2026 Supreme(Online)(AP) 12939

HIGH COURT OF ANDHRA PRADESH
Ravi Nath Tilhari, Balaji Medamalli, JJ
Katta Srinivasu – Appellant
Versus
IKF Finance Limited – Respondent
CIVIL REVISION PETITION Nos. 2345/2022 | 419/2026

A unilateral appointment of a sole arbitrator by a party having an interest in the dispute is invalid under the Act. Such an arbitrator suffers from inherent lack of jurisdiction, rendering the award non-est. The right to challenge this ineligibility is not waived unless there is an express written agreement.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 4, 12(5), 14, 15, 16 and 34 - Constitution of India - Article 14 - Unilateral appointment of sole arbitrator - Ineligibility of arbitrator - Mandate of arbitrator - Waiver of right to object - Execution of arbitral award - Principle of equal treatment of parties - Arbitrator falling under Seventh Schedule is de jure ineligible, and appointment is ex facie invalid - Managing director or authorized official having interest in dispute/outcome cannot unilaterally nominate sole arbitrator - Inherent lack of jurisdiction can be raised at any stage including collateral proceedings. (Paras 16, 21, 25, 27, 43)

(B) Arbitration and Conciliation Act, 1996 - Section 12(5) - Proviso - Express agreement in writing - Requirement for waiver - Right to object to appointment of ineligible arbitrator cannot be taken away by mere implication - There must be clear, unequivocal written agreement subsequent to dispute arising for waiver to be valid. (Paras 25, 28, 41)

Facts of the case:
The petitioner challenged an order of attachment passed in execution proceedings of an arbitral award. The award was passed by a sole arbitrator who was unilaterally appointed by the respondent finance entity. The petitioner contended that the appointment was invalid under the Act, as the official of the respondent entity who appointed the arbitrator was himself ineligible under the Seventh Schedule, and consequently lacked the authority to nominate an arbitrator. The respondent contended that the petitioner had waived the right to object by participating in proceedings and not raising objections earlier under Section 4.

Findings of Court:
The court held that the principle of equal treatment applies to the appointment of arbitrators. An arbitrator who is ineligible under the Seventh Schedule is unable to perform functions as a matter of law, and the appointment is void. The authority to appoint an arbitrator is obliterated once the authority becomes ineligible. Since there was no express written agreement to waive the ineligibility as required by the proviso to Section 12(5), the plea of waiver was rejected.

Issues: Whether the unilateral appointment of a sole arbitrator is valid; whether the petitioner waived the right to object to such an appointment; and whether an award passed by an ineligible arbitrator can be challenged at the stage of execution.

Ratio Decidendi: An arbitrator appointed unilaterally by a party having interest in the dispute is ineligible by operation of law. The ineligibility renders the arbitrator's mandate automatically terminated and the resulting award void. Such jurisdictional defects can be raised at any stage, including in execution proceedings, as a court or tribunal lacking inherent jurisdiction cannot render an award on merits.

Result: Civil revision petitions allowed; impugned order of attachment set aside and arbitration proceedings under Section 34 closed as the award was found to be without jurisdiction.