Awards by unilaterally appointed arbitrators are nullities absent express written waiver under Section 12(5).

In brief

The question

Whether the unilateral appointment of an arbitrator by the CMD of a party is hit by Section 12(5) read with the Seventh Schedule of the Act

The court held

The court held that the unilateral appointment made by the CMD without an express written agreement between the parties was void ab initio

It also directed

Consequently, the resulting arbitral award is a nullity as it was passed by a tribunal lacking inherent jurisdiction

The court allowed the petition and set aside the arbitral award dated 06.07.2018

01Facts

The Petitioner, Engineering Projects India Limited (EPIL), entered into an agreement with the Respondent on 23.04.2008 for the construction of a college building in Agartala

¶ 2

Clause 76 of the General Conditions of Contract (GCC) provided for dispute resolution via a sole arbitrator appointed unilaterally by the Chairman and Managing Director (CMD) of EPIL

¶ 2.1

Arbitration was invoked on 14.03.2016, and the CMD appointed a sole arbitrator on 10.01.2017

¶ 2.2

After participating in the proceedings, an award was passed on 06.07.2018 in favor of the Respondent

¶ 1, 2.2

EPIL subsequently challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that the unilateral appointment of the arbitrator was legally impermissible

¶ 3

02Issues

i.Whether the unilateral appointment of an arbitrator by the CMD of a party is hit by Section 12(5) read with the Seventh Schedule of the Act

¶ 3, 5.1

ii.Whether the Petitioner’s participation in arbitral proceedings or the fact that it was the appointing party constitutes a waiver of the right to object to the arbitrator's ineligibility

¶ 4, 5.2

iii.Whether an arbitral award passed by a unilaterally appointed arbitrator is a nullity

¶ 5.2, 11

03Law Applied

The court applied Section 12(5) of the Arbitration and Conciliation Act, 1996, which renders any person falling within the categories of the Seventh Schedule (such as employees or interested parties) ineligible to be an arbitrator

¶ 2.2, 6

It relied on the Supreme Court’s decision in Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India (2026 INSC 6), which established that unilateral appointments are ex facie invalid and that any waiver of Section 12(5) must be by an "express agreement in writing"

¶ 5.1, 7, 8

The court cited Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi (2025 SCC OnLine Del 4241), affirming that a party's participation in proceedings does not constitute a deemed waiver and that an award by an ineligible arbitrator is a nullity

¶ 5.2, 6

Provisions in the judgment · 9 · Linked ones open on LawLens

Arbitration and Conciliation Act, 1996 9 provisions

Section 4 Section 12 Section 14 Section 15 Section 18 Section 21 Section 34 Section 36 Section 7

04Reasoning

The court reasoned that since the CMD of EPIL is ineligible to act as an arbitrator under the Seventh Schedule, he is equally disqualified from unilaterally nominating or appointing another person as an arbitrator

¶ 6, 10

The court emphasized that Section 12(5) is a mandatory provision that goes to the root of the tribunal's jurisdiction

¶ 5.1, 5.2

Applying the principles from Bhadra International, the court held that "waiver" requires a conscious, written manifestation of intent after the dispute has arisen; therefore, the Petitioner’s conduct—including appointing the arbitrator and participating in the merits of the case—cannot be construed as an implied waiver

¶ 7, 8, 10

The court rejected the Respondent's argument that the award predated the Bhadra decision, clarifying that the law declared by the Supreme Court applies retrospectively unless specified otherwise

¶ 9