O.M.P. (COMM) 318/2023 Page 1 of 15

$~78

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Date of decision: 06.04.2026

+ O.M.P. (COMM) 318/2023, I.A. 15318/2023, I.A. 15320/2023

& I.A. 17155/2025

AIRPORTS AUTHORITY OF INDIA .....Petitioner

Through: Sh. Digvijay Rai, Mr. Archit

Mishra, Advs., Mr. Gagan

Kochar, Senior Manager, Ms.

Pragya Bansal, JE-AAI, Ms.

Kashish Singhal, JE-AAI & Mr.

Vivek Gupta, DGM- AAI.

versus

SUNEHARI BAGH BUILDERS PVT LTD .....Respondent

Through: Mr. Avinash Trivedi, Ms.

Ritika Trivedi, Mr. Rahul

Aggarwal & Mr. Anurag

Kaushik, Advs.

CORAM:

HON'BLE MR. JUSTICE AVNEESH JHINGAN

AVNEESH JHINGAN , J. (ORAL)

1. This petition under Section 34 of the Arbitration and

Conciliation Act, 1996 (for short „the Act‟) is against award dated

15.03.2023 and the order dated 19.04.2023 passed under Section 33.

2. The grievance is that the unilateral appointment of the arbitrator

is in violation of the amended Section 12(5) of the Act.

3. The brief facts are that the petitioner was the successful bidder

in a tender invited by the respondent for construction of Central Air

Traffic Flow Management (CATFM) and associated offices at Vasant

O.M.P. (COMM) 318/2023 Page 2 of 15

Kunj, New Delhi. The letter of intent to award was issued to the

respondent for the value of Rs.11,53,06,853/- and the contract dated

20.01.2016 (hereinafter „the contract) was executed between the

parties to the lis. The dispute arose between the parties and the

respondent under clause 25 of contract approached the petitioner for

constitution of Dispute Resolution Committee (for short „DRC‟). The

DRC vide its report dated 22.09.2021 rejected the claims. The

respondent on 25.10.2021 invoked arbitration proceedings by issuance

of notice under Section 21 of the Act. The petitioner appointed the

arbitrator. The arbitration proceedings culminated in the impugned

award. The application filed under Section 33 was disposed of vide

order dated 19.04.2023.

4. Clause 25 of the contract is reproduced below which provides

for dispute resolution mechanism and arbitration:-

“CLAUSE 25

Dispute Resolution Mechanism And Arbitration

Except where otherwise provided in the contract, all

questions and disputes relating to the meaning of the

specifications, design, drawings and instruction 'here-in

before mentioned and as to the quality of workmanship or

materials used on the work or as to any other question,

claim, right, matter or thing whatsoever, in any way

arising out of or relating to the contract, designs,

drawings, specifications, estimates, instructions, orders or

these conditions or otherwise concerning the work or the

execution or failure to execute the same whether arising

during the progress of the work or after the cancellation,

termination, completion or abandonment thereof shall be

dealt with as mentioned hereinafter:

O.M.P. (COMM) 318/2023 Page 3 of 15

(i) Through Dispute Resolution Committee: Any

dispute as stated above shall be referred in the first place

to the Dispute Resolution Committee (DRC) appointed by

the Executive Director / Member (Planning) / Chairman,

Airports Authority of India.

It is also a term of contract that fees and other expense if

payable to DRC shall be paid equally by both the parties

i.e. AAI and Contractor.

Unless the contract has already been repudiated or

terminated, the contractor shall, in every case, continue to

proceed with the work with all due diligence.

It is also a term of contract that if the contractor does not

make any demand for Dispute Resolution Committee in

respect of any claim in writing within 90 (Ninty) days of

receiving the intimation from the AAI that the bill is

ready for payment, the claim of contracator(s) will be

deemed to have been waved and absolutely barred and

the AAI shall be discharged and released of all liabilities

under the contract in respect of these claims.

(ii) Adjudication through Arbitration:- Except

where the decision has become final, binding and

conclusive in terms of Sub Para (i) above, disputes or

differences shall be referred for adjudication through

arbitration by a sole arbitrator appointed by the Member

(Planning) I Chairman, AAI. If the arbitrator so appointed

is unable or unwilling to act or resigns his appointment or

vacates his office due to any reason whatsoever, another

sole arbitrator shall be appointed in the manner aforesaid.

Such person shall be entitled to proceed with the

reference from the stage at which it was left by his

predecessor.

It is also a term of contract that If the contractor does not

make any demand for appointment of Arbitrator in

respect of any claim in writing within 120 (One hundred

Twenty) days of receiving the decision I award from

O.M.P. (COMM) 318/2023 Page 4 of 15

Dispute Resolution Committee, the claim of

contracator(s) will be deemed to have been waved and

absolutely barred and the AAI shall be discharged and

released of all liabilities under the contract in respect of

these claims.

It is term of this contract that the party invoking

arbitration shall give a list of disputes with amounts

claimed in respect of each such disputes alongwith the

notice for appointment of arbitrator and giving reference

to the rejection of their claims by the Dispute Resolution

Committee.

It is also a term of this contract that no person, other than

a person appointed by above mentioned appointing

authority, should act as arbitrator and if for any reason

that is not possible, the matter shall not be referred to

arbitration at all.

The arbitration shall be conducted in· accordance with the

provisions of the Arbitration and Conciliation Act, 1996

(26 of 1996) or any statutory modification or re-

enactment thereof and the rules made there under and for

the time being in force shall apply to the arbitration

proceeding under this clause.

It is also a term of this contract that the arbitrator shall

adjudicate on only such disputes as are referred to him by

the appointing authority and give separate award against

each dispute and claim referred to him and in all cases

where the total amount of the claims by any party exceeds

Rs. 1,00, 000/-, the arbitrator shall give reasons for the

award.

It is also a term of the contract that if any fees are payable

to the arbitrator, these shall be paid equally by both the

parties.

It is also a term of the contract that the arbitrator shall be

deemed to have entered on the reference on the date he

issues notice to both the parties calling them to submit

O.M.P. (COMM) 318/2023 Page 5 of 15

their statement of claims and counter statement of claims.

The venue of the arbitration shall be such place as may be

fixed by the arbitrator in his sole discretion. The fees, if

any, of the arbitrator shall, If required to be paid before

the award is made and published, be paid half and half by

each of the parties. The cost of the reference and of the

award (including the fees, if any, of the arbitrator) shall

be in the discretion of the arbitrator who may direct to any

by whom and in what manner, such costs or any part

thereof shall be paid and fix or settle the amount of costs

to be so paid.”

5. 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 this court in Railways Board, Ministry of Railways Vs.

Titagarh Rail Systems Limited, 2026:DHC:1720.

6. Per contra, it is not a case of unilateral appointment. The

petitioner vide communication dated 09.11.2021 proposed names of

three arbitrators from its panel and sought consent of the respondent to

nominate an arbitrator from the proposed names. The respondent by

communication dated 12.11.2021 consented to one of the proposed

names for appointment. It is contended that the parties participated in

the arbitral proceedings and the choice of appointment of the arbitrator

was of the respondent and the decision relied upon is not applicable to

the facts of the present case.

7. Before proceeding further, it would be apposite to quote the

following decisions:

7.1 The Supreme Court in Bhadra International (India) Pvt. Ltd.

& Ors. v. Airports Authority of India, 2026 INSC 6 dealt with the

O.M.P. (COMM) 318/2023 Page 6 of 15

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 application under Section 34 of the Act,

1996?”

Held:

“123…i. The principle of equal treatment of parties

provided in Section 18 of the Act, 1996, applies not only to

the arbitral proceedings but also to the procedure for

appointment of arbitrators. Equal treatment of the parties

entails that the parties must have an equal say in the

constitution of the arbitral tribunal.

ii. Sub-section (5) of Section 12 provides that any person

whose relationship with the parties or counsel, or the

dispute, whether direct or indirect, falls within any of the

categories specified in the Seventh Schedule would be

ineligible to be appointed as an arbitrator. Since, the

ineligibility stems from the operation of law, not only is a

person having an interest in the dispute or its outcome

ineligible to act as an arbitrator, but appointment by such a

person would be ex facie invalid.

iii. The words “an express agreement in writing” in

the proviso to Section 12(5) means that the right to object

to the appointment of an ineligible arbitrator cannot be

taken away by mere implication. The agreement referred to

O.M.P. (COMM) 318/2023 Page 7 of 15

in the proviso must be a clear, unequivocal written

agreement.

iv. When an arbitrator is found to be ineligible by virtue of

Section 12(5) read with the Seventh Schedule, his mandate

is automatically terminated. In such circumstance, an

aggrieved party may approach the court under Section 14

read with Section 15 for appointment of a substitute

arbitrator. Whereas, when an award has been passed by

such an arbitrator, an aggrieved party may approach the

court under Section 34 for setting aside the award.

v. In arbitration, the parties vest jurisdiction in the tribunal

by exercising their consent in furtherance of a valid

arbitration agreement. An arbitrator who lacks jurisdiction

cannot make an award on the merits. Hence, an objection

to the inherent lack of jurisdiction can be taken at any

stage of the proceedings.”

7.2 The Division Bench of this court in Mahavir Prasad Gupta

and Sons v. Govt. of NCT of Delhi, 2025 SCC OnLine Del 4241

dealt with the following issues:

“74…a) When a party itself has unilaterally appointed the

arbitrator, whether that party can object to the unilateral

appointment of the arbitrator at any stage during or after

the arbitration proceedings?

b) If a party has unilaterally appointed an arbitrator, can

that party be deemed to have given express waiver in

writing under Section 12(5) of the Act while making the

appointment itself?”

The court concluded:

“84….a) Mandatory Requirement: Any arbitration

agreement providing unilateral appointment of the sole or

presiding arbitrator is invalid. A unilateral appointment by

any party in the arbitrations seated in India is strictly

prohibited and considered as null and void since its very

O.M.P. (COMM) 318/2023 Page 8 of 15

inception. Resultantly, any proceedings conducted before

such unilaterally appointed Arbitral Tribunal are also

nullity and cannot result into an enforceable award being

against Public Policy of India and can be set aside under

Section 34 of the Act and/or refused to be enforced under

Section 36 of the Act.

b) Deemed Waiver: The proviso to Section 12(5) of the

Act requires an express agreement in writing. The conduct

of the parties, no matter how acquiescent or conducive, is

inconsequential and cannot constitute a valid waiver under

the proviso to Section 12(5) of the Act. The ineligibility of

a unilaterally appointed arbitrator can be waived only by

an express agreement in writing between the parties after

the dispute has arisen between them. Section 12(5) of the

Act is an exception to Section 4 of the Act as there is no

deemed waiver under Section 4 of the Act for unilateral

appointment by conduct of participation in the

proceedings. The proviso to Section 12(5) of the Act

requires an „express agreement in writing‟ and deemed

waiver under Section 4 of the Act will not be applicable to

the proviso to Section 12(5) of the Act.

c) Award by an Ineligible Arbitrator is a Nullity: An

award passed by a unilaterally appointed arbitrator is a

nullity as the ineligibility goes to the root of the

jurisdiction. Hence, the award can be set aside under

Section 34(2)(b) of the Act by the Court on its own if it

„finds that‟ an award is passed by unilaterally appointed

arbitrator without even raising such objection by either

party.

d) Stage of Challenge: An objection to the lack of

inherent jurisdiction of an arbitrator can be taken at any

stage during or after the arbitration proceedings including

by a party who has appointed the sole or presiding

arbitrator unilaterally as the act of appointment is not an

express waiver of the ineligibility under proviso to Section

12(5) of the Act. Such objection can be taken even at stage

of challenge to the award under Section 34 of the Act or

O.M.P. (COMM) 318/2023 Page 9 of 15

during the enforcement proceedings under Section 36 of

the Act.”

8. After amendment of Section 12(5) of the Act an employee of a

party in dispute can neither be appointed arbitrator nor can nominate

or appoint any other person as an arbitrator. The unilateral

appointment in absence of an express agreement in writing between

the parties to waive applicability of Section 12(5) of the Act is void ab

initio. The filing of the statement of claim or participation in the

arbitral proceedings cannot be construed as waiver under the proviso

to Section 12(5) of the Act. The unilateral appointment of the

arbitrator can be objected to for the first time under Section 34 of the

Act.

9. Clause 25(i) of the contract mandates that all disputes shall be

referred to the DRC, constituted by the Executive Director / Member

(Planning) / Chairman, Airports Authority of India (AAI). The

contractor is obligated to continue work during the pendency of

disputes unless the contract stands terminated. The clause prescribes a

ninety days limitation period from the date of intimation by AAI of

bill readiness for raising a demand for DRC in respect of any claim,

failing which the contractor shall be deemed to have waived the claim.

9.1 Clause 25(ii) of the contract states that except for the decisions

having attained finality under clause 25(i) of the contract, the dispute

shall be referred to arbitration by a sole arbitrator appointed by the

Member (Planning) / Chairman. There is a limitation period of

hundred and twenty days for the contractor to invoke arbitration from

the date of the DRC decision, failing which the claims shall be

O.M.P. (COMM) 318/2023 Page 10 of 15

deemed waived and barred.

10. The law is well settled that the official of a party to the dispute

can neither be appointed arbitrator nor appoint an arbitrator. In the

case in hand, the arbitrator was appointed by the petitioner from the

panel maintained by it. The Supreme Court in Central Organisation

for Railway Electrification v. ECI SPIC SMO MCML (JV), (2025)

4 SCC 641 held that curating a panel of arbitrators by one of the

parties to the dispute and requiring the other party to exercise its

choice from such a panel affects the freedom of the party to appoint

the arbitrator, thereby raising a reasonable doubt. The relevant

paragraphs are reproduced below:

“132. In Voestalpine [Voestalpine Schienen

GmbH v. DMRC Ltd., (2017) 4 SCC 665 : (2017) 2 SCC

(Civ) 607] and CORE [Central Organisation for Railway

Electrification v. ECI-SPIC-SMO-MCML (JV), (2020) 14

SCC 712] , one of the parties curated a panel of

arbitrators and mandated the other party to select their

arbitrator from the panel. Since the curation of the list is

exclusively undertaken by one party, the other party is

effectively excluded from the process of curating the

panel from which exclusively, the appointment of an

arbitrator is to be made. The other party has to

mandatorily select its arbitrator from a curated panel,

restricting their freedom to appoint an arbitrator of their

choice. This is against the principle of equal treatment

contained under Section 18. In this situation, there is no

effective counterbalance because both parties do not

participate equally in the process of appointing

arbitrators. The party curating the panel can restrict the

choice of the party only to a person who is on the panel

selected by the other party and to no other person.

133. Many PSUs are regularly involved in arbitration

O.M.P. (COMM) 318/2023 Page 11 of 15

disputes and constantly need the services of arbitrators.

Such institutions often maintain a pool of potential

arbitrators with the sole object of having a ready pool of

qualified professionals who have committed their time

and consented to act as arbitrators for fixed fees. The

Arbitration Act does not prohibit parties to an arbitration

agreement from maintaining a curated panel of potential

arbitrators. However, the problem arises when the PSUs

make it mandatory for other parties to select their

nominees from the curated panel of arbitrators. When a

PSU exercises its discretion to curate a panel, the very

factor that the PSU is choosing only a certain number of

persons as potential arbitrators and not others will raise a

reasonable doubt in the mind of a fair-minded person.

The PSUs may conceivably have nominated a person on

the panel of potential arbitrators because they have a

certain predisposition in favour of the former. This doubt

is reinforced when the other party is given no choice but

to select its arbitrator from the curated panel.

134. In CORE [Central Organisation for Railway

Electrification v. ECI-SPIC-SMO-MCML (JV), (2020) 14

SCC 712] , the three-member tribunal was sought to be

constituted in the following manner : (i) the Railways

would suggest at least four names of retired railway

officers; (ii) the contractor would select two names out of

the panel for appointment as their arbitrator; (iii) The

General Manager (of the Railways) would thereafter

choose at least one person out of the two to be appointed

as the contractor's arbitrator; and (iv) The General

Manager would proceed to appoint the balance arbitrators

from the panel or outside the panel and also indicate the

presiding arbitrator.

135. Such an arbitrator-appointment clause is likely to

give rise to justifiable doubts as to the independence and

impartiality of arbitrators for two reasons: (i) the

contractor is restricted to choosing its arbitrator from the

panel of four arbitrators nominated by the party who is a

O.M.P. (COMM) 318/2023 Page 12 of 15

disputant; and (ii) the contractor's choice is further

constrained because it is made subject to the decision of

the General Manager who will choose one among the two

persons suggested by the party. Since the contractor has

to select its arbitrator from a curated panel, the arbitration

clause does not allow the contractor equal participation in

the appointment of their arbitrator. Moreover, the clause

allows the General Manager to appoint the balance

arbitrators from either the panel or outside the panel.

Thus, the process of appointing the arbitrators is unequal

because the General Manager can go beyond the panel of

four potential arbitrators, while the contractor is bound by

the names enlisted in the panel.”

11. In view of the law laid down by the Supreme Court in Bhadra

International (supra) and the decision of this Court relied upon by the

learned counsel for the petitioner, the appointment of the arbitrator is

in violation of the amended provisions of Section 12(5) of the Act.

12. The issue now to be determined is as to whether after the

dispute arose was there an express waiver in writing by the parties that

the provisions of Section 12(5) of the Act will not apply.

13. The Supreme Court in Bhadra International (supra) held that

waiver involves a conscious decision to abandon the existing legal

right and can be made only by a person fully aware of such right. A

legal right cannot be taken away by implications. The waiver has to be

an unequivocal expression and it cannot be lost sight of that by such

waiver the restriction imposed by Section 12(5) of the Act is sought to

be overcome.

14. There is no prescribed format under the proviso to section 12(5)

of the Act for an express agreement in writing but it shall not mean

that the waiver can be inferred by implication or through conduct. It

O.M.P. (COMM) 318/2023 Page 13 of 15

would be relevant to quote the following paragraph from Bhadra

International (supra):

“84. Undoubtedly, the statute does not prescribe a format

for the agreement. However, the absence of a prescribed

format cannot be construed to mean that the waiver may

be inferred impliedly or through conduct. We say so

because the legislature has consciously prefaced the term

“agreement” with the word “express” and followed it

with the phrase “in writing”. This semantics denote the

intention of the legislature that the waiver under the

proviso to Section 12(5) must be made only through an

express and written manifestation of intention.”

15. The communication dated 09.11.2021 of the petitioner seeking

consent to nominate an arbitrator from the panel maintained by the

petitioner out of the three names mentioned therein read with the letter

of respondent dated 12.11.2021 consenting to the appointment of the

arbitrator is not an express waiver in writing in consonance with the

proviso to Section 12(5) of the Act. The option given to the

respondent to select an arbitrator from the curated panel maintained by

the petitioner is violation of Section 18 of the Act.

16. The Supreme Court in Central Organisation for Railway

Electrification (supra) held that making the other party to select an

arbitrator from a curated panel is against the principles of equal

treatment contained in Section 18 of the Act.

17. The matter needs to be considered from another angle. The

express consent in writing under proviso to Section 12(5) of the Act

has to be of both the parties. It is not a case set up that the petitioner

by express written agreement waived of applicability of Section 12(5)

of the Act. The waiver has to be expressed and cannot be construed or

O.M.P. (COMM) 318/2023 Page 14 of 15

inferred through conduct. The Division Bench of this court in

Mahavir Prasad Gupta and Sons (supra) held that an appointment

of an ineligible person as an arbitrator is void ab-initio and can be

challenged by the party making such appointment. The relevant

paragraphs of the judgment are:

“81. Accordingly, the party that unilaterally appointed the

arbitrator cannot be deemed to have agreed in writing to

waive the ineligibility of the arbitrator by act of

appointment. When appointment itself is ineligible under

the provisions of Section 12(5) of the Act read with

Seventh Schedule of the Act, it does not take away the

right of the party to challenge such an appointment

merely because that party had made the appointment in

absence of express agreement in writing between the

parties to waive the applicability of Section 12(5) of the

Act.

82. Hence, a party which unilaterally appointed the

arbitrator has right to object to such appointment

irrespective of fact that that party itself made the

appointment of the arbitrator. Mere fact of making

appointment in writing will not make the ineligible

appointment a valid appointment unless there is express

agreement in writing waiving such ineligibility.

83. Although it appears disingenuous, a party appointing

an the sole or presiding arbitrator unilaterally can

challenge the award on the ground that the award has

been rendered in contravention of Section 12(5) of the

Act read with Seventh Schedule of the Act

notwithstanding that the said party itself made such an

appointment. When the Arbitral Tribunal inherently

lacked jurisdiction to act, the arbitration proceedings

O.M.P. (COMM) 318/2023 Page 15 of 15

are void ab initio, rendering the award unenforceable

irrespective of which party made such unilateral

appointment. The arbitral proceedings and an award made

by an unilaterally appointed sole or presiding arbitrator,

who is de jure ineligible to be appointed as an arbitrator

by virtue of the Seventh Schedule of the Act are void ab

initio. The waiver under the proviso to Section 12(5) of

the Act must be express and subsequent to the disputes

having been arisen between the parties. Hence, the party

which appointed the sole or presiding arbitrator

unilaterally can also challenge the award under Section

34 of the Act on the ground of such ineligibility.”

18. In the absence of compliance of proviso to Section 12(5) of the

Act by the parties, the appointment of the arbitrator by the petitioner is

vitiated as it violates Section 12(5) read with Seventh Schedule of the

Act. The appointment of the arbitrator is void ab-initio and renders the

impugned award nullity.

19. The petition is allowed and the impugned award is set aside.

Pending application is also disposed of.

AVNEESH JHINGAN, J

APRIL 06, 2026/ ‘JK’

Reportable:- Yes