JUDGMENT :

AVNEESH JHINGAN, J. 

1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking setting aside of the arbitral award dated 30.09.2022 (for brevity 'the award').

2. The short issue is that whether the unilateral appointment of the sole arbitrator is in violation of amended Section 12(5) of the Act.

3. The brief facts are that the respondent was awarded a work contract originating from Bharat Sanchar Nigam Limited (BSNL) tender which was sub-contracted on back to back basis. The respondent issued Letter of Intent dated 26.03.2015 for execution of work relating to obtaining row, survey, trenching, laying, installation, testing & commissioning of optical fibre cable, PLB duct and accessories for construction of Exclusive Optical National Long Distance (NLD) backbone and optical access route for defence network for specified part of package 'F' totaling to 365 km (approx.) in the States of West Bengal and Jharkhand.

3.1 On 15.05.2015, the work order was issued and work was to be completed by 31.12.2015. There was a delay in handing over the site consequently, dispute arose between the parties to the lis. Clause 23 of the General Conditions of Order (for short ‘GCO’) reproduced below provides for dispute resolution through arbitration.

“23. DISPUTE RESOLUTION

If any dispute arises between the parties hereto during the subsistence of this Work Order or thereafter, including in connection with the validity, interpretation, implementation or any alleged breach of any provision of this Work Order or relating to any question with reference to or in connection with this Work Order, including the question as to whether any termination of this Work Order has been legitimate, the parties hereto shall endeavor to settle such dispute amicably within 30 days from raising of the dispute by either of the parties in writing to other party mentioning the exact nature of the subject in dispute.

In case, the said dispute could not be resolved amicably within the said period of 30 days, then immediately upon expiry of the said period in a written communication by either party to the dispute shall inform the other party that the subject matter in dispute shall be referred to arbitration. The arbitration shall be in accordance with Arbitration and Conciliation Act 1996 including any statutory amendments made thereof. The arbitration proceedings shall be conducted by a sole arbitrator appointed by the Company.

In case of a dispute, the Company shall appoint the sole arbitrator and send notice of such appointment in writing to the Contractor.

The sole arbitrator shall give the award as expeditiously as possible. The award of the sole arbitrator shall be binding on the parties. The venue of the arbitration as mutually agreed by the parties to this Work Order shall be exclusively and only held in New Delhi.

It is mutually agreed between the parties hereto that Courts in New Delhi subject to the aforesaid shall have exclusive jurisdiction. During the process of arbitration, the Order should be executed with no interruption, any party defaulting in performing their scope of work prior or during the subsistence or after the award has been made but before it is enforced as a rule of the court, shall be held liable for the cost incurred by the other party/parties for executing the scope of work of the defaulting party.”

3.2 A notice dated 30.10.2019 under section 21 of the Act was issued by the petitioner and the respondent vide communication dated 27.11.2019 appointed the sole arbitrator. The proceedings culminated in the impugned award.

4. Learned counsel for the petitioner submits that the appointment of the arbitrator is in violation of Section 12(5) read with Seventh Schedule 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 decisi