Unilateral Appointment of Arbitrator Without Express Written Waiver Is Void Ab Initio and Vitiates Award

The Petitioner (BHEL) awarded a sub-contract to the Respondent for a project valued at ₹15,97,99,800/-

Clause 33 of the General Conditions of Contract (GCC) empowered BHEL’s General Manager to act as or nominate a sole arbitrator

Following a dispute and a prior set-aside award, the Respondent invoked arbitration again on 10.11.2016

Pursuant to Clause 33, the Petitioner unilaterally appointed a nominee of the General Manager as the sole arbitrator on 13.12.2016

The resulting award dated 21.12.2017 was challenged by the Petitioner—the very party that made the appointment—under Section 34 of the Arbitration and Conciliation Act, 1996, on the grounds that the unilateral appointment violated the amended Section 12(5) of the Act

1. Whether the unilateral appointment of a sole arbitrator by one party is in violation of the amended Section 12(5) of the Arbitration and Conciliation Act, 1996

2. Whether a party that unilaterally appointed the arbitrator can challenge the validity of that appointment for the first time in an application under Section 34

3. Whether the participation in arbitral proceedings or the lack of an objection during the proceedings constitutes a waiver of Section 12(5)

The Court applied Section 12(5) of the Arbitration and Conciliation Act, 1996 (as amended in 2015), which renders any person specified in the Seventh Schedule ineligible to be an arbitrator

It relied on the Supreme Court ruling 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 lack inherent jurisdiction

Additionally, the Court followed Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi (2025 SCC OnLine Del 4241), which held that waiver under the proviso to Section 12(5) requires an "express agreement in writing" and cannot be inferred from conduct or participation

The Court reasoned that under the amended Section 12(5), an employee of a party—or a person nominated by such an official—is ineligible to act as an arbitrator because the right to equal treatment under Section 18 extends to the appointment process

Since the Petitioner unilaterally appointed the arbitrator without an "express agreement in writing" from the Respondent to waive the ineligibility post-dispute, the appointment was void ab initio

The Court rejected the Respondent's argument that the Petitioner was estopped from challenging its own appointment, noting that jurisdictional defects go to the root of the matter and can be raised at any stage, including Section 34 proceedings

Furthermore, the Court clarified that its previous dismissal of a Section 11 petition did not "confirm" the appointment on merits, as it had merely observed that the tribunal was already constituted at that time

The petition was allowed, and the arbitral award dated 21.12.2017 was set aside, leaving parties at liberty to seek fresh legal remedies