Unilateral arbitrator appointment void without express waiver; even appointing party can challenge award, Delhi HC rules

The Public Works Department awarded B.L. Infra Projects Pvt. Ltd. a contract for constructing additional SPS classrooms at schools in Delhi.

The stipulated completion period was 135 days, from 16 March 2016 to 28 July 2016, but the work was completed approximately 437 days late.

Disputes arose concerning the completion of the work, payments, escalation, prolongation costs, interest and other contractual claims.

Pursuant to Clause 25 of the contract, the Chief Engineer, CPWD—an official of the Petitioner—unilaterally appointed the sole arbitrator.

The arbitrator awarded the Respondent a total of ₹2,39,85,987, apart from granting declaratory relief regarding GST, and rejected or partly allowed various claims.

The award dated 14 January 2022 was corrected on 9 February 2022 under Section 33 of the Arbitration and Conciliation Act, 1996 (“A&C Act”).

In the Section 34 petition, the Petitioner principally challenged the award on the ground that the arbitrator had been unilaterally appointed by the Petitioner and was consequently ineligible under Section 12(5) read with the Seventh Schedule of the A&C Act.

Whether an arbitrator unilaterally appointed by an interested party under the contractual arbitration clause is ineligible under Section 12(5) read with the Seventh Schedule of the A&C Act, rendering the appointment and award void ab initio?

Whether participation in the arbitral proceedings, or the fact that the Petitioner itself made the appointment, constitutes an express written waiver under the proviso to Section 12(5) of the A&C Act?

Whether the Petitioner could challenge the unilateral appointment for the first time in proceedings under Section 34 of the A&C Act despite having appointed the arbitrator?

The Court applied Section 12(5) of the A&C Act, read with the Seventh Schedule, which renders a person having the specified relationships or interests with a party or the dispute ineligible to be appointed as an arbitrator.

The proviso to Section 12(5) permits waiver only through an express agreement in writing made after the disputes have arisen.

Relying on Bhadra International (India) (P) Ltd. v. Airports Authority of India, 2026 SCC OnLine SC 7, and Bharat Broadband Network Ltd. v. United Telecoms Ltd., the Court held that waiver cannot be inferred from conduct, participation or procedural acquiescence.

It also relied on TRF Ltd. v. Energo Engineering Projects Ltd., (2017) 8 SCC 377, and the Division Bench decision in Mahavir Prasad Gupta & Sons v. State (NCT of Delhi), 2025 SCC OnLine Del 4241, for the principles that unilateral appointment is invalid, the appointing party is not deemed to have waived its objection merely by making the appointment, and an objection to inherent jurisdiction may be raised even at the Section 34 stage.

An award rendered by an ineligible arbitrator is a nullity and may be set aside under Section 34(2)(b)(ii) of the A&C Act.

Clause 25 vested the exclusive power to appoint the sole arbitrator in the Chief Engineer, CPWD, who was an official of the Petitioner and therefore lacked the requisite neutrality under Section 12(5) read with the Seventh Schedule.

The Respondent’s reliance on paragraph 2 of the award and its participation in the arbitration could not establish a valid waiver because there was no clear, unequivocal and written agreement, executed after the disputes arose, waiving the arbitrator’s statutory ineligibility.

The Court further held that the Petitioner’s own act of appointing the arbitrator did not amount to an express waiver.

Since the appointment was void ab initio, the tribunal lacked inherent jurisdiction, and the resulting award was rendered a nullity.

The Petitioner was therefore entitled to raise the objection for the first time in the Section 34 proceedings.

No valid express written waiver had been executed by the parties after the disputes arose, and neither participation in the arbitration nor the Petitioner’s own appointment of the arbitrator cured the statutory ineligibility.

Consequently, the arbitral appointment and proceedings were void ab initio, the award dated 14 January 2022, as corrected on 9 February 2022, was set aside, and the Section 34 petition was disposed of.

Pending applications were also disposed of.