Airports Authority Of India vs Mssingla Constructins Ltd

Court
Delhi High Court

$~82
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 13.05.2026
+ O.M.P. (COMM) 118/2026, I.A. 6095/2026, I.A. 6096/2026, I.A.
6097/2026 & I.A. 6098/2026

AIRPORTS AUTHORITY OF INDIA .....Petitioner
Through: Mr. Vaibhav Kalra, Ms. Neha
Bhatnagar , Advs. with Mr. Gurmeet
Singh, JT. GM
versus

MSSINGLA CONSTRUCTINS LTD .....Respondent
Through: Mr. Saurav Yadav, Adv.

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

1. On 05.05.2026 the following order was passed:
“1. Learned counsel for the respondent accepts notice and
submits that no reply is required to be filed.
2. Learned counsel for the petitioner contends that issue is of
unilateral appointment and seeks time to argue the matter.
3. Put up on 13.05.2026 in the Supplementary List.”

2. 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 13.10.2025 (for brevity „the award‟).
3. The facts in brief are that the petitioner/Airport Authority of India
(AAI) awarded a work to the respondent for establishment of a Civil
Enclave at Adampur Airport, Punjab, for construction of apron, taxi track
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and associated works. The Letter of Acceptance dated 15.06.2018 was
issued for approximately Rs.14.13 crores, with a stipulated completion
period of eight months ending on 24.02.2019. The formal agreement was
executed on 02.07.2018 and the site was handed over on 25.06.2018.
3.1 According to the AAI, the respondent failed to mobilize adequate
manpower, machinery and materials from the inception, resulting in
repeated delays. Notices were issued and time was extended upto 2021, but
right was reserved by the AAI‟s right to levy compensation. The work was
completed only on 18.04.2022, and a completion certificate and final bill
were issued on 30.11.2022.
3.2 The respondent raised monetary claims towards wrongful deductions,
escalation, overhead losses and damages arising from prolongation of the
contract. The dispute was first referred to the Dispute Resolution Committee
(DRC) in February 2023, and the report was issued on 21.02.2024.
Arbitration was invoked by notice dated 29.02.2024. The arbitrator was
appointed on 21.06.2024 as per the arbitration clause 25(ii) of the
agreement. Claims of the respondent were allowed and a sum of
Rs.2,76,57,596/- with interest and costs was awarded.
4. Learned counsel for the petitioner submits that the appointment of the
arbitrator is in violation of Section 12(5) 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.
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5. Per contra , it is not a case of unilateral appointment and the parties
participated in the arbitral proceedings and the decisions relied upon is not
applicable to the facts of the present case.
6. The submission is that petitioner having appointed the arbitrator and
on failing is now taking a u-turn. The contention is that the consent of the
petitioner is evident having appointed the sole arbitrator. Reliance is placed
upon the decision of the Supreme Court in Bhadra International (supra).
Moreover, the arbitrator was selected by the respondent from the list
provided by the petitioner/AAI.
7. Before proceeding further, it would be apposite to quote the following
decisions:
7.1 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
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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.

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.”

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7.2 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. 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
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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.”
8. 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.
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9. Clause 25 of the agreement states that any dispute relating to the
contract, drawings, specifications, quality of work, instructions, payments,
or execution of work must first be referred within fifteen days to the DRC
through the Chairman, AAI. The DRC must give its decision within sixty
days, extendable by thirty days with consent of both parties from receipt of
reference and no legal representation on behalf of parties is allowed before
the DRC. After exhausting the above mechanism, if either party is
dissatisfied with the decision or no decision is given in time then a party
within thirty days can give notice to the Chairman, AAI for appointment of
arbitrator. Member (Plg) of AAI shall appoint sole or one of the three
arbitrators as the case may be within thirty days of receipt of such request. In
case of three arbitrators contractor shall also appoint one arbitrator and two
appointed arbitrator shall appoint the third arbitrator. Contracts up to rupees
one hundred crore will be decided by a sole arbitrator, while contracts above
one hundred crore will be decided by a tribunal of three arbitrators, in
accordance with the Act.
10. The law is well settled that the official of a party to the dispute can
neither be appointed as an arbitrator nor can appoint an arbitrator. In the
case in hand, the arbitrator was appointed by the petitioner. The Supreme
Court in Central Organisation for Railway Electrification v. ECI SPIC
SMO MCML (JV) , (2025) 4 SCC 641 held that curating a panel of
arbitrators by one of the parties to the dispute and requiring the other party
to exercise its choice from such a panel affects the freedom of the party to
appoint the arbitrator, thereby raising a reasonable doubt.
11. In view of the law laid down by the Supreme Court in Bhadra
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International (supra) and the decision of this Court in Mahavir Prasad
Gupta (supra), the appointment of the arbitrator is in violation of the
amended provisions of Section 12(5) of the Act.
12. The issue now to be determined is as to whether after the dispute
arose was there an express waiver in writing between the parties that the
provisions of Section 12(5) of the Act shall not apply.
13. 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.
14. 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.”
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15. 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 a case set up by the respondent that the petitioner
consented for waiver of applicability of Section 12(5) of the Act. The waiver
has to be expressed and cannot be construed or inferred through conduct.
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
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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 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.”
16. In the absence of compliance of proviso to Section 12(5) of the Act by
the parties, the appointment of the arbitrator by the petitioner is in violation
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.
17. The petition is allowed and the impugned award is set aside. Pending
application is also disposed of.


AVNEESH JHINGAN, J
MAY 13, 2026/Pa

Reportable:- Yes








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