A party cannot unilaterally appoint a sole arbitrator; such appointment is void ab initio.

The petitioner, Shobha Ano Prints Pvt. Ltd., supplied optical instruments to the respondents under Supply Order No. A/18951/TS/Proc/Sight Dial/264/OS-16B dated 26 February 2019, valued at INR 5,15,80,547. The respondents subsequently terminated the Supply Order by letter dated 29 July 2024.

Clause 3 of the Supply Order incorporated Form DPM-7 and provided that the arbitrator would be appointed by DGOS/ADOS (TS), i.e., Respondent No. 2.

The petitioner invoked arbitration on 3 September 2024, following which the respondents unilaterally appointed Mr. B.L. Choudhary as sole arbitrator. The petitioner submitted claims of INR 4,86,74,264, while the respondents raised a counterclaim of INR 646.11 crores.

During the proceedings, the petitioner sought the arbitrator’s disclosures under Section 12 of the Arbitration and Conciliation Act, 1996. The arbitrator disclosed that he was conducting nine ongoing arbitrations, four of which had been initiated by the respondents or their affiliates.

The arbitrator rejected the recusal application and the application for change of venue on 9 February 2026.

The petitioner consequently approached the High Court under Section 15 of the A&C Act, seeking termination of the arbitrator’s mandate and appointment of a substitute arbitrator.

Whether the unilateral appointment of a sole arbitrator by Respondent No. 2, a party interested in the outcome of the arbitration, was legally valid in the absence of an express written waiver under the proviso to Section 12(5) of the A&C Act?

Whether the mandate of the unilaterally appointed arbitrator was liable to be terminated and a substitute sole arbitrator appointed under Sections 14 and 15 of the A&C Act?

Whether the petitioner’s objections concerning the arbitrator’s disclosures and alleged lack of independence required recusal of the existing arbitrator?

The Court applied Sections 12(5), 14 and 15 of the Arbitration and Conciliation Act, 1996. Section 12(5), read with the Seventh Schedule, renders a person having a proscribed relationship with a party or the dispute ineligible to act as arbitrator; absent a clear and express written agreement, such ineligibility cannot be waived.

The Court relied on TRF Ltd. v. Energo Engineering Projects Ltd., (2017) 8 SCC 377, and Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760, which establish that a party interested in the outcome cannot unilaterally appoint a sole arbitrator.

It also relied on Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, 2026 SCC OnLine SC 7, holding that equal treatment under Section 18 extends to the constitution of the tribunal, that an appointment made by an ineligible person is ex facie invalid, and that the mandate of such arbitrator automatically terminates, permitting appointment of a substitute under Sections 14 and 15.

The Court further referred to Engineering Projects India Ltd. v. Allied Construction, 2026 SCC OnLine Del 4000, which held that unilateral appointment is void ab initio and that participation in the proceedings does not constitute waiver under Section 12(5).

The Court found that Clause 3 of the Supply Order vested the exclusive power to appoint the sole arbitrator in Respondent No. 2, which was itself a party to and materially interested in the dispute.

This arrangement gave the respondents exclusive control over the constitution of the tribunal and was therefore inconsistent with the principles of equal treatment and impartial adjudication recognised under Sections 12(5) and 18 of the A&C Act.

No express written agreement waiving the applicability of Section 12(5) had been produced.

Applying Perkins Eastman, Bhadra International and the related authorities, the Court held that the appointment of Mr. B.L. Choudhary was unilateral, void and non-est.

Consequently, it was unnecessary to decide the petitioner’s further challenge based on the arbitrator’s disclosures as a condition precedent to terminating his mandate, although those circumstances formed part of the procedural background.

With the parties’ consent, Ms. Justice (Retd.) Deepa Sharma, former Judge of the Delhi High Court, was appointed as the substitute sole arbitrator.

She was directed to furnish the disclosures required under Section 12 and was permitted to charge fees under the Fourth Schedule or as otherwise agreed.

All rights and contentions concerning the claims, counterclaims, jurisdiction and arbitrability were kept open for determination by the substitute arbitrator, and the petition and pending applications were disposed of accordingly.