Unilateral Appointment of Arbitrator Without Express Written Waiver rendered Award Void Ab Initio Under Section 12(5)

The Petitioner (Air Force Naval Housing Board) issued a tender for residential construction, which was awarded to the Respondent (M/S N.G. Constructions). A contract was executed on 10.06.2010.

Clause 18.2 of the agreement provided for dispute resolution via a sole arbitrator nominated exclusively by the Chairman of the Petitioner board.

Following disputes and the completion of work in late 2017, the Respondent invoked arbitration in 2019, and the Petitioner unilaterally appointed a sole arbitrator.

Despite the Petitioner having made the appointment and both parties participating in the proceedings without initial objection, the resulting award dated 27.07.2022 was challenged under Section 34 of the Arbitration and Conciliation Act, 1996.

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

2. Whether participation in arbitral proceedings or the act of appointing the arbitrator constitutes an "express agreement in writing" to waive the ineligibility under the proviso to Section 12(5).

3. Whether a party who unilaterally appointed the arbitrator is estopped from challenging the award on the grounds of that arbitrator's ineligibility.

The Court applied Section 12(5) of the Arbitration and Conciliation Act, 1996, which renders any person falling under the Seventh Schedule ineligible to be an arbitrator.

The Court relied on the Supreme Court precedent in Bhadra International (India) Pvt. Ltd. v. Airports Authority of India (2026), which established that unilateral appointments are ex-facie invalid and that waiver of ineligibility requires a clear, unequivocal "express agreement in writing".

The Court followed the Division Bench ruling in Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi (2025), which held that an award by an ineligible arbitrator is a nullity and the objection of inherent lack of jurisdiction can be raised at the Section 34 stage, even by the party who made the appointment.

The Court reasoned that following the amendment to Section 12(5), an official of a party to a dispute is legally barred from acting as an arbitrator or nominating one unilaterally.

The Court observed that the Petitioner’s Chairman had unilaterally appointed the arbitrator pursuant to Clause 18.2, which is a direct violation of the principle of equal treatment of parties in the constitution of the tribunal.

Applying the "express agreement" test from Bhadra International, the Court found that neither the act of appointment nor the subsequent participation in proceedings (filing claims/evidence) constitutes a valid waiver, as waiver cannot be inferred through conduct or implication.

The Court emphasized that since the ineligibility of a unilaterally appointed arbitrator goes to the root of the jurisdiction, the proceedings were void ab initio, and the Petitioner was not precluded from challenging its own appointment.

The Court answered that the lack of inherent jurisdiction can be raised at any stage, including under Section 34. Consequently, the High Court allowed the petition, set aside the impugned award dated 27.07.2022, and disposed of all pending applications.