Unilateral appointment of an arbitrator by an ineligible authority is void and lacks inherent jurisdiction.

The appellant was a retail dealer of the respondent-corporation under an agreement dated 14.11.2013

Following an inspection on 14.06.2017, which found a broken weights and measures seal on a dispensing nozzle, the respondent terminated the dealership on 24.07.2017

The appellant invoked arbitration under Clause 66, which empowered the respondent’s Chairman to act as or appoint an arbitrator

The respondent sought the appellant’s consent to appoint its employee as an arbitrator to comply with the 2015 Amendment of the Arbitration Act

The appellant initially proposed his own arbitrator, which was rejected; he eventually signed a letter on 07.03.2018 giving "consent" to the Corporation to appoint an arbitrator

The Sole Arbitrator (a HPCL employee) dismissed the claims on 26.04.2019

The Commercial Court-II, Lucknow, dismissed the appellant's Section 34 petition on 19.04.2023, ruling that the appellant had waived his right to object to the appointment

The court applied Section 12(5) of the Arbitration and Conciliation Act, 1996, which renders any person with a relationship specified in the Seventh Schedule (such as an employee) de jure ineligible to be an arbitrator, notwithstanding prior agreements

The proviso to Section 12(5) requires a post-dispute "express agreement in writing" to waive such ineligibility

The court relied on the "Nemo Judex" principle and the doctrine of "Equal Treatment of Parties" under Section 18

Key precedents included TRF Ltd. v. Energo Engineering and Perkins Eastman Architects DPC v. HSCC (India) Ltd., establishing that an ineligible person cannot nominate an arbitrator

CORE-II (2025), affirming the prospective invalidity of unilateral appointments

Bhadra International (India) (P) Ltd. v. AAI (2026), which defined "express agreement" as requiring a clear, unequivocal written manifestation of intent to waive the specific bar under Section 12(5)

The Court reasoned that the Chairman and Managing Director of the respondent were hit by the Seventh Schedule and thus lacked the inherent jurisdiction to act as or nominate an arbitrator

Applying the Bhadra International standard, the Court found that the exchange of letters (specifically the letter dated 07.03.2018) did not constitute a valid waiver because there was no "consensus ad idem" regarding the abandonment of the legal right to object under Section 12(5)

The letters were mere procedural correspondence regarding the appointment process rather than a conscious, informed waiver of statutory ineligibility

Regarding the timing of the objection, the Court held that since the ineligibility under Section 12(5) goes to the root of the jurisdiction, an award passed by such an arbitrator is non-est and can be challenged at any stage, including in a Section 37 appeal, regardless of whether the plea was precisely articulated in the Section 34 petition

Consequently, the Sole Arbitrator was de jure ineligible, rendering the mandate void

The Court set aside the judgment of the Commercial Court dated 19.04.2023 and the arbitral award dated 26.04.2019. The parties were granted liberty to appoint a fresh arbitrator in accordance with law