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2026 Supreme(Del) 669
IN THE HIGH COURT OF DELHI AT NEW DELHI
AVNEESH JHINGAN, J.
Air Force Naval Housing Board - Petitioner
Versus
M/S N G Constructions - Respondent
O.M.P. (COMM) 497 of 2022, I.A. 21446 of 2022 & I.A. 31600 of 2025, O.M.P. (COMM) 116 of 2023
Decided On : 26-05-2026
Important Points
Subject
Arbitration Law - Arbitrator Appointment and Eligibility
Act Referred
Headnote
(B) Arbitration and Conciliation Act, 1996 - Section 12(5) - Proviso - Express agreement in writing - Requirement for waiver - Waiver of ineligibility under the Act must be through an express and written manifestation of intention made after the dispute has arisen - Conduct, acquiescence, or implication cannot serve as a substitute for an express written agreement. (Paras 10, 11 and 12)
(C) Arbitration and Conciliation Act, 1996 - Section 34 - Challenge to award - Standing of a party to challenge their own unilateral appointment - A party that makes a unilateral appointment of an arbitrator is not precluded from challenging the award on grounds of the arbitrator's ineligibility - When the tribunal inherently lacks jurisdiction, the award is a nullity and can be challenged at any stage. (Paras 12 and 13)
Facts of the case:
A construction contract was executed between the parties in 2010. Following an increase in disputes, the employer unilaterally appointed a sole arbitrator as per the contract's dispute resolution clause. The arbitrator proceeded with the matter, and an award was rendered. The employer subsequently challenged the award in court, contending that the appointment was unilaterally made and violated statutory provisions regarding arbitrator neutrality and eligibility, despite having been the party that made the original appointment.
Findings of Court:
The court held that any arbitration agreement facilitating the unilateral appointment of a sole arbitrator is prohibited by law. It determined that in the absence of an express, unequivocal agreement in writing post-dispute, there was no valid waiver of the arbitrator's ineligibility. Consequently, the appointment was void ab initio, and the resulting award was deemed a nullity.
Issues: (1) Whether the unilateral appointment of a sole arbitrator renders the arbitral tribunal ineligible and the award unenforceable. (2) Whether a party that unilaterally appointed the arbitrator is estopped from challenging the award on grounds of ineligibility. (3) Whether participation in arbitration constitutes a waiver of statutory ineligibility.
Ratio Decidendi: Statutory ineligibility of an arbitrator strikes at the root of the tribunal's inherent jurisdiction. Being a matter of public policy and mandatory law, an appointment made in violation of the prescribed schedule cannot be validated by the conduct, participation, or even the initial act of appointment by the challenging party. Only an express written agreement, executed after the dispute arises, can waive such ineligibility.
Result: Petition allowed; impugned award set aside.
For the Petitioner: Mr. Yoginder Handoo, Mr. Ashwin Kataria, Ms. Khushboo Mittal, Mr. Garvit Solanki, Mr. Gaurav Vishwakarma and Mr. Aditya Aggarwal.
For the Respondent: Mr. Bhupesh Narula, Mr. Rinku Narula, Ms. Poonam Nagpal, Mr. Anugrah Ekka & Mr. Kanishk Taneja, Advs. (through VC).
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| Table of Content |
|---|
| 1. factual background involving unilateral appointment of an arbitrator under a construction agreement. (Para 1 , 2) |
| 2. contention regarding challenge to arbitrator eligibility under section 12(5) vs. principle of waiver by conduct. (Para 3 , 4) |
| 3. unilateral arbitrator appointments are void ab initio and ineligible under section 12(5). (Para 5 , 6 , 7) |
| 4. requirement for express written waiver of section 12(5) ineligibility post-dispute. (Para 8 , 9 , 10 , 11) |
| 5. the party appointing the arbitrator may still challenge the award based on lack of inherent jurisdiction. (Para 12 , 13) |
| 6. award set aside due to lack of jurisdiction from unilateral appointment compliant with section 12(5). (Para 14 , 15) |
JUDGMENT :
1. These petitions are filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "the Act") against the award dated 27.07.2022 (hereinafter "impugned award").
2. For convenience sake, the facts are being taken from O.M.P. (COMM) 497/2022. The brief facts are that the petitioner issued Notice Inviting Tender dated 05.03.2010 for construction of residential apartment and the respondent/M/s N G Constructions was the successful bidder. The contract was executed between the parties on 10.06.2010 (hereinafter referred to as "the contract"). The work was completed on 28.11.2017. Clause 18.2 of the contract provided for dispute resolution through arbitration which is reproduced below:
“18.2 ARBITRATION
All disputes or differences arising between the parties hereto arising out of the subject matter of this agreement or the respective rights and duties of the parties under this agreement except those the decision whereof is specifically provided for in the agreement to be final, shall be referred to on the sole arbitration of an arbitrator, to be only nominated by the Chairman, Air Force Naval Housing Board, New Delhi, whose decision thereon shall be final and binding on both the parties provided that if the differences and disputes are claimed by the contractor to have arisen, reference shall only be made if the Contractor has given notice in writing, of the said disputes or differences, within 28 days of cause of action for the same arising to the Chairman, Air Force Naval Housing Board, New Delhi.”
2.1 Dispute arose between the parties and arbitration was invoked on 18.11.2019 at the instance of the respondent and the petitioner unilaterally appointed a sole arbitrator. The proceedings culminated in the impugned award.
3. Learned counsel for the petitioner submits that the appointment of the arbitrator is in violation of Section 12(5) of the Act and the impugned award is liable to be set aside. Reliance is placed upon the decision of the Supreme Court in Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India, 2026 INSC 6 and on the decision of this court in Railways Board, Ministry of Railways vs. Titagarh Rail Systems Limited , 2026 DHC 1720.
4. Per contra, on a declaration filed by the arbitrator in compliance with Section 12 of the Act no objection was raised by the petitioner and the petitioner participated in the arbitration proceedings. The submission is that petitioner having appointed the arbitrator and on failing is now taking a u-turn. The contention is that the consent of the petitioner is evident having appointed the sole arbitrator.
5. Before proceeding further, it would be apposite to quote the following decisions:
5.1 The Supreme Court in Bhadra International (supra) dealt with the following three issues:
“29….i. Whether the sole arbitrator could be said to have become “ineligible to be appointed as an arbitrator” by virtue of sub-section (5) of Section 12 of the Act, 1996?
ii. Whether the parties could be said to have waived the applicability of sub-section (5) of Section 12 of the Act, 1996, by way of their conduct, either expressed or implied?
iii. Whether the appellants could have raised an objection to the appointment of the sole arbitrator for the first time in an
