IN THE HIGH COURT AT CALCUTTA

CIVIL APPELLATE JURISDICTION

COMMERCIAL DIVISION

Appellate Side

Present:

The Hon’ble Justice Debangsu Basak

And

The Hon’ble Justice Ajay Kumar Gupta

AO-COM 35 of 2025

Amal Krishna Dey

Vs.

Central Warehousing Corporation

For the Appellant : Mr. Amitava Ghosh, Adv.

Mr. Malay Kumar Das, Adv.

Mr. Tapas Kumar Dey, Adv.

Mr. Sourav Chatterjee, Adv.

For the Respondent : Mr. Samrat Chowdhury, Adv.

Heard on : 23.07.2026

Judgment on : 29.07.2026

Judgment uploaded on : 29.07.2026

Ajay Kumar Gupta, J.:

1. This instant appeal is at the behest of the Appellant/Claimant, who is

aggrieved by and dissatisfied with the judgment and order dated 23

rd

June, 2025 passed by the Commercial Court at Asansol, in Misc.

2

Arbitration (Com) Case No. 43 of 2024 filed under Section 34 of the

Arbitration and Conciliation Act, 1996 (in short, ‘the Arbitration Act’)

arising out of Misc. Case (Arb) No. 10 of 2021.

2. By the said judgment and order, the Commercial Court set aside the

Award dated 31

st

January, 2021 passed by the Sole Arbitrator, observing

therein that the impugned arbitral award is patently illegal and in

contravention of the settled principle of law.

3. The brief facts, essential for the consideration of the instant appeal, are

that the Central Warehousing Corporation (in short ‘CWC’), Respondent

herein, had published a notice inviting tender on 26

th

April, 2011 for

construction of a 2400 MT capacity godown along with RCC drain,

internal road and electrical installation at C.W. Santragachi, for an

estimated cost of Rs. 65.97 lakhs.

4. The Appellant participated in the tender and was adjudged the lowest

bidder, pursuant to which a Letter of Acceptance was issued on 30

th

July, 2011 and a work order on 13

th

September, 2011, with the

contractual amount standing at Rs. 80,34,247.30/-. The parties entered

into a formal agreement on 2

nd

December, 2011, and though the work

was originally to be completed within 6 months, it was ultimately

completed only on 24

th

August, 2013.

5. The Corporation deducted penalties and withheld payments from the

final bill, giving rise to a dispute between the parties, following which the

Respondent invoked the arbitration clause on 1

st

January, 2019. In

3

terms of the contract, the Managing Director of the

Respondent/Corporation appointed Mr. Madhuresh Kumar (Retired

IRSE), a retired employee of the Corporation, as the Sole Arbitrator, who

entered upon reference vide letter dated 29

th

January, 2019. The

Claimant submitted its statement of claim on 20

th

March, 2019 claiming

Rs. 16,37,159/- with interest @ 18% p.a. from 24

th

August, 2013, while

the Corporation submitted its statement of defence on 21

st

June, 2019

along with a counterclaim of Rs. 47,58,275/- towards loss of business

and Rs. 45,60,000/- towards establishment charges.

6. After hearing the parties at length, the learned Arbitrator passed the

impugned award granting Rs. 16,15,017/- with interest @ 10% p.a. till

realisation to the Appellant/Claimant, while rejecting the Respondent's

counterclaim in its entirety, i.e., the award that was assailed by the

Respondent in Section 34 proceedings, with the Appellant having filed a

written objection, but, not having appeared to argue the matter at the

time of hearing.

7. The Respondent/Corporation challenged the award before the learned

Single Judge, under Section 34 of the Arbitration Act. The Court, having

relied upon several judgments, held that once a person becomes ineligible

under Section 12(5) read with the Seventh Schedule of the Arbitration

Act, such ineligibility also extinguishes the power to nominate a

substitute arbitrator, and that mere participation of a party in the

arbitral proceedings does not amount to a waiver of the right to object,

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which can only be effected by an "express agreement in writing" entered

into after disputes have arisen. Applying this principle, the Court set

aside the impugned award, holding the unilateral appointment of the

Arbitrator void ab initio and the Arbitrator de jure incapable of performing

his functions for want of inherent jurisdiction.

SUBMISSION ON THE BEHALF OF APPELLANT:

8. Learned counsel appearing on behalf of the Appellant submitted that the

Learned Single Judge has erred in facts and law while rejecting the

application filed by the Appellant under Section 34 of the Arbitration Act.

The learned Single Judge also did not consider that the arbitrator was

appointed on the basis of reference made by the Appellant invoking the

arbitration agreement as contained in Clause 25 of the Condition of

Contract arising out of and in connection with work of 2400 MT capacity

godown along with RCC drain, internal road and electrical installation at

C.W. Santragachi and, at the time of appointment of arbitrator or even at

the time of consideration of the arbitration proceedings by the arbitrator,

the Respondent herein did not raise any issue with regard to the

appointment of the arbitrator. Furthermore, the arbitrator was a retired

employee. Therefore, there is no question of biasness. The arbitrator

decided the award in accordance with law without any error or perversity.

Therefore, interference by the learned Judge under Section 34 of the

Arbitration Act is not called for.

5

9. Learned counsel appearing on behalf of the Appellant has placed reliance

on the following judgments to support of his contention that once the

arbitration proceedings are initiated and decided without any objection

and demur of the parties, the same cannot be said patently illegal or void:

i. Hindustan Construction Company Ltd. through its Authorised

Signatory Yogesh Dalal Vs. Bihar Rajya Pul Nirman Nigam

Limited and Ors.

1

;

SUBMISSIONS ON BEHALF OF THE RESPONDENT:

10. Per contra, learned counsel appearing on behalf of the Respondent

vehemently opposed the submission made by the learned counsel

appearing on behalf of the Appellant and further submitted that after the

amendment in Arbitration Act, the Managing Director is not an

appropriate authority to appoint the arbitrator. The arbitrator appointed

was actually ex-employee. Once a person becomes statutory ineligible for

holding a post of arbitrator under Section 12(5) of the Arbitration Act, the

arbitrator loses the power of taking proceedings under Arbitration Act as

he was nominated by a Managing Director who is not the appointing

authority unilaterally. The appointment of the arbitrator must be in

accordance with law.

11. It was further submitted that even if the Respondent did not raise any

question with regard to the appointment of arbitrator at the time of

appointment or even during arbitration proceedings, the same does not

1

(2026) 3 SCC 264

6

come within the scope of estoppels or waiver in view of the provision of

Section 12(5). Therefore, the learned Judge rightly allowed the

application filed under Section 34 of the Arbitration Act and set aside the

impugned Award, since it was passed by the Arbitrator, who was not

competent as per the law of Arbitration.

12. Learned counsel appearing on behalf of the Respondent has placed

reliance on the following judgments to bolster his aforesaid submissions:

i. Bhadra International (India) Pvt. Ltd. and Ors. Vs. Airports

Authority of India

2

;

ii. Perkins Eastman Architects DPC and Anr. Vs. HSCC (India)

Ltd.

3

;

iii. Bharat Broadband Network Ltd. Vs. United Telecoms Ltd.

4

.

DISCUSSION AND FINDINGS: -

13. Having heard the learned counsels for the respective parties, perusal of

the judgments relied upon by the parties and legal provisions of the

Arbitration Act, this court finds the following issue, as raised by the

parties, falls for consideration as under:

 Whether the learned Judge erred in setting aside the award, holding

that the unilateral appointment was void ab initio and the arbitrator was

incapable of performing his functions for want of inherent jurisdiction?

2

2026 SCC OnLine SC 7

3

(2020) 20 SCC 760 : 2019 SCC OnLine SC 1517

4

(2019) 5 SCC 755 : 2019 SCC OnLine SC 547.

7

14. Before deciding this issue, this court would like to look into the relevant

legal provisions as applicable for appointment of the Arbitrator upon

reference by any of the parties and its inherent jurisdiction.

Section 11 (6), 12, 15 (2) and 29A of the Arbitration and

Conciliation Act, 1996 reads as under:

11(6). Where, under an appointment procedure agreed upon by the parties,—

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement

expected of them under that procedure; or

(c) a person, including an institution, fails to perform any function entrusted to

him or it under that procedure, a party may request 1[the Supreme Court or, as

the case may be, the High Court or any person or institution designated by such

Court] to take the necessary measure, unless the agreement on the appointment

procedure provides other means for securing the appointment. 2

[(6A) The Supreme Court or, as the case may be, the High Court, while

considering any application under sub-section (4) or sub-section (5) or sub-section

(6), shall, notwithstanding any judgment, decree or order of any Court, confine to

the examination of the existence of an arbitration agreement.

(6B) The designation of any person or institution by the Supreme Court or, as the

case may be, the High Court, for the purposes of this section shall not be

regarded as a delegation of judicial power by the Supreme Court or the High

Court.]

12. Grounds for challenge.—1[(1) When a person is approached in connection with

his possible appointment as an arbitrator, he shall disclose in writing any

circumstances,—

(a) such as the existence either direct or indirect, of any past or present

relationship with or interest in any of the parties or in relation to the subject-

matter in dispute, whether financial, business, professional or other kind, which

is likely to give rise to justifiable doubts as to his independence or impartiality;

and

(b) which are likely to affect his ability to devote sufficient time to the arbitration

and in particular his ability to complete the entire arbitration within a period of

twelve months.

Explanation 1.—The grounds stated in the Fifth Schedule shall guide in

determining whether circumstances exist which give rise to justifiable doubts as

to the independence or impartiality of an arbitrator.

Explanation 2.—The disclosure shall be made by such person in the form

specified in the Sixth Schedule.]

(3) An arbitrator may be challenged only if—

(a) circumstances exist that give rise to justifiable doubts as to his

independence or impartiality, or

(b) he does not possess the qualifications agreed to by the parties.

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(4) A party may challenge an arbitrator appointed by him, or in whose

appointment he has participated, only for reasons of which he becomes aware

after the appointment has been made.

[(5) Notwithstanding any prior agreement to the contrary, any person whose

relationship, with the parties or counsel or the subject-matter of the dispute, falls

under any of the categories specified in the Seventh Schedule shall be ineligible

to be appointed as an arbitrator: Provided that parties may, subsequent to

disputes having arisen between them, waive the applicability of this sub-section

by an express agreement in writing.]

15(2). Where the mandate of an arbitrator terminates, a substitute arbitrator shall

be appointed according to the rules that were applicable to the appointment of the

arbitrator being replaced.

[29A.Time limit for arbitral award.—(1) The award shall be made within a period of

twelve months from the date the arbitral tribunal enters upon the reference.

Explanation.—For the purpose of this sub-section, an arbitral tribunal shall be

deemed to have entered upon the reference on the date on which the arbitrator or

all the arbitrators, as the case may be, have received notice, in writing, of their

appointment.

(2) If the award is made within a period of six months from the date the arbitral

tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive

such amount of additional fees as the parties may agree.

(3) The parties may, by consent, extend the period specified in sub-section (1) for

making award for a further period not exceeding six months.

(4) If the award is not made within the period specified in sub-section (1) or the

extended period specified under sub-section (3), the mandate of the arbitrator(s)

shall terminate unless the Court has, either prior to or after the expiry of the

period so specified, extended the period:

Provided that while extending the period under this sub-section, if the Court finds

that the proceedings have been delayed for the reasons attributable to the

arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not

exceeding five per cent. for each month of such delay.

(5) The extension of period referred to in sub-section (4) may be on the application

of any of the parties and may be granted only for sufficient cause and on such

terms and conditions as may be imposed by the Court.

(6) While extending the period referred to in sub-section (4), it shall be open to the

Court to substitute one or all of the arbitrators and if one or all of the arbitrators

are substituted, the arbitral proceedings shall continue from the stage already

reached and on the basis of the evidence and material already on record, and the

arbitrator(s) appointed under this section shall be deemed to have received the

said evidence and material.

(7) In the event of arbitrator(s) being appointed under this section, the arbitral

tribunal thus reconstituted shall be deemed to be in continuation of the previously

appointed arbitral tribunal.

(8) It shall be open to the Court to impose actual or exemplary costs upon any of

the parties under this section.

(9) An application filed under sub-section (5) shall be disposed of by the Court as

expeditiously as possible and endeavour shall be made to dispose of the matter

9

within a period of sixty days from the date of service of notice on the opposite

party.

# On 23.10.2015, the Arbitration and Conciliation (Amendment) Act, 2015 came

into effect (for short, “the Amendment Act, 2015 ”), by which sub-section (5)

was inserted into Section 12. The provision reads thus:—

“[(5) Notwithstanding any prior agreement to the contrary, any person whose

relationship, with the parties or counsel or the subject-matter of the dispute,

falls under any of the categories specified in the Seventh Schedule shall be

ineligible to be appointed as an arbitrator:

Provided that parties may, subsequent to disputes having arisen between

them, waive the applicability of this sub-section by an express agreement in

writing.]”

15. In the year 2017, the Appellant vide notice dated 01.01.2017 invoked the

arbitration clause and requested the Managing Director to appoint an

Arbitrator in terms of clause 25 of the conditions of contract arising out

of and in connection with the work “Construction of 2400 MTC godown

along with internal roads & electrical installation at CWC Santragachi”.

The Managing Director of the Respondent/Corporation vide his letter

dated 25.01.2019, appointed Mr. Madhuresh Kumar (Retired IRSE), a

retired employee of the Corporation, as the Sole Arbitrator, who entered

upon reference vide letter dated 29

th

January, 2019 and decided the

Arbitration proceedings in favour of the Appellant and passed an Award

directing the payment of Rs. 16,15,017/- including release of full amount

of the SD withheld, to be paid by the Corporation to the Claimant. In

addition, future interest @ 10% per annum simple interest shall be

payable on the awarded amount from the date of Award to the date of

actual payment. It was further directed that no future interest shall be

payable if the Arbitral Award amount is paid within 90 days of the

publication of the Award.

10

16. The impugned Award was challenged under Section 34 of the Arbitration

Act, before the learned Judge, Commercial Court, who in turn set aside

the Award as aforesaid only on the ground that the Award was passed by

the Arbitrator, which is patently illegal and in contravention of the settled

principle of law.

17. On the aforesaid issue, the learned Judge, Commercial Court, in its

impugned judgment, held that the appointment for the sole arbitrator

was unilateral, as the Managing Director had proceeded to appoint the

arbitrator only pursuant to the written request of the Appellant and

considering the clause 25 of the General Conditions of Contract that is

contrary to law relying on following judgments:

 TRF Ltd. v. Energo Engineering Projects Ltd. (2017) 8 SCC 377: It

was held that once a person becomes statutorily ineligible under Section

12(5), they also lose the power to nominate a substitute arbitrator ("once

the infrastructure collapses, the superstructure is bound to collapse").

 Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2020) 20 SCC

760: This judgment extended such disqualification to unilateral

appointments by an interested Managing Director.

 Bharat Broadband Network Ltd. v. United Telecoms Ltd. (2019) 5

SCC 755: The learned Judge relied upon this judgment on the limited

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

 Cholamandalam Investment v. Amrapali Enterprises2023 SCC

OnLine Cal 605: This judgment was relied upon holding that unilateral

arbitrator appointments are void ab initio, and any award there from a de

jure ineligible/unilaterally appointed arbitrator is without jurisdiction.

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18. The clause 25 of the General Conditions of Contract is stipulated, inter

alia, in verbatim as follows:

“CLAUSE 25. Except where otherwise provided in the contract all arising out

of or relating to the contract, designs, drawing, questions and disputes

relating to the meaning of the specifications, designs, drawings and

instructions herein before mentioned and as to the quality of workmanship

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

matter or thing whatsoever, in any way specifications, estimates,

instructions orders or these conditions or otherwise concerning the works, 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 referred to the sole arbitration of the person

appointed by the Managing Director, Central Warehousing Corporation at the

time of dispute or if there be no Managing Director, Central Warehousing

Corporation, the Administrative Head of the said Central Warehousing

Corporation at the time of such appointment.

There will be no objection to any such appointment that the arbitrator so

appointed is an employee/ retired employee of the Corporation that he had

to deal with the matters to which the contract relates and that in course of

his duties as Corporation employee, he had expressed views on all or any of

the matters in the dispute or difference.

If the arbitrator so appointed is unable or unwilling to act or resigns his

appointment or vacates his office due to any reason whatsoever or is

heavenly abode, 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 this

contract that no person other than a person appointed by the Managing

Director or Administrative Head of the Central Warehousing Corporation as

aforesaid should act as an arbitrator and if for any reason that is not

possible, the matter is not to be referred to arbitration at all.

12

It is a term of this contract that the party invoking arbitration shall give a list

of disputes, with amounts claimed in respect of each such dispute along

with the notice for appointment of arbitrator.”

19. Clause 25 of the General Conditions of Contract vests the power of

appointing the Sole Arbitrator exclusively in the Managing Director of

CWC, a serving officer of one of the parties to the dispute, and, failing

him, in the Corporation's Administrative Head. The clause further

stipulates, as a pre-dispute term, that there shall be no objection to the

appointee being an employee or retired employee of the Corporation, who

had dealt with the very matters in dispute, and it forecloses arbitration

altogether if a person so appointed by the Managing

Director/Administrative Head is, for any reason, unable to act, the

matter is not to be referred to arbitration at all.

20. The Appellant may seek to press the specific stipulation in Clause 25,

that there shall be no objection to the arbitrator being an employee or

retired employee of the Corporation, who had dealt with the disputed

matters, as a standing, contractually consented and agreed waiver. That

submission cannot be accepted, for two independent reasons.

21. First, Section 12(5) opens with the words “notwithstanding any prior

agreement to the contrary”. Clause 25 can precisely be identified as a

prior agreement of such nature, incorporated into the contract at the

time it was executed, long before any dispute arose. The non-obstante

clause was designed for exactly this situation, to prevent standard-form

contractual terms of this kind, agreed at arm's length before any dispute

13

crystallised, from insulating an appointment mechanism that the 2015

Amendment intended to render impermissible.

22. The proviso to Section 12(5) permits only one route out: an express

agreement in writing entered into after the disputes have arisen. A pre-

dispute clause of general application, drafted into the standard

conditions of contract, does not meet that description, however, clearly

worded.

23. Second, independently, even if Clause 25 were treated as bearing on

waiver, mere participation in the reference, i.e., filing pleadings,

contesting the claim on merits, or seeking extensions, does not itself

amount to the express written waiver the proviso requires, as the Hon’ble

Supreme Court has reaffirmed in Bharat Broadband Network Ltd. v.

United Telecoms Ltd. (Supra) , and again in Bhadra International

(India) Pvt. Ltd. v. Airports Authority of India (Supra). Nothing on

this record suggests any distinct, post-dispute written instrument

between the parties recording an informed waiver by the Appellant of the

objection to the Managing Director's unilateral power of appointment.

24. The reliance placed by the Appellant on Hindustan Construction

Company Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd. (Supra) is not of

great assistance. The said decision was concerned with the finality of an

appointment order under Section 11 of the Arbitration Act, and with

waiver by conduct under the general provision of Section 4 read with

Section 16. The ineligibility contemplated under Section 12(5) read with

14

the Seventh Schedule stands on a different footing. It opens with its own

non-obstante clause and is curable only in the manner prescribed by its

proviso, i.e., by an express agreement in writing entered into after

disputes have arisen. A general waiver-by-conduct principle applicable to

procedural objections cannot override this specific statutory mode of

waiver.

25. That apart, this Court considers it necessary to clarify the true basis on

which the present appointment falls foul of Section 12(5). It is not the

fact that Mr. Madhuresh Kumar was a retired employee of the

Respondent/Corporation, by itself, that renders him ineligible. The

Seventh Schedule of the Arbitration Act disqualifies any person who is

“an employee, consultant, advisor or has any other past or present

relationship with a party”.

26. However, the issue in the present case lies in the appointing authority,

and not merely in the identity of the appointed arbitrator. At the risk of

repetition, clause 25 of the General Conditions of Contract vests the

power to appoint the Sole Arbitrator exclusively in the Managing Director

of the Respondent/Corporation, who is a serving officer of one of the

parties to the dispute, and, failing him, in the Corporation's

Administrative Head, again an officer of the Respondent. The Managing

Director, being a person interested in the outcome of the dispute by

virtue of his very office, is himself rendered ineligible under Section 12(5)

read with the Seventh Schedule. It is by now well settled, commencing

15

with TRF Ltd. v. Energo Engineering Projects Ltd. (Supra) , and

thereafter in Perkins Eastman Architects DPC v. HSCC (India) Ltd.

(Supra), that once the appointing authority is himself ineligible to act as

an arbitrator, he is equally incompetent to nominate any other person as

arbitrator, "once the infrastructure collapses, the superstructure is

bound to collapse" with it. Therefore it does not matter whether the

appointee happened to be a serving or a retired employee of the

Corporation: the appointment stands vitiated at its very source, in the

unilateral exercise of power by an interested Managing Director, a vice

this Court's own precedent in Cholamandalam Investment and

Finance Co. Ltd. v. Amrapali Enterprises (Supra) has held, renders

the resultant award, and the Arbitrator's very jurisdiction to render it, a

nullity, incapable of being cured.

27. For the reasons aforesaid, this Court finds no infirmity in the view taken

by the learned Judge, Commercial Court, that the appointment of the

Sole Arbitrator was unilateral and void ab initio, and that the Arbitrator

was rendered de jure incapable of performing his functions for want of

inherent jurisdiction.

28. Accordingly, AO-COM 35 of 2025 is dismissed.

29. There shall be no order as to costs.

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30. Urgent photostat certified copy of this Judgment, if applied for, is to be

given to the parties on priority basis on compliance of all legal formalities.

I Agree.

(Debangsu Basak, J.) (Ajay Kumar Gupta, J.)