Wiretel Solution Pvt.Ltd. vs Annu Infra Construct India Pvt. Ltd.

$~78
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 05.05.2026
+ O.M.P. (COMM) 40/2023 & I.A. 9919/2023

WIRETEL SOLUTION PVT.LTD. .....Petitioner
Through: Mr. Ravikesh K. Sinha, Adv.

versus

ANNU INFRA CONSTRUCT INDIA PVT.
LTD. .....Respondent
Through: Mr. Deepak Dahiya & Mr.
Dharmender Dahiya, Advs.

CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
AVNEESH JHINGAN, J. (ORAL)

1. This petition is filed under Section 34 of the Arbitration and
Conciliation Act, 1996 (for short „the Act‟) seeking setting aside of the
arbitral award dated 30.09.2022 (for brevity „the award‟).
2. The short issue is that whether the unilateral appointment of the sole
arbitrator is in violation of amended Section 12(5) of the Act.
3. The brief facts are that the respondent was awarded a work contract
originating from Bharat Sanchar Nigam Limited (BSNL) tender which was
sub-contracted on back to back basis. The respondent issued Letter of Intent
dated 26.03.2015 for execution of work relating to obtaining row, survey,
trenching, laying, installation, testing & commissioning of optical fibre
cable, PLB duct and accessories for construction of Exclusive Optical
National Long Distance (NLD) backbone and optical access route for
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defence network for specified part of package „F‟ totaling to 365 km
(approx.) in the States of West Bengal and Jharkhand.
3.1 On 15.05.2015, the work order was issued and work was to be
completed by 31.12.2015. There was a delay in handing over the site
consequently, dispute arose between the parties to the lis . Clause 23 of the
General Conditions of Order (for short „GCO‟) reproduced below provides
for dispute resolution through arbitration.
“23. DISPUTE RESOLUTION
If any dispute arises between the parties hereto during the
subsistence of this Work Order or thereafter, including in
connection with the validity, interpretation, implementation or
any alleged breach of any provision of this Work Order or
relating to any question with reference to or in connection with
this Work Order, including the question as to whether any
termination of this Work Order has been legitimate, the parties
hereto shall endeavor to settle such dispute amicably within 30
days from raising of the dispute by either of the parties in
writing to other party mentioning the exact nature of the subject
in dispute.

In case, the said dispute could not be resolved amicably within
the said period of 30 days, then immediately upon expiry of the
said period in a written communication by either party to the
dispute shall inform the other party that the subject matter in
dispute shall be referred to arbitration. The arbitration shall be
in accordance with Arbitration and Conciliation Act 1996
including any statutory amendments made thereof. The
arbitration proceedings shall be conducted by a sole arbitrator
appointed by the Company.

In case of a dispute, the Company shall appoint the sole
arbitrator and send notice of such appointment in writing to the
Contractor.

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The sole arbitrator shall give the award as expeditiously as
possible. The award of the sole arbitrator shall be binding on the
parties. The venue of the arbitration as mutually agreed by the
parties to this Work Order shall be exclusively and only held in
New Delhi.

It is mutually agreed between the parties hereto that Courts in
New Delhi subject to the aforesaid shall have exclusive
jurisdiction. During the process of arbitration, the Order should
be executed with no interruption, any party defaulting in
performing their scope of work prior or during the subsistence
or after the award has been made but before it is enforced as a
rule of the court, shall be held liable for the cost incurred by the
other party/parties for executing the scope of work of the
defaulting party.”

3.2 A notice dated 30.10.2019 under section 21 of the Act was issued by
the petitioner and the respondent vide communication dated 27.11.2019
appointed the sole arbitrator. The proceedings culminated in the impugned
award.
4. Learned counsel for the petitioner submits that the appointment of the
arbitrator is in violation of Section 12(5) read with Seventh Schedule of the
Act and the impugned award is liable to be set aside. Reliance is placed
upon the decision of the Supreme Court in Bhadra International (India)
Pvt. Ltd. & Ors. v. Airports Authority of India , 2026 INSC 6 and on the
decision of this court in Railways Board, Ministry of Railways vs.
Titagarh Rail Systems Limited, 2026:DHC:1720.
5. Per contra, the arbitrator was appointed at the request of the petitioner
and there are no pleadings in the petition under Section 34 of the Act
challenging the unilateral appointment of the arbitrator.
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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 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
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by mere implication. The agreement referred to in
the proviso must be a clear, unequivocal written agreement.

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 prohibited and
considered as null and void since its very inception.
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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 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.”
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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 in 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. The unilateral
appointment of the arbitrator can be objected to for the first time under
Section 34 of the Act.
8. Clause 23 of the GCO provides for resolution of disputes through
arbitration and the arbitrator was to be appointed by the respondent
company.
9. The law is well settled that an official of a party to the dispute can
neither be appointed as an arbitrator nor can appoint an arbitrator but in the
case in hand the arbitrator was appointed by the respondent.
10. The contention that the appointment of the arbitrator was never
objected to and that this issue was not pleaded in the petition under Section
34 of the Act is of no avail. The Supreme Court in Bhadra International
(supra) held that the issue goes to the root of jurisdiction and can be raised
for the first time under Section 34 of the Act. Moreover, the issue of
jurisdiction can be raised at any stage, including the stage of execution. It is
also held that there should be express written consent by the parties for
waiver of the applicability of Section 12(5) of the Act. The relevant
paragraphs are reproduced below:
“97. One could argue that a miscreant party may participate in
the arbitral proceedings up to the passing of the award, despite
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having full knowledge of the arbitrator's ineligibility. While after
an adverse award is rendered, such a party may then seek to
challenge it with a view to having it set aside. Such an
apprehension is reasonable, however, to obviate the possibility of
such misuse, the party making unilateral appointment must
endeavour to enter into an express written agreement as
stipulated in the proviso to Section 12(5), so as to safeguard the
proceedings from being rendered futile.

*
109. When an award has been passed, the proceedings before the
arbitral tribunal conclude, leaving no possibility of substituting
the arbitrator at this stage. In other words, once an award is
passed, the mandate of the arbitral tribunal also arrives at a
conclusion. In such circumstances, a party aggrieved by the
arbitrator's ineligibility may challenge the award by filing an
application under Section 34 of the 1996 Act, as an award passed
by an ineligible arbitrator is nullity, non-est, or void ab initio,
and against the public policy of India.

*
113. A challenge to an arbitrator's ineligibility could be raised
at any stage because an award passed in such circumstance is
non-est, i.e., it carries no enforceability or recognition in law. We
say so because an arbitrator does not possess the jurisdiction to
pass an award. In arbitration, the parties vest the jurisdiction in
the tribunal by virtue of a valid arbitration agreement and an
appointment made in accordance with the provisions of the Act,
1996. This jurisdiction is grounded in the consent of the parties
as explained in the foregoing paragraphs of this judgment.”

11. The Supreme Court in Bhadra International (supra) held that waiver
under the proviso to Section 12(5) of the Act involves a conscious decision
to waive rigour of statutory provisions and the person waiving such right
should be aware of the right. A legal right cannot be taken away by
implication and the waiver has to be an unequivocal expression.
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12. 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
(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.”
13. 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. It is not the case set up before this Court that the respondent
had given written consent under proviso to Section 12(5) of the Act.
14. The non- compliance of proviso to Section 12(5) of the Act by the
parties brings the appointment of the arbitrator in teeth of Section 12(5) read
with Seventh Schedule of the Act. The appointment of the arbitrator is void
ab initio and renders the impugned award nullity.
15. The petition is allowed and the impugned award is set aside. Pending
application also stands disposed of.


AVNEESH JHINGAN, J
MAY 5, 2026
Ch/Vs
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