal is allowed and the impugned award and the
judgment are set aside.
15. All pending applications stand disposed of.



AVNEESH JHINGAN, J

SHAIL JAIN, J
OCTOBER 15, 2026
‘tl’

Reportable: Yes
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