Award set aside after Delhi High Court holds unilateral appointment of sole arbitrator invalid without express written waiver under Section 12(5) Arbitration Act

The Government of NCT of Delhi invited tenders for construction of Judicial Staff Quarters at Sector-19, Dwarka. MBL Infrastructure Ltd. was the successful bidder, and the parties executed Contract No. 01/EE/B-131/2014-2015, containing a GCC arbitration clause providing for appointment of a sole arbitrator by the Chief Engineer, CPWD, in charge of the work.

Disputes subsequently arose concerning amounts due, delay, and implementation of the contract. MBL invoked arbitration by notice dated 28 December 2018 under Section 21 of the Arbitration and Conciliation Act, 1996, and the respondent appointed the arbitrator on 8 January 2019.

The arbitral proceedings culminated in an award dated 22 November 2022, which was challenged by both parties under Section 34 of the Act.

The respondent contended that the appointment was void ab initio for violating Section 12(5) of the Act, whereas MBL argued that the parties had waived the statutory restriction through an express written request and their participation in the proceedings.

Whether the unilateral appointment of the sole arbitrator under the GCC was invalid under Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996.

Whether the parties had expressly waived, in writing and after the disputes arose, the applicability of Section 12(5) of the Act.

Whether participation in the arbitral proceedings, or the appointment of the arbitrator itself, could constitute waiver under the proviso to Section 12(5).

Section 12(5) of the Arbitration and Conciliation Act, 1996, read with the Seventh Schedule, renders a person having a relationship falling within the specified categories ineligible to be appointed as an arbitrator; such ineligibility operates by law and makes the appointment void.

The proviso to Section 12(5) permits waiver only through an express agreement in writing made after the disputes have arisen; waiver cannot be inferred from conduct, participation, acquiescence, or the act of appointment itself.

In Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, 2026 INSC 6, the Supreme Court held that an ineligible arbitrator lacks jurisdiction, that waiver must be clear and unequivocal, and that an objection to inherent jurisdiction may be raised even at the Section 34 stage.

In Mahavir Prasad Gupta and Sons v. Government of NCT of Delhi, 2025 SCC OnLine Del 4241, the Division Bench held that unilateral appointment is null and void, conduct cannot amount to waiver under Section 12(5), and an award rendered by an ineligible arbitrator is a nullity capable of being set aside under Section 34.

The contractual clause authorised the respondent’s Chief Engineer to appoint the sole arbitrator, resulting in a unilateral appointment contrary to the equal-treatment principle and the statutory bar under Section 12(5).

The Court rejected the argument that MBL’s notice dated 28 December 2018 constituted waiver because the notice specifically objected to appointment of an employee of the respondent and did not expressly waive Section 12(5).

Further, participation in the arbitral proceedings could not substitute for the expressly written agreement required by the proviso to Section 12(5).

The Court also held that waiver must be attributable to both parties and that there was no case that the respondent had consented in writing to waive the statutory ineligibility.

Since no post-dispute express written waiver existed, the appointment was void ab initio, the tribunal lacked inherent jurisdiction, and the resulting award was a nullity.

The arbitral award dated 22 November 2022 was therefore declared a nullity and set aside under Section 34; O.M.P. (COMM) 135/2023 was allowed.

In consequence, O.M.P. (COMM) 299/2023 and its pending applications were disposed of without further orders, while OMP (ENF.) (COMM.) 85/2023 and the connected execution applications were disposed of as infructuous.