Airports Authority Of India vs Sunehari Bagh Builders Pvt Ltd

Court
Delhi High Court
Case type
Original Misc Petition Commercial
Decided on
06-04-2026
<div> <br /> <br /> $~78 <br /> <b>* </b> <b>IN THE HIGH COURT OF DELHI AT NEW DELHI </b><br /> <b> </b><br /> <b>% </b> <b> </b> <b> </b> <b> Date of decision: 06.04.2026 </b><br /> <b> </b><br /> + O.M.P. (COMM) 318/2023, I.A. 15318/2023, I.A. 15320/2023 <br /> &amp; I.A. 17155/2025 <br /> AIRPORTS AUTHORITY OF INDIA .....Petitioner <br /> Through: Sh. Digvijay Rai, Mr. Archit <br /> Mishra, Advs., Mr. Gagan <br /> Kochar, Senior Manager, Ms. <br /> Pragya Bansal, JE-AAI, Ms. <br /> Kashish Singhal, JE-AAI &amp; Mr. <br /> Vivek Gupta, DGM- AAI. <br /> <br /> versus <br /> <br /> SUNEHARI BAGH BUILDERS PVT LTD .....Respondent <br /> Through: Mr. Avinash Trivedi, Ms. <br /> Ritika Trivedi, Mr. Rahul <br /> Aggarwal &amp; Mr. Anurag <br /> Kaushik, Advs. <br /> <b>CORAM: </b><br /> <br /> <b>HON&#x27;BLE MR. JUSTICE AVNEESH JHINGAN</b><br /> <b> </b><br /> <b>AVNEESH JHINGAN, J. (ORAL)</b> <br /> 1. This petition under Section 34 of the Arbitration and <br /> Conciliation Act, 1996 (for short „the Act‟) is against award dated <br /> 15.03.2023 and the order dated 19.04.2023 passed under Section 33. <br /> 2. The grievance is that the unilateral appointment of the arbitrator <br /> is in violation of the amended Section 12(5) of the Act. <br /> 3. The brief facts are that the petitioner was the successful bidder <br /> in a tender invited by the respondent for construction of Central Air <br /> Traffic Flow Management (CATFM) and associated offices at Vasant <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 1 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> Kunj, New Delhi. The letter of intent to award was issued to the <br /> respondent for the value of Rs.11,53,06,853/- and the contract dated <br /> 20.01.2016 (hereinafter „the contract) was executed between the <br /> parties to the <i>lis</i> . The dispute arose between the parties and the <br /> respondent under clause 25 of contract approached the petitioner for <br /> constitution of Dispute Resolution Committee (for short „DRC‟). The <br /> DRC vide its report dated 22.09.2021 rejected the claims. The <br /> respondent on 25.10.2021 invoked arbitration proceedings by issuance <br /> of notice under Section 21 of the Act. The petitioner appointed the <br /> arbitrator. The arbitration proceedings culminated in the impugned <br /> award. The application filed under Section 33 was disposed of <i>vide</i> <br /> order dated 19.04.2023. <b> </b><br /> 4. Clause 25 of the contract is reproduced below which provides <br /> for dispute resolution mechanism and arbitration:- <b> </b><br /> <b>“CLAUSE 25 </b><br /> <b>Dispute Resolution Mechanism And Arbitration </b><br /> Except where otherwise provided in the contract, all <br /> questions and disputes relating to the meaning of the <br /> specifications, design, drawings and instruction &#x27;here-in <br /> before mentioned and as to the quality of workmanship or <br /> materials used on the work or as to any other question, <br /> claim, right, matter or thing whatsoever, in any way <br /> arising out of or relating to the contract, designs, <br /> drawings, specifications, estimates, instructions, orders or <br /> these conditions or otherwise concerning the work or the <br /> execution or failure to execute the same whether arising <br /> during the progress of the work or after the cancellation, <br /> termination, completion or abandonment thereof shall be <br /> dealt with as mentioned hereinafter: <br /> <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 2 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> (i) <b>Through Dispute Resolution Committee</b> : Any <br /> dispute as stated above shall be referred in the first place <br /> to the Dispute Resolution Committee (DRC) appointed by <br /> the Executive Director / <i> </i> Member (Planning) / Chairman, <br /> Airports Authority of India. <br /> <br /> It is also a term of contract that fees and other expense if <br /> payable to DRC shall be paid equally by both the parties <br /> i.e. AAI and Contractor. <br /> <br /> Unless the contract has already been repudiated or <br /> terminated, the contractor shall, in every case, continue to <br /> proceed with the work with all due diligence. <br /> <br /> It is also a term of contract that if the contractor does not <br /> make any demand for Dispute Resolution Committee in <br /> respect of any claim in writing within 90 (Ninty) days of <br /> receiving the intimation from the AAI that the bill is <br /> ready for payment, <b>the claim of contracator(s) will be </b><br /> <b>deemed to have been waved and absolutely </b> barred and <br /> the AAI shall be discharged and released of all liabilities <br /> under the contract in respect of these claims. <br /> <br /> (ii) <b>Adjudication </b> <b>through </b> <b>Arbitration</b> :- Except <br /> where the decision has become final, binding and <br /> conclusive in terms of Sub Para (i) above, disputes or <br /> differences shall be referred for adjudication through <br /> arbitration by a sole arbitrator appointed by the Member <br /> (Planning) <i>I </i> Chairman, AAI. If the arbitrator so appointed <br /> is unable or unwilling to act or resigns his appointment or <br /> vacates his office due to any reason whatsoever, another <br /> sole arbitrator shall be appointed in the manner aforesaid. <br /> Such person shall be entitled to proceed with the <br /> reference from the stage at which it was left by his <br /> predecessor. <br /> <br /> It is also a term of contract that If the contractor does not <br /> make any demand for appointment of Arbitrator in <br /> respect of any claim in writing within 120 (One hundred <br /> Twenty) days of receiving the decision <i>I </i> award from <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 3 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> Dispute Resolution Committee, the claim of <br /> contracator(s) will be deemed to have been waved and <br /> absolutely barred and the AAI shall be discharged and <br /> released of all liabilities under the contract in respect of <br /> these claims. <br /> <br /> It is term of this contract that the party invoking <br /> arbitration shall give a list of disputes with amounts <br /> claimed in respect of each such disputes alongwith the <br /> notice for appointment of arbitrator and giving reference <br /> to the rejection of their claims by the Dispute Resolution <br /> Committee. <br /> <br /> It is also a term of this contract that no person, other than <br /> a person appointed by above mentioned appointing <br /> authority, should act as arbitrator and if for any reason <br /> that is not possible, the matter shall not be referred to <br /> arbitration at all. <br /> <br /> The arbitration shall be conducted in· accordance with the <br /> provisions of the Arbitration and Conciliation Act, 1996 <br /> (26 of 1996) or any statutory modification or re-<br /> enactment thereof and the rules made there under and for <br /> the time being in force shall apply to the arbitration <br /> proceeding under this clause. <br /> <br /> It is also a term of this contract that the arbitrator shall <br /> adjudicate on only such disputes as are referred to him by <br /> the appointing authority and give separate award against <br /> each dispute and claim referred to him and in all cases <br /> where the total amount of the claims by any party exceeds <br /> Rs. 1,00, 000/-, the arbitrator shall give reasons for the <br /> award. <br /> <br /> It is also a term of the contract that if any fees are payable <br /> to the arbitrator, these shall be paid equally by both the <br /> parties. <br /> <br /> It is also a term of the contract that the arbitrator shall be <br /> deemed to have entered on the reference on the date he <br /> issues notice to both the parties calling them to submit <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 4 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> their statement of claims and counter statement of claims. <br /> The venue of the arbitration shall be such place as may be <br /> fixed by the arbitrator in his sole discretion. The fees, if <br /> any, of the arbitrator shall, If required to be paid before <br /> the award is made and published, be paid half and half by <br /> each of the parties. The cost of the reference and of the <br /> award (including the fees, if any, of the arbitrator) shall <br /> be in the discretion of the arbitrator who may direct to any <br /> by whom and in what manner, such costs or any part <br /> thereof shall be paid and fix or settle the amount of costs <br /> to be so paid.” <b> </b><br /> <b> </b><br /> 5. Learned counsel for the petitioner submits that the appointment <br /> of the arbitrator is in violation of Section 12(5) of the Act and the <br /> impugned award is liable to be set aside. Reliance is placed upon the <br /> decision of this court in <b>Railways Board, Ministry of Railways Vs. </b><br /> <b>Titagarh Rail Systems Limited, </b> 2026:DHC:1720. <b> </b><br /> 6. <i>Per contra</i> , it is not a case of unilateral appointment. The <br /> petitioner vide communication dated 09.11.2021 proposed names of <br /> three arbitrators from its panel and sought consent of the respondent to <br /> nominate an arbitrator from the proposed names. The respondent by <br /> communication dated 12.11.2021 consented to one of the proposed <br /> names for appointment. It is contended that the parties participated in <br /> the arbitral proceedings and the choice of appointment of the arbitrator <br /> was of the respondent and the decision relied upon is not applicable to <br /> the facts of the present case. <b> </b><br /> 7. Before proceeding further, it would be apposite to quote the <br /> following decisions: <b> </b><br /> 7.1 The Supreme Court in <b>Bhadra International (India) Pvt. Ltd. </b><br /> <b>&amp; Ors. v. Airports Authority of India</b> , 2026 INSC 6 dealt with the <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 5 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> following three issues: <b> </b><br /> “29….i. Whether the sole arbitrator could be said to <br /> have become “ <i>ineligible to be appointed as an </i><br /> <i>arbitrator</i> ” by virtue of sub-section (5) of Section 12 of <br /> the Act, 1996? <br /> <br /> ii. Whether the parties could be said to have waived <br /> the applicability of sub-section (5) of Section 12 of the <br /> Act, 1996, by way of their conduct, either expressed or <br /> implied? <br /> <br /> iii. Whether the appellants could have raised an <br /> objection to the appointment of the sole arbitrator for the <br /> first time in an application under Section 34 of the Act, <br /> 1996?” <br /> <br /> <b>Held: </b><br /> <b> </b><br /> “123…i. The principle of equal treatment of parties <br /> provided in Section 18 of the Act, 1996, applies not only to <br /> the arbitral proceedings but also to the procedure for <br /> appointment of arbitrators. Equal treatment of the parties <br /> entails that the parties must have an equal say in the <br /> constitution of the arbitral tribunal. <br /> <br /> ii. Sub-section (5) of Section 12 provides that any person <br /> whose relationship with the parties or counsel, or the <br /> dispute, whether direct or indirect, falls within any of the <br /> categories specified in the Seventh Schedule would be <br /> ineligible to be appointed as an arbitrator. Since, the <br /> ineligibility stems from the operation of law, not only is a <br /> person having an interest in the dispute or its outcome <br /> ineligible to act as an arbitrator, but appointment by such a <br /> person would be <i>ex facie</i> invalid. <br /> <br /> iii. The words “an express agreement in writing” in <br /> the proviso to Section 12(5) means that the right to object <br /> to the appointment of an ineligible arbitrator cannot be <br /> taken away by mere implication. The agreement referred to <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 6 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> in the proviso must be a clear, unequivocal written <br /> agreement. <br /> <br /> iv. When an arbitrator is found to be ineligible by virtue of <br /> Section 12(5) read with the Seventh Schedule, his mandate <br /> is automatically terminated. In such circumstance, an <br /> aggrieved party may approach the court under Section 14 <br /> read with Section 15 for appointment of a substitute <br /> arbitrator. Whereas, when an award has been passed by <br /> such an arbitrator, an aggrieved party may approach the <br /> court under Section 34 for setting aside the award. <br /> <br /> v. In arbitration, the parties vest jurisdiction in the tribunal <br /> by exercising their consent in furtherance of a valid <br /> arbitration agreement. An arbitrator who lacks jurisdiction <br /> cannot make an award on the merits. Hence, an objection <br /> to the inherent lack of jurisdiction can be taken at any <br /> stage of the proceedings.” <br /> <br /> 7.2 The Division Bench of this court in <b>Mahavir Prasad Gupta </b><br /> <b>and Sons v. Govt. of NCT of Delhi</b> , 2025 SCC OnLine Del 4241 <br /> dealt with the following issues: <br /> “74…a) When a party itself has unilaterally appointed the <br /> arbitrator, whether that party can object to the unilateral <br /> appointment of the arbitrator at any stage during or after <br /> the arbitration proceedings? <br /> <br /> b) If a party has unilaterally appointed an arbitrator, can <br /> that party be deemed to have given express waiver in <br /> writing under Section 12(5) of the Act while making the <br /> appointment itself?” <br /> <br /> <b>The court concluded: </b><br /> <b> </b><br /> “84….a) <b>Mandatory </b> <b>Requirement:</b> Any arbitration <br /> agreement providing unilateral appointment of the sole or <br /> presiding arbitrator is invalid. A unilateral appointment by <br /> any party in the arbitrations seated in India is strictly <br /> prohibited and considered as null and void since its very <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 7 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> inception. Resultantly, any proceedings conducted before <br /> such unilaterally appointed Arbitral Tribunal are also <br /> nullity and cannot result into an enforceable award being <br /> against Public Policy of India and can be set aside under <br /> Section 34 of the Act and/or refused to be enforced under <br /> Section 36 of the Act. <br /> b) <b>Deemed Waiver:</b> The proviso to Section 12(5) of the <br /> Act requires an express agreement in writing. The conduct <br /> of the parties, no matter how acquiescent or conducive, is <br /> inconsequential and cannot constitute a valid waiver under <br /> the proviso to Section 12(5) of the Act. The ineligibility of <br /> a unilaterally appointed arbitrator can be waived only by <br /> an express agreement in writing between the parties after <br /> the dispute has arisen between them. Section 12(5) of the <br /> Act is an exception to Section 4 of the Act as there is no <br /> deemed waiver under Section 4 of the Act for unilateral <br /> appointment by conduct of participation in the <br /> proceedings. The proviso to Section 12(5) of the Act <br /> requires an „express agreement in writing‟ and deemed <br /> waiver under Section 4 of the Act will not be applicable to <br /> the proviso to Section 12(5) of the Act. <br /> c) <b>Award by an Ineligible Arbitrator is a Nullity:</b> An <br /> award passed by a unilaterally appointed arbitrator is a <br /> nullity as the ineligibility goes to the root of the <br /> jurisdiction. Hence, the award can be set aside under <br /> Section 34(2)(b) of the Act by the Court on its own if it <br /> „finds that‟ an award is passed by unilaterally appointed <br /> arbitrator without even raising such objection by either <br /> party. <br /> d) <b>Stage of Challenge:</b> An objection to the lack of <br /> inherent jurisdiction of an arbitrator can be taken at any <br /> stage during or after the arbitration proceedings including <br /> by a party who has appointed the sole or presiding <br /> arbitrator unilaterally as the act of appointment is not an <br /> express waiver of the ineligibility under proviso to Section <br /> 12(5) of the Act. Such objection can be taken even at stage <br /> of challenge to the award under Section 34 of the Act or <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 8 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> during the enforcement proceedings under Section 36 of <br /> the Act.” <br /> 8. After amendment of Section 12(5) of the Act an employee of a <br /> party in dispute can neither be appointed arbitrator nor can nominate <br /> or appoint any other person as an arbitrator. The unilateral <br /> appointment in absence of an express agreement in writing between <br /> the parties to waive applicability of Section 12(5) of the Act is void <i>ab </i><br /> <i>initio</i> . The filing of the statement of claim or participation in the <br /> arbitral proceedings cannot be construed as waiver under the proviso <br /> to Section 12(5) of the Act. The unilateral appointment of the <br /> arbitrator can be objected to for the first time under Section 34 of the <br /> Act. <br /> 9. Clause 25(i) of the contract mandates that all disputes shall be <br /> referred to the DRC, constituted by the Executive Director / <i> </i> Member <br /> (Planning) / Chairman, Airports Authority of India (AAI). The <br /> contractor is obligated to continue work during the pendency of <br /> disputes unless the contract stands terminated. The clause prescribes a <br /> ninety days limitation period from the date of intimation by AAI of <br /> bill readiness for raising a demand for DRC in respect of any claim, <br /> failing which the contractor shall be deemed to have waived the claim. <b> </b><br /> 9.1 Clause 25(ii) of the contract states that except for the decisions <br /> having attained finality under clause 25(i) of the contract, the dispute <br /> shall be referred to arbitration by a sole arbitrator appointed by the <br /> Member (Planning) / Chairman. There is a limitation period of <br /> hundred and twenty days for the contractor to invoke arbitration from <br /> the date of the DRC decision, failing which the claims shall be <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 9 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> deemed waived and barred. <b> </b><br /> 10. The law is well settled that the official of a party to the dispute <br /> can neither be appointed arbitrator nor appoint an arbitrator. In the <br /> case in hand, the arbitrator was appointed by the petitioner from the <br /> panel maintained by it. The Supreme Court in <b>Central Organisation </b><br /> <b>for Railway Electrification v. ECI SPIC SMO MCML (JV)</b> , (2025) <br /> 4 SCC 641 held that curating a panel of arbitrators by one of the <br /> parties to the dispute and requiring the other party to exercise its <br /> choice from such a panel affects the freedom of the party to appoint <br /> the arbitrator, thereby raising a reasonable doubt. The relevant <br /> paragraphs are reproduced below: <b> </b><br /></div><table><tbody><tr><td>“132. In Voestalpine [Voestalpine Schienen</td><td></td></tr><tr><td>GmbH v. DMRC Ltd., (2017) 4 SCC 665 : (2017) 2 SCC</td><td></td></tr><tr><td>(Civ) 607] and CORE [Central Organisation for Railway</td><td></td></tr><tr><td>Electrification v. ECI-SPIC-SMO-MCML (JV), (2020) 14</td><td></td></tr><tr><td>SCC 712] , one of the parties curated a panel of</td><td></td></tr><tr><td>arbitrators and mandated the other party to select their</td><td></td></tr><tr><td>arbitrator from the panel. Since the curation of the list is</td><td></td></tr><tr><td>exclusively undertaken by one party, the other party is</td><td></td></tr><tr><td>effectively excluded from the process of curating the</td><td></td></tr><tr><td>panel from which exclusively, the appointment of an</td><td></td></tr><tr><td>arbitrator is to be made. The other party has to</td><td></td></tr><tr><td>mandatorily select its arbitrator from a curated panel,</td><td></td></tr><tr><td>restricting their freedom to appoint an arbitrator of their</td><td></td></tr><tr><td>choice. This is against the principle of equal treatment</td><td></td></tr><tr><td>contained under Section 18. In this situation, there is no</td><td></td></tr><tr><td>effective counterbalance because both parties do not</td><td></td></tr><tr><td>participate equally in the process of appointing</td><td></td></tr><tr><td>arbitrators. The party curating the panel can restrict the</td><td></td></tr><tr><td>choice of the party only to a person who is on the panel</td><td></td></tr><tr><td>selected by the other party and to no other person.</td><td></td></tr></tbody></table><div><br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 10 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /></div><table><thead><tr><th>disputes and constantly need the services of arbitrators.</th><th></th></tr></thead><tbody><tr><td>Such institutions often maintain a pool of potential</td><td></td></tr><tr><td>arbitrators with the sole object of having a ready pool of</td><td></td></tr><tr><td>qualified professionals who have committed their time</td><td></td></tr><tr><td>and consented to act as arbitrators for fixed fees. The</td><td></td></tr><tr><td>Arbitration Act does not prohibit parties to an arbitration</td><td></td></tr><tr><td>agreement from maintaining a curated panel of potential</td><td></td></tr><tr><td>arbitrators. However, the problem arises when the PSUs</td><td></td></tr><tr><td>make it mandatory for other parties to select their</td><td></td></tr><tr><td>nominees from the curated panel of arbitrators. When a</td><td></td></tr><tr><td>PSU exercises its discretion to curate a panel, the very</td><td></td></tr><tr><td>factor that the PSU is choosing only a certain number of</td><td></td></tr><tr><td>persons as potential arbitrators and not others will raise a</td><td></td></tr><tr><td>reasonable doubt in the mind of a fair-minded person.</td><td></td></tr><tr><td>The PSUs may conceivably have nominated a person on</td><td></td></tr><tr><td>the panel of potential arbitrators because they have a</td><td></td></tr><tr><td>certain predisposition in favour of the former. This doubt</td><td></td></tr><tr><td>is reinforced when the other party is given no choice but</td><td></td></tr><tr><td>to select its arbitrator from the curated panel.</td><td></td></tr></tbody></table><table><tbody><tr><td>134. In CORE [Central Organisation for Railway</td><td></td></tr><tr><td>Electrification v. ECI-SPIC-SMO-MCML (JV), (2020) 14</td><td></td></tr><tr><td>SCC 712] , the three-member tribunal was sought to be</td><td></td></tr><tr><td>constituted in the following manner : (i) the Railways</td><td></td></tr><tr><td>would suggest at least four names of retired railway</td><td></td></tr><tr><td>officers; (ii) the contractor would select two names out of</td><td></td></tr><tr><td>the panel for appointment as their arbitrator; (iii) The</td><td></td></tr><tr><td>General Manager (of the Railways) would thereafter</td><td></td></tr><tr><td>choose at least one person out of the two to be appointed</td><td></td></tr><tr><td>as the contractor&#x27;s arbitrator; and (iv) The General</td><td></td></tr><tr><td>Manager would proceed to appoint the balance arbitrators</td><td></td></tr><tr><td>from the panel or outside the panel and also indicate the</td><td></td></tr><tr><td>presiding arbitrator.</td><td></td></tr></tbody></table><div><br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 11 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /></div><table><thead><tr><th>disputant; and (ii) the contractor&#x27;s choice is further</th><th></th></tr></thead><tbody><tr><td>constrained because it is made subject to the decision of</td><td></td></tr><tr><td>the General Manager who will choose one among the two</td><td></td></tr><tr><td>persons suggested by the party. Since the contractor has</td><td></td></tr><tr><td>to select its arbitrator from a curated panel, the arbitration</td><td></td></tr><tr><td>clause does not allow the contractor equal participation in</td><td></td></tr><tr><td>the appointment of their arbitrator. Moreover, the clause</td><td></td></tr><tr><td>allows the General Manager to appoint the balance</td><td></td></tr><tr><td>arbitrators from either the panel or outside the panel.</td><td></td></tr><tr><td>Thus, the process of appointing the arbitrators is unequal</td><td></td></tr><tr><td>because the General Manager can go beyond the panel of</td><td></td></tr><tr><td>four potential arbitrators, while the contractor is bound by</td><td></td></tr><tr><td>the names enlisted in the panel.”</td><td></td></tr></tbody></table><div><br /> <b>International </b> (supra) <b> </b> and the decision of this Court relied upon by the <br /> learned counsel for the petitioner, the appointment of the arbitrator is <br /> in violation of the amended provisions of Section 12(5) of the Act. <b> </b><br /> 12. The issue now to be determined is as to whether after the <br /> dispute arose was there an express waiver in writing by the parties that <br /> the provisions of Section 12(5) of the Act will not apply. <b> </b><br /> 13. The Supreme Court in <b>Bhadra International </b> (supra) held that <br /> waiver involves a conscious decision to abandon the existing legal <br /> right and can be made only by a person fully aware of such right. A <br /> legal right cannot be taken away by implications. The waiver has to be <br /> an unequivocal expression and it cannot be lost sight of that by such <br /> waiver the restriction imposed by Section 12(5) of the Act is sought to <br /> be overcome. <b> </b><br /> 14. There is no prescribed format under the proviso to section 12(5) <br /> of the Act for an express agreement in writing but it shall not mean <br /> that the waiver can be inferred by implication or through conduct. It <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 12 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> would be relevant to quote the following paragraph from <b>Bhadra </b><br /> <b>International</b> (supra): <b> </b><br /> “84. Undoubtedly, the statute does not prescribe a format <br /> for the agreement. However, the absence of a prescribed <br /> format cannot be construed to mean that the waiver may <br /> be inferred impliedly or through conduct. We say so <br /> because the legislature has consciously prefaced the term <br /> “ <i>agreement</i> ” with the word “ <i>express</i> ” and followed it <br /> with the phrase “ <i>in writing</i> ”. This semantics denote the <br /> intention of the legislature that the waiver under the <br /> <i>proviso </i> to Section 12(5) must be made only through an <br /> <b> </b><br /> express and written manifestation of intention.”<br /> <br /> 15. The communication dated 09.11.2021 of the petitioner seeking <br /> consent to nominate an arbitrator from the panel maintained by the <br /> petitioner out of the three names mentioned therein read with the letter <br /> of respondent dated 12.11.2021 consenting to the appointment of the <br /> arbitrator is not an express waiver in writing in consonance with the <br /> proviso to Section 12(5) of the Act. The option given to the <br /> respondent to select an arbitrator from the curated panel maintained by <br /> the petitioner is violation of Section 18 of the Act. <b> </b><br /> 16. The Supreme Court in <b>Central Organisation for Railway </b><br /> <b>Electrification</b> (supra) held that making the other party to select an <br /> arbitrator from a curated panel is against the principles of equal <br /> treatment contained in Section 18 of the Act. <b> </b><br /> 17. The matter needs to be considered from another angle. The <br /> express consent in writing under proviso to Section 12(5) of the Act <br /> has to be of both the parties. It is not a case set up that the petitioner <br /> by express written agreement waived of applicability of Section 12(5) <br /> of the Act. The waiver has to be expressed and cannot be construed or <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 13 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> inferred through conduct. The Division Bench of this court in <br /> <b>Mahavir Prasad Gupta and Sons </b> (supra) <b> </b> held that an appointment <br /> of an ineligible person as an arbitrator is void <i> ab-initio</i> and can be <br /> challenged by the party making such appointment. The relevant <br /> paragraphs of the judgment are: <b> </b><br /> <b>“</b> 81. <b> </b> Accordingly, the party that unilaterally appointed the <br /> arbitrator cannot be deemed to have agreed in writing to <br /> waive the ineligibility of the arbitrator by act of <br /> appointment. When appointment itself is ineligible under <br /> the provisions of Section 12(5) of the Act read with <br /> Seventh Schedule of the Act, it does not take away the <br /> right of the party to challenge such an appointment <br /> merely because that party had made the appointment in <br /> absence of express agreement in writing between the <br /> parties to waive the applicability of Section 12(5) of the <br /> Act. <br /> 82. Hence, a party which unilaterally appointed the <br /> arbitrator has right to object to such appointment <br /> irrespective of fact that that party itself made the <br /> appointment of the arbitrator. Mere fact of making <br /> appointment in writing will not make the ineligible <br /> appointment a valid appointment unless there is express <br /> agreement in writing waiving such ineligibility. <br /> 83. Although it appears disingenuous, a party appointing <br /> an the sole or presiding arbitrator unilaterally can <br /> challenge the award on the ground that the award has <br /> been rendered in contravention of Section 12(5) of the <br /> Act read with Seventh Schedule of the Act <br /> notwithstanding that the said party itself made such an <br /> appointment. When the Arbitral Tribunal inherently <br /> lacked jurisdiction to act, the arbitration proceedings <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 14 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> <br /><br /> <br /> <br /> are <i>void ab initio</i> , rendering the award unenforceable <br /> irrespective of which party made such unilateral <br /> appointment. The arbitral proceedings and an award made <br /> by an unilaterally appointed sole or presiding arbitrator, <br /> who is <i>de jure</i> ineligible to be appointed as an arbitrator <br /> by virtue of the Seventh Schedule of the Act are <i>void ab </i><br /> <i>initio</i> . The waiver under the proviso to Section 12(5) of <br /> the Act must be express and subsequent to the disputes <br /> having been arisen between the parties. Hence, the party <br /> which appointed the sole or presiding arbitrator <br /> unilaterally can also challenge the award under Section <br /> 34 of the Act on the ground of such ineligibility.” <b> </b><br /> 18. In the absence of compliance of proviso to Section 12(5) of the <br /> Act by the parties, the appointment of the arbitrator by the petitioner is <br /> vitiated as it violates Section 12(5) read with Seventh Schedule of the <br /> Act. The appointment of the arbitrator is void <i> ab-initio</i> and renders the <br /> impugned award nullity. <b> </b><br /> 19. The petition is allowed and the impugned award is set aside. <br /> Pending application is also disposed of. <b> </b><br /> <br /> <b> </b><br /> <b>AVNEESH JHINGAN, J</b> <br /> <b>APRIL 06, 2026/ </b> <i>‘JK’</i> <br /> <b> </b><br /> Reportable:- <b>Yes </b> <br /> Signature Not Verified<br /> O.M.P. (COMM) 318/2023 Page 15 of 15 <br /> <br /> Signed By:CHANCHAL<br /> Signing Date:10.04.2026<br /> 17:05:11<br /> </div>