Ineligibility under Section 12(5) can be waived only by an express written agreement after disputes arise.

Rohini Heliport Limited and Cloudatix Biz India Venture Pvt. Ltd. entered into an agreement dated 13 January 2017 for operating a snack bar at the Rohini Heliport.

Following governmental intervention, heliport operations were discontinued, the respondent’s staff was denied entry, and the respondent stopped paying lease rentals. The appellant consequently issued a termination notice on 4 October 2019.

The agreement contained a dispute-resolution clause providing first for conciliation and thereafter for appointment of a sole arbitrator by the appellant’s Chairman and Managing Director (CMD). After conciliation failed, the CMD unilaterally appointed Mohan Sharma as sole arbitrator on 8 June 2021.

The arbitration culminated in an award dated 24 July 2023, which the respondent challenged under Section 34 of the Arbitration and Conciliation Act, 1996. The Commercial Court set aside the award on 16 May 2026, holding that the arbitrator’s appointment was barred by Section 12(5) read with the Seventh Schedule, and that there was no express written waiver by the respondent. The appellant challenged that order before the High Court.

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

Whether the proviso to Section 12(5) applied because the respondent had waived the statutory bar through its consent, participation, or conduct, despite there being no separate express written waiver.

Section 12(5) of the Arbitration and Conciliation Act, 1996 renders a person ineligible to act as arbitrator where the person’s relationship with a party or the dispute falls within the Seventh Schedule; the disqualification operates notwithstanding any prior agreement to the contrary, unless the parties waive it by an express agreement in writing after the dispute has arisen.

A person who is himself ineligible to act as arbitrator cannot unilaterally nominate another arbitrator, as held in TRF Ltd. v. Energo Engineering Projects Ltd., Bharat Broadband Network Ltd. v. United Telecoms Ltd., Perkins Eastman Architects DPC v. HSCC (India) Ltd., and Haryana Space Application Centre v. Pan India Consultants (P) Ltd.

Following Bhadra International (India) (P) Ltd. v. Airports Authority of India, 2026 SCC OnLine SC 7, waiver under the proviso requires a clear, unequivocal and written agreement made after the dispute has arisen; it cannot be inferred from silence, participation, procedural orders, filing pleadings, or other conduct.

An award rendered by an arbitrator rendered de jure ineligible under Section 12(5) may be set aside under Section 34.

The agreement empowered the appellant’s CMD to appoint the sole arbitrator. Since the CMD was a director or part of the management of one of the parties, the appointment mechanism attracted the relevant Seventh Schedule disqualification.

Applying TRF and the subsequent authorities, the Court held that an ineligible appointing authority could not validly nominate the arbitrator.

The appellant’s reliance on the proviso to Section 12(5) failed because the record contained no express written agreement, executed after the dispute arose, by which the respondent knowingly waived its right to object to the arbitrator’s ineligibility.

The respondent’s participation in the arbitration or any consent recorded by the arbitrator could not substitute for the statutory requirement of an express written waiver; waiver by conduct or procedural participation was expressly rejected in Bhadra.

The Commercial Court therefore correctly treated the appointment as invalid and set aside the resulting award.

Finding the case fully covered by Bhadra, the Court declined to interfere with the Commercial Court’s order setting aside the arbitral award and dismissed the appeal.