FAO(OS) (COMM) 246/2026 Page 1 of 20

$~

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 10.09.2026

Judgment pronounced on: 25.09.2026

Judgment uploaded on: 25.09.2026

# CNR No. DLHC010430852026

+ FAO(OS) (COMM) 246/2026, CM APPL. 61809/2026 and CM

APPL. 61810/2026

M/S AHLUWALIA CONTRACTS (INDIA) LIMITED (ACIL)

.....Appellant

Through: Mr. Anil Airi, Sr. Adv. with

Mr. Dhruv Rohatgi, Ms.

Chandrika Sachdev, Mr. Dhruv

Kumar & Mr. Harsh Gautam,

Advs.

versus

AIRPORTS AUTHORITY OF INDIA (AAI) .....Respondent

Through: Mr. Vaibhav Kalra, Ms. Neha

Bhatnagar & Mr. Deepankar

Singh, Advs.

CORAM:

HON'BLE MR. JUSTICE ANIL KSHETARPAL

HON'BLE MR. JUSTICE VIMAL KUMAR YADAV

J U D G M E N T

ANIL KSHETARPAL, J.:

1. The present Appeal under Section 37 of the Arbitration and

Conciliation Act, 1996 [hereinafter referred to as the „A&C Act‟], has

been preferred by the Appellant, M/s Ahluwalia Contracts (India) Ltd.

(„ACIL‟), assailing the judgment dated 20.07.2026 [hereinafter

referred to as „Impugned Judgment‟] passed by the learned Single

Judge in OMP (COMM.) No.512/2023, whereby the petition preferred

FAO(OS) (COMM) 246/2026 Page 2 of 20

by the Respondent [hereinafter referred to as „Section 34 Petition‟],

Airports Authority of India („AAI‟), under Section 34 of the A&C Act

was allowed and the arbitral award dated 10.08.2023 [hereinafter

referred to as „Award‟] was set aside.

2. The controversy in the present Appeal is confined to the

constitution of the Arbitral Tribunal and, in particular, the

appointment of the Sole Arbitrator by AAI. The principal grievance of

the Appellant is that the learned Single Judge, while entertaining the

challenge under Section 34 of the A&C Act, proceeded to examine the

validity of the appointment of the Sole Arbitrator on the basis of the

judgment of the Supreme Court in Bhadra International (India) Pvt.

Ltd. & Ors. v. Airports Authority of India

1

[hereinafter referred to as

„Bhadra International‟], although no challenge to the appointment of

the Sole Arbitrator had been raised by AAI either during the arbitral

proceedings or in its Section 34 Petition.

3. The Appellant contends that the factual premise underlying

Bhadra International was materially different, inasmuch as the

challenge therein was raised by the party which had not participated in

or made the unilateral appointment of the arbitrator. According to the

Appellant, the principle laid down therein cannot be mechanically

extended to a case where the very party which had appointed the Sole

Arbitrator itself seeks to question the appointment, after having

participated in the arbitral proceedings without demur and after the

Award had been rendered.

1

2026 INSC 6

FAO(OS) (COMM) 246/2026 Page 3 of 20

FACTUAL MATRIX:

4. The facts, insofar as relevant for adjudication of the present

Appeal, may briefly be noticed.

5. AAI awarded the work to ACIL on 21.01.2009, pursuant to

which the Contract Agreement was executed between the parties on

02.02.2009. The stipulated date of commencement of the work was

31.01.2009. Disputes subsequently arose between the parties, inter

alia, in relation to the levy of compensation by AAI. AAI issued a

Show Cause Notice dated 18.09.2015 proposing levy of

compensation, to which ACIL submitted its reply on 06.10.2015.

Thereafter, AAI, vide communication dated 29.12.2015, levied

compensation of Rs.1,45,50,192/- retrospectively.

6. ACIL thereafter invoked the contractual dispute resolution

mechanism and, on 07.05.2016, requested AAI to constitute the

Dispute Resolution Board [hereinafter referred to as „DRB‟] in terms

of Clause 57(a)(i) of the Contract Agreement. The DRB submitted its

recommendations on 05.10.2017. AAI, however, conveyed its

decision on 01.03.2019, rejecting the review of the delay analysis and

confirming the levy of compensation.

7. Aggrieved by the aforesaid decision, ACIL, vide notice dated

16.04.2019, invoked arbitration under Clause 57(b) of the Contract

Agreement and requested AAI to appoint an independent arbitrator for

adjudication of the disputes between the parties.

FAO(OS) (COMM) 246/2026 Page 4 of 20

8. Pursuant thereto, AAI, vide email dated 10.05.2019, intimated

the proposed Sole Arbitrator regarding his appointment and called

upon him to convey his consent to the appointment. AAI also sought

the requisite declaration from the proposed Arbitrator in terms of the

Fifth and Sixth Schedules to the A&C Act. The proposed Sole

Arbitrator furnished his consent and declaration under Section

12(1)(b) of the A&C Act on 12.05.2019. Thereafter, vide letter dated

13.05.2019, AAI formally intimated the appointment of Shri S.C.

Gupta, Chief Engineer (Retd.), CPWD, as the Sole Arbitrator to

adjudicate the disputes between the parties.

9. The Sole Arbitrator entered upon the reference and conveyed

his acceptance of the appointment on 26.05.2019. During the course

of the arbitral proceedings, issues also arose regarding reference of

additional claims and the counter-claims of AAI. The Sole Arbitrator

sought appropriate approval from the competent authority of AAI for

reference of such claims. AAI thereafter took steps for reference of

Claim No. 5.7 and its counter-claims to the Sole Arbitrator.

10. The arbitral proceedings continued from 2019 to 2023. Both

parties participated in the proceedings and, as per the record placed

before this Court, no objection was raised by either party to the

appointment of the Sole Arbitrator or alleging any bias on his part.

The parties thereafter completed their respective pleadings and

arguments before the Sole Arbitrator.

11. On 10.08.2023, the Sole Arbitrator rendered the Award. Claim

No.1 was allowed and Claim No.4 was partly allowed in favour of

FAO(OS) (COMM) 246/2026 Page 5 of 20

ACIL, along with interest under Claim No.5. Claim Nos.2, 3 and 6 as

well as the counter-claims of AAI were rejected.

12. Aggrieved by the Award, AAI preferred the Section 34 Petition

before the learned Single Judge in November 2023. The challenge was

founded on the merits of the award, particularly with respect to the

consideration of Claim Nos.1, 4 and 5 and the rejection of the counter-

claims. Significantly, no ground challenging the appointment of the

Sole Arbitrator, including on the basis of Section 12(5) read with the

Seventh Schedule to the A&C Act, was raised in the Section 34

proceedings.

13. The Section 34 Petition was thereafter taken up for hearing on

13.07.2026. The arguments advanced on behalf of AAI remained

confined to the merits of the claims and counter-claims, and no

application or objection was raised by AAI concerning the unilateral

appointment or constitution of the Arbitral Tribunal. It was during the

course of the hearing that the learned Single Judge, suomotu, raised a

query regarding the appointment of the Sole Arbitrator and adjourned

the matter for further consideration.

14. On 20.07.2026, after hearing the Appellant on the aspect of the

appointment of the Sole Arbitrator, the learned Single Judge allowed

the Section 34 Petition and set aside the Award. While doing so, the

learned Single Judge placed reliance, inter alia, upon the judgment of

the Supreme Court in Bhadra International and the decisions of this

Court in Railways Board, Ministry of Railways v. Titagarh Rail

FAO(OS) (COMM) 246/2026 Page 6 of 20

Systems Ltd.

2

; and Engineering Projects (India) Ltd. v. Allied

Construction

3

.

15. It is in the aforesaid circumstances that the present Appeal has

been preferred. The Appellant principally assails the learned Single

Judge‟s decision to set aside the Award on a ground concerning the

appointment of the Sole Arbitrator, notwithstanding that the party

which had itself appointed the Sole Arbitrator had not raised any such

objection either before the Arbitral Tribunal or in the Section 34

proceedings.

CONTENTIONS OF THE P ARTIES:

16. Heard learned senior counsel and learned counsel representing

the respective parties, and with their able assistance, perused the paper

book.

17. Learned senior counsel representing the Appellant has made the

following submissions:

i. Learned Single Judge erred in applying the judgment in

Bhadra International to the facts of the present case. Bhadra

International concerned a challenge to a unilateral appointment

raised by the party which had not itself appointed the Arbitrator

and was consequently aggrieved by being denied an equal say in

the constitution of the Arbitral Tribunal. The present case,

according to the Appellant, stands on a materially different

footing, since it was AAI itself which appointed the Sole

2

2026:DHC:1720

3

2026:DHC:2540

FAO(OS) (COMM) 246/2026 Page 7 of 20

Arbitrator and subsequently participated in the arbitral

proceedings without raising any objection to his appointment.

ii. The expression „aggrieved party‟, in the context in which

the Supreme Court considered the issue in Bhadra International,

necessarily refers to a party aggrieved by the manner in which

the Arbitral Tribunal came to be constituted. A distinction must

therefore be maintained between a party which is aggrieved by

the appointment of an arbitrator and a party which, having

accepted the constitution of the Tribunal and participated in the

arbitral proceedings, is merely aggrieved by the ultimate award.

iii. AAI had consciously and expressly appointed Shri S.C.

Gupta as the Sole Arbitrator. Prior to the appointment, AAI had

itself called upon the proposed Arbitrator to furnish the requisite

declaration under the amended provisions of the A&C Act. The

Arbitrator thereafter furnished his declaration under Section

12(1)(b), and AAI proceeded with the arbitration without raising

any objection either to the declaration or to the constitution of the

Tribunal.

iv. The arbitration continued for nearly four years, during

which both parties participated in the proceedings, including in

relation to the reference of additional claims and counter-claims.

At no stage during this period was any objection raised by AAI

to the appointment of the Sole Arbitrator or any allegation made

regarding his independence or impartiality. AAI could not, after

having participated in the arbitral proceedings and suffered an

FAO(OS) (COMM) 246/2026 Page 8 of 20

Award adverse to it, seek to invalidate the entire arbitral process

on the basis of a defect in the very appointment which it had

itself made.

v. Learned Single Judge travelled beyond the scope of the

Section 34 proceedings in examining the appointment of the Sole

Arbitrator. AAI‟s Section 34 Petition did not contain any ground

under Section 12(5) read with the Seventh Schedule of the A&C

Act, and the challenge before the learned Single Judge was

confined to the merits of the claims and counter-claims. The

issue concerning the appointment was raised by the learned

Single Judge suomotu during the hearing and was thereafter

made the basis for setting aside the Award.

vi. The principle underlying Section 12(5) of the A&C Act

is intended to secure the independence and impartiality of the

Arbitral Tribunal and, in the context of a unilateral appointment,

principally protects the party which has not participated in the

appointment.

18. Per contra, learned counsel representing AAI, while supporting

the Impugned Judgment, has made the following submissions:

i. The mandate contained in Section 12(5) of the A&C Act,

as interpreted by the Supreme Court in Bhadra International,

cannot be defeated merely on the basis of the subsequent conduct

of the parties or their participation in the arbitral proceedings.

FAO(OS) (COMM) 246/2026 Page 9 of 20

ii. Learned Single Judge was, therefore, justified in

examining the validity of the appointment of the Sole Arbitrator

and in applying the principles laid down by the Supreme Court in

Bhadra International. The question of the validity of the

constitution of the Arbitral Tribunal is distinct from the merits of

the Award and, if the Tribunal itself was not validly constituted,

the resulting award could not be sustained.

iii. The fact that the objection to the appointment was not

specifically raised in the Section 34 Petition does not preclude

the Court from examining the legality of the constitution of the

Arbitral Tribunal where the defect goes to the root of the

proceedings. Reliance is accordingly placed upon the reasoning

adopted by the learned Single Judge in the Impugned Judgment.

19. No other submission has been advanced by learned senior

counsel and learned counsel representing the respective parties.

ANALYSIS AND FINDINGS:

20. This Court has considered the submissions advanced by learned

senior counsel and learned counsel representing the respective parties

and has perused the material placed on record.

21. As already noticed hereinabove, the question which arises for

consideration is whether, after the enforcement of the Arbitration and

Conciliation (Amendment) Act, 2015, the appointment of the Arbitral

Tribunal by one of the parties, in the absence of an express agreement

FAO(OS) (COMM) 246/2026 Page 10 of 20

in writing subsequent to the disputes having arisen, would amount to

waiver of the applicability of Section 12(5) of the A&C Act.

22. The answer to the aforesaid question is no longer res integra.

The statutory scheme contained in Section 12(5) of the A&C Act, as

also the interpretation placed thereon by the Supreme Court and this

Court, makes it clear that the waiver contemplated by the proviso to

Section 12(5) is of a particular and specific nature. It cannot be

inferred merely from the conduct of the parties, from the fact that a

party itself appointed the arbitrator, or from the participation of the

parties in the arbitral proceedings.Waiver, in a general sense, may in

an appropriate case be inferred from conduct or from other

circumstances. However, where the statute itself prescribes the

manner in which a party may waive the applicability of a statutory

provision, the Court cannot substitute the statutorily prescribed mode

with an implied waiver. The proviso to Section 12(5) expressly

requires an agreement in writing, subsequent to the disputes having

arisen between the parties.

23. Section 12(5) of the A&C Act, as introduced by the Arbitration

and Conciliation (Amendment) Act, 2015, reads as under:

“12. Grounds for challenge

…

(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.”

FAO(OS) (COMM) 246/2026 Page 11 of 20

24. On a plain reading of the aforesaid provision, it becomes

evident that the legislature has consciously prescribed three essential

requirements for waiver: (i) the waiver must be subsequent to the

disputes having arisen between the parties; (ii) it must be by

agreement between the parties; and (iii) such agreement must be

express and in writing. Thus, the statutory provision does not

contemplate a waiver by implication or by conduct.

25. The aforesaid interpretation has been authoritatively settled by

the Supreme Court in Bhadra International. The Supreme Court,

after examining the scope and effect of the proviso to Section 12(5) of

the A&C Act, has explained the requirements of such waiver in the

following terms:

“75. The essentials of the proviso to Section 12(5) are:-

i. The parties can waive their right to object under sub-section (5)

of Section 12;

ii. The right to object under the sub-section can be waived only

subsequent to a dispute having arisen between the parties;

iii. The waiver must be in the form of an express agreement in writing.

***

78. What flows from the aforesaid is when a right exists, i.e., the

right to object to the appointment of an ineligible arbitrator in terms

of

Section 12(5), such a right cannot be taken away by mere implication.

For a

party to be deprived of this right by way of waiver, there must be a

conscious

and unequivocal expression of intent to relinquish it. Needless to say,

for a

waiver to be valid, it is necessary that the actor demonstrates the

intention

to act, and for an act to be intentional, the actor must understand the

act and

its consequences.

***

FAO(OS) (COMM) 246/2026 Page 12 of 20

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

agreement. However, the absence of a prescribed format cannot be

construed t o

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. ”

26. The significance of the aforesaid decision becomes apparent

from the facts of Bhadra International itself. In that case, the

Arbitrator had, in Procedural Order No.1, specifically recorded that

none of the parties had any objection to his appointment as the Sole

Arbitrator. Despite such factual position, the correctness of which was

not disputed, the Supreme Court held that such an observation

recorded in the procedural order could not amount to waiver,

particularly when the statute envisages waiver only by an express

agreement in writing subsequent to the disputes having arisen between

the parties.

27. Thus, the mere fact that a party may have proceeded with the

arbitration with knowledge of the constitution of the Arbitral Tribunal

cannot be elevated to an express agreement in writing as contemplated

by the proviso to Section 12(5) of the A&C Act. The statutory

requirement is not satisfied by acquiescence, participation or conduct.

The requirement is of an agreement, expressed in writing, between the

parties after the disputes have arisen.

FAO(OS) (COMM) 246/2026 Page 13 of 20

28. The aforesaid principle has also been applied by the Division

Bench of this Court in Titagarh Rail Systems(supra). The Division

Bench has specifically rejected the contention that following the

contractual procedure for appointment of an arbitrator, by itself, could

result in waiver of the applicability of Section 12(5) of the A&C Act.

The relevant observations read as under:

“27. While it may be true that the procedure followed by the parties

was that which was envisaged, in the contract between them, as

applying where there was waiver of Section 12(5), following of the

procedure cannot by itself result in such waiver. The argument

effectively puts the cart before the horse. There must, in the first

instance, be waiver of the applicability of Section 12(5) by written

agreement in writing as required by the proviso to the said clause

read with the decision in Bhadra International, and, only thereafter, if

there exists such express waiver in writing, would the arbitral

procedure envisaged in that situation as contained in Clause

2905(a)(ii) apply. The situation cannot be read in reverse. We cannot

accept the argument that by invoking the procedure applicable in a

case of waiver of Section 12(5), Section 12(5) stands waived, despite

the absence of any written agreement in writing to that effect.

28. In fact, the situation which exists in the present case is that the

very invocation of the procedure, envisaged in the contract between

the parties as being applicable in a case in which Section 12(5) stood

waived, was itself illegal. That procedure applies only where there is

waiver of the applicability of Section 12(5). Inasmuch as there was no

such waiver in the present case, the procedure itself would not apply.

By erroneously invoking the procedure which applies where Section

12(5) has been waived, waiver of Section 12(5) cannot be implied.”

29. The principle emerging from the aforesaid decisions is,

therefore, clear. The fact that a party has acted in accordance with the

contractual mechanism for appointment cannot, in the absence of an

express agreement in writing subsequent to the disputes, constitute

waiver of the applicability of Section 12(5) of the A&C Act. The

contractual mechanism cannot be permitted to operate in a manner

contrary to the mandatory statutory requirement.

FAO(OS) (COMM) 246/2026 Page 14 of 20

30. In the present case, it is not in dispute that AAI appointed the

Sole Arbitrator in exercise of the power conferred upon it under

Clause 57(c) of the Contract Agreement. It is also not in dispute that

the appointment was made after the disputes had arisen between the

parties. However, there is admittedly no express agreement in writing

between the parties, subsequent to the disputes having arisen, whereby

the applicability of Section 12(5) of the A&C Act was waived.

31. The Appellant seeks to overcome this statutory requirement

by placing reliance upon the fact that AAI itself appointed the Sole

Arbitrator, participated in the arbitral proceedings for several years

and did not raise any objection to the constitution of the Arbitral

Tribunal until after the Award was rendered. However, these

circumstances, even taken cumulatively, cannot constitute the express

agreement in writing mandated by the proviso to Section 12(5) of the

A&C Act.

32. In this regard, reliance placed by the Appellant upon the fact

that it was AAI itself which appointed the Sole Arbitrator is of no

avail. The precise question whether a party which has itself made the

unilateral appointment can subsequently object to the appointment has

also been considered by the Division Bench of this Court in Mahavir

Prasad Gupta and Sons v. Govt. of NCT of Delhi

4

. The Division

Bench considered the question whether the act of unilateral

appointment itself could constitute an express agreement to waive the

statutory ineligibility and held as under:

“79. Hence, exercise of power to unilaterally appoint the arbitrator by

a party cannot be termed as express agreement to waive the invalidity

4

2025 SCC OnLine Del 4241

FAO(OS) (COMM) 246/2026 Page 15 of 20

of the arbitration agreement providing for unilateral appointment. For

waiver under Section 12(5) of the Act after the dispute have arisen, the

parties are required to consciously agree in writing to waive the

ineligibility of the arbitrator. Grounds of ineligibility of the arbitrator

under Seventh Schedule are derived from Red List of IBA Rules on

Conflict of Interest in International Commercial Arbitration. The Act

was as amended in 2015 to provide a detailed framework to address

arbitrator bias. This framework includes the Fifth and Seventh

Schedules, which draw from the Orange and Red Lists of the IBA

Guidelines, respectively. The Fifth Schedule requires arbitrators to

disclose any circumstances that might reasonably affect their

impartiality, including relationships with the parties, counsel, or

subject matter of the dispute. The Seventh Schedule reflecting the Red

List, outlines scenarios of relationship conflict that would result in de

jure ineligibility of an arbitrator.”

33. The aforesaid decision is of particular relevance to the

submission advanced by learned senior counsel representing the

Appellant. The mere fact that the appointment was made by AAI does

not amount to an express agreement in writing by both parties to

waive the applicability of Section 12(5) of the A&C Act. The act of

appointment and the statutory waiver contemplated by the proviso

operate in distinct fields and cannot be equated with each other.

34. Significantly, the Division Bench in Mahavir Prasad Gupta

(supra)ultimately upheld the setting aside of the award on the ground

of unilateral appointment. The Supreme Court thereafter declined to

interfere with the judgment of the Division Bench in the Special

Leave Petition. The aforesaid position thus lends further consistency

to the interpretation adopted by this Court regarding the mandatory

nature of the proviso to Section 12(5) of the A&C Act.

35. The question posed before this Court is also directly answered

by the judgment of the Supreme Court in Bharat Broadband Network

FAO(OS) (COMM) 246/2026 Page 16 of 20

Ltd. v. United Telecoms Ltd.

5

. In the said case, the Supreme Court

considered the precise question as to whether the appointment of an

ineligible arbitrator by the party having the power of appointment

could itself amount to an express waiver under the proviso to Section

12(5) of the A&C Act. The Supreme Court held that it could not.

36. The Supreme Court, in Paragraph No.20 of Bharat

Broadband (supra), interpreted the expression “express agreement in

writing” occurring in the proviso to Section 12(5) of the A&C Act in

the following terms:

“20. This then brings us to the applicability of the proviso to Section

12(5) on the facts of this case. Unlike Section 4 of the Act which deals

with deemed waiver of the right to object by conduct, the proviso to

Section 12(5) will only apply if subsequent to disputes having arisen

between the parties, the parties waive the applicability of sub-section

(5) of Section 12 by an express agreement in writing. For this reason,

the argument based on the analogy of Section 7 of the Act must also

be rejected. Section 7 deals with arbitration agreements that must be

in writing, and then explains that such agreements may be contained

in documents which provide a record of such agreements. On the

other hand, Section 12(5) refers to an “express agreement in writing”.

The expression “express agreement in writing” refers to an

agreement made in words as opposed to an agreement which is to be

inferred by conduct. Here, Section 9 of the Contract Act, 1872

becomes important. It states:

“9. Promises, express and implied.—Insofar as the

proposal or acceptance of any promise is made in words,

the promise is said to be express. Insofar as such proposal

or acceptance is made otherwise than in words, the

promise is said to be implied.”

It is thus necessary that there be an “express” agreement in writing.

This agreement must be an agreement by which both parties, with full

knowledge of the fact that Shri Khan is ineligible to be appointed as

an arbitrator, still go ahead and say that they have full faith and

confidence in him to continue as such. The facts of the present case

disclose no such express agreement. The appointment letter which is

relied upon by the High Court as indicating an express agreement on

the facts of the case is dated 17-1-2017. On this date, the Managing

5

(2019) 5 SCC 755

FAO(OS) (COMM) 246/2026 Page 17 of 20

Director of the appellant was certainly not aware that Shri Khan

could not be appointed by him as Section 12(5) read with the Seventh

Schedule only went to the invalidity of the appointment of the

Managing Director himself as an arbitrator. Shri Khan's invalid

appointment only became clear after the declaration of the law by the

Supreme Court in TRF Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd.,

(2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] which, as we have seen

hereinabove, was only on 3-7-2017. After this date, far from there

being an express agreement between the parties as to the validity of

Shri Khan's appointment, the appellant filed an application on 7-10-

2017 before the sole arbitrator, bringing the arbitrator's attention to

the judgment in TRF Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd.,

(2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] and asking him to declare

that he has become de jure incapable of acting as an arbitrator.

Equally, the fact that a statement of claim may have been filed before

the arbitrator, would not mean that there is an express agreement in

words which would make it clear that both parties wish Shri Khan to

continue as arbitrator despite being ineligible to act as such. This

being the case, the impugned judgment is not correct when it applies

Section 4, Section 7, Section 12(4), Section 13(2) and Section 16(2) of

the Act to the facts of the present case, and goes on to state that the

appellant cannot be allowed to raise the issue of eligibility of an

arbitrator, having itself appointed the arbitrator. The judgment under

appeal is also incorrect in stating that there is an express waiver in

writing from the fact that an appointment letter has been issued by the

appellant, and a statement of claim has been filed by the respondent

before the arbitrator. The moment the appellant came to know that

Shri Khan's appointment itself would be invalid, it filed an application

before the sole arbitrator for termination of his mandate.”

37. The aforesaid decision is directly relevant to the facts of the

present case. The Supreme Court has expressly rejected the

proposition that the party which itself appoints the arbitrator is thereby

precluded from questioning the validity of such appointment. More

importantly, the Supreme Court has made it clear that the appointment

letter itself cannot be treated as an express agreement in writing under

the proviso to Section 12(5) of the A&C Act.

38. The submission of learned senior counsel representing the

Appellant that the decision in Bhadra International ought to be

FAO(OS) (COMM) 246/2026 Page 18 of 20

confined to a case where the objection is raised by the party which did

not make the appointment, therefore, cannot be accepted. The

subsequent decision of the Division Bench in Mahavir Prasad Gupta

(supra) has expressly examined this very issue, and the principle has

thereafter received further support from the Supreme Court. The

statutory requirement of an express agreement in writing does not

depend upon which of the parties made the appointment.

39. Equally, the participation of AAI in the arbitral proceedings

cannot result in a different conclusion. The Supreme Court in Bhadra

International has specifically recognised that even conduct which

may otherwise appear to demonstrate acceptance of the Arbitral

Tribunal cannot substitute the express written agreement contemplated

by the proviso. The reason is apparent from the statutory language

itself. Section 12(5) of the A&C Act constitutes a specific statutory

departure from the general principle of waiver by conduct.

40. In the present case, the record discloses participation by AAI

in the arbitral proceedings from 2019 until the passing of the Award in

2023. However, there is no material to demonstrate that, subsequent to

the disputes having arisen, the parties entered into any express

agreement in writing whereby they consciously waived the

applicability of Section 12(5) of the A&C Act. Participation in the

arbitral proceedings, submission of pleadings, consideration of claims

and counter-claims, or failure to raise an objection before the Arbitral

Tribunal cannot be treated as a substitute for such statutory waiver.

FAO(OS) (COMM) 246/2026 Page 19 of 20

41. The contention that the objection was not raised in the Section

34 Petition also does not assist the Appellant. An objection founded

upon the inherent lack of jurisdiction of an Arbitral Tribunal, where

the statutory conditions rendering the arbitrator ineligible are

attracted, is not converted into a valid appointment merely because the

objection was not raised at an earlier stage. The Supreme Court in

Bhadra International has specifically recognised that an objection

going to the inherent jurisdiction of the Arbitral Tribunal may be

raised at the stage of a challenge to the Award under Section 34.

42. In the present case, therefore, the learned Single Judge was

justified in examining the validity of the constitution of the Arbitral

Tribunal. Once the appointment of the Sole Arbitrator was found to be

contrary to the mandatory provisions of Section 12(5) read with the

Seventh Schedule of the A&C Act, and there was no express

agreement in writing subsequent to the disputes waiving the

applicability of Section 12(5), the resulting Award could not be

sustained.

43. It is also relevant to note that the learned Single Judge has set

aside the Award only on the issue which forms the subject matter of

the present Appeal, namely, the validity of the unilateral appointment

of the Sole Arbitrator. The learned Single Judge has not proceeded to

examine or determine the merits of the claims adjudicated by the

Arbitral Tribunal.

44. Having regard to the statutory mandate contained in Section

12(5) of the A&C Act, the authoritative interpretation placed upon the

FAO(OS) (COMM) 246/2026 Page 20 of 20

proviso by the Supreme Court in Bharat Broadband (supra) and

Bhadra International, and the consistent view taken by the Division

Bench of this Court in Mahavir Prasad Gupta (supra) and Titagarh

Rail Systems (supra), this Court finds no merit in the submissions

advanced on behalf of the Appellant.

CONCLUSION:

45. Consequently, this Court finds no error in the conclusion

reached by the learned Single Judge in setting aside the Award on the

aforesaid ground.

46. Finding no merit in the present Appeal, the same is dismissed.

The pending applications also stand closed.

ANIL KSHETARPAL , J.

VIMAL KUMAR YADAV , J.

SEPTEMBER 25, 2026

sp/shah