FAO(OS) (COMM) 110/2024 Page 1 of 22

$~

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 12 January 2026

Pronounced on: 14 January 2026

+ FAO(OS) (COMM) 110/2024

M/S. M.V. OMNI PROJECTS (INDIA) LTD. .....Appellant

Through: Mr. Raj Shekhar Rao, Sr. Adv.

with Mr. Subodh Kr. Pathak, Mr. Amit Sinha,

Mr. Abhishek Sandillya, Mr. Pawan Kumar

Sharma and Mr. Wamic Wasim, Advs.

versus

UNION OF INDIA THROUGH

EXECUTIVE ENGINEER CPWD .....Respondent

Through: Mr. Ankur Mahindro, Mr.

Ruchir Mishra, Mr. Rohan Taneja, Mr.

Ankush Satija, Mr. Aditya Kapur, Mr. Mohit

Dagar, Mr. Raghav Kalra, Mr. Animesh

Dubey, Mr. Raghav Kalra, Ms. Creesha

Shashtri, Ms. Jhanak Setia and Ms. Radhika

Agrawal, Advs.

CORAM:

HON'BLE MR. JUSTICE C. HARI SHANKAR

HON'BLE MR. JUSTICE OM PRAKASH SHUKLA

JUDGMENT

% 14.01.2026

C. HARI SHANKAR, J.

The lis

1. We are required, in this appeal, to consider the extent to which

this case would be covered by the recent judgment of the Supreme Court

FAO(OS) (COMM) 110/2024 Page 2 of 22

in Bhadra International (India) (P) Ltd v. Airports Authority of

India

1

.

2. Disputes, which emanated out of an agreement dated 12 January

2016, between the appellant and the respondent, were referred to

arbitration and culminated in an arbitral award dated 30 May 2023,

which was adverse to the respondent. The respondent challenged the

said award before this Court under Section 34 of the Arbitration and

Conciliation Act, 1996

2

by way of OMP (Comm) 355/2023. By

judgment dated 8 May 2024, a learned Single Judge of this Court has

allowed OMP (Comm) 355/2023

3

and has set aside the arbitral award.

3. Aggrieved thereby, the present appellant, as the respondent in the

OMP, has instituted the present appeal.

4. We have heard Mr. Raj Shekhar Rao, learned Senior Counsel for

the appellant and Mr. Ankur Mahindro, learned Counsel for the

respondent, at length.

5. The learned Single Judge has, by the impugned judgment, set

aside the arbitral award, solely on the ground that the appointment of

the arbitrator was in violation of Section 12(5)

4

of the 1996 Act. In so

holding, the learned Single Judge has followed the judgments of the

1

2026 SCC OnLine SC 7, referred to, hereinafter, as “Bhadra”.

2

“the 1996 Act”, hereinafter

3

Union of India v M/s. M.V. Omni Projects (India) Ltd.

4

(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) 110/2024 Page 3 of 22

Supreme Court in Bharat Broadband Network Ltd. v. United Telecoms

Ltd

5

and Perkins Eastman Architects DPC v. HSCC (India) Ltd

6

.

6. The Supreme Court has, very recently, clarified the legal position

in its judgment in Bhadra. Essentially, the arguments before us

revolved around the impact of the said decision on the facts of the

present case.

Facts

7. Clause 25 of the General Conditions of Contract governing the

agreement between the appellant and the respondent provided for

reference of disputes to arbitration, and read as under:

“CLAUSE 25

Except where otherwise provided in the contract, all questions and

disputes relating to the meaning of the specifications, design,

drawings and instructions 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 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 dealt with as mentioned hereinafter:

(i) ………….

(ii) Except where the decision has become final, binding

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

difference shall be referred for adjudication through

arbitration by a sole arbitrator appointed by the Chief

Engineer, CPWD, in charge of the work or if there be no

Chief Engineer, the Additional Director General of the

5

(2019) 5 SCC 755

6

(2020) 20 SCC 760

FAO(OS) (COMM) 110/2024 Page 4 of 22

concerned region of CPWD or if there be no Additional

Director General, the Special Director General or the

Director Genera/, CPWD. 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 al which it was left by his predecessor.

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 and

giving reference to the rejection by the Chief Engineer of the appeal.

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

appointed by such Chief Engineer CPWD or Additional Director

General or Special Director General or Director Genera/, CPWD, as

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

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

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

any demand for appointment of arbitrator in respect of any claims in

writing as aforesaid within 120 days of receiving the intimation from

the Engineer-in-Charge that the final bill is ready for payment, the

claim of the contractor shall be deemed to have been waived and

absolutely barred and the Government shall be discharged and

released of all liabilities under the contract in respect of these claims.

The arbitration shall be concluded in accordance with the provisions

of the Arbitration and Conciliation Act, 1996 (26 of 1996) or any

statutory modifications or re-enactment thereof and the rules made

there under and for the lime 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 their statement or 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

FAO(OS) (COMM) 110/2024 Page 5 of 22

made and published, be paid haul 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.”

8. Disputes having been arisen between the parties, the appellant

issued a notice to the respondent, under Section 21

7

of the 1996 Act, on

11 October 2018, which read thus:

“Date: 11

th

October, 2018

To

The Chief Engineer

IITD, Project Zone

Hauz Khas,

New Delhi-110016

Work Contract: Agreement No: 1/EE/III DEM MPD/2015-

2016 C/o IIIDEM Campus at Plot No.-1, Sector-13, Dwarka, New

Delhi.

Sub: Invocation of Arbitration Clause 25 in Contract No.

01/EE/IIIDEMPD/2015-16 dated 12.01.2016 under provision of

Arbitration and Conciliation Act 1996.

Sir,

With reference to the aforesaid contract it is stated that the contract

has been illegally and arbitrarily terminated by your office vide letter

dated 01.10.2018 dispatched on 03.10.2018.

Since, the contract has already been terminated unilaterally,

therefore, It is requested to appoint an independent Arbitrator in

terms of the provisions of Arbitration and Conciliation Act 2016 for

adjudication of dispute and claim without any delay. This clause is

invoked without prejudice to my right to file my claim separately.

Thanking You,

Yours Faithfully,

7

21. Commencement of arbitral proceedings.—Unless otherwise agreed by the parties, the arbitral

proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be

referred to arbitration is received by the respondent.

FAO(OS) (COMM) 110/2024 Page 6 of 22

For, M.V.Omni Projects (I) Limited,

Sd/-

Authorized Signatory”

Mr. Rao points out that the Section 21 notice called upon the respondent

to appoint an independent arbitrator.

9. As the respondent did not appoint any arbitrator as sought by the

Section 21 notice, the appellant instituted ARB P 199/2019

8

under

Section 11(6)

9

of the 1996 Act. The prayer clause in the arbitration

petition read thus:

“In view of the facts and circumstances of the present case, it is,

therefore, most humbly prayed that this Hon'ble Court may

graciously be pleased to:

a) Appoint any person as sole arbitrator to adjudicate

the disputes between the parties arisen in respect of the

Agreement dated 12.01.2016 between the Petitioner and

Respondent; and/or

b) Pass such other or further Order(s)/direction(s) as

this Hon'ble Court deems just and proper in the facts and

circumstance of the present case.”

10. Vide order dated 23 August 2019, the learned Single Judge of this

Court disposed of the ARB P 199/2019 in the following terms:

8

M/s M.V. Omni Projects (India) Limited v. The Executive Engineer Central Public Works Department

9

(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,

the appointment shall be made, on an application of the party, by the arbitral institution designated

by the Supreme Court, in case of international commercial arbitration, or by the High Court, in case

of arbitrations other than international commercial arbitration, as the case may be to take the

necessary measure, unless the agreement on the appointment procedure provides other means for

securing the appointment.

FAO(OS) (COMM) 110/2024 Page 7 of 22

“1. This petition has been filed under Section 11 of the

Arbitration and Conciliation Act, 1996 for appointment of an

arbitrator.

2. The contract stipulates appointment of an arbitrator by the

Chief Engineer. The contract also stipulates dispute resolution

mechanism which, according to the learned counsel for the

petitioner, has been availed of. He states that the petitioner has made

a representation dated May 16, 2019 to the Chief Engineer for

appointment of an arbitrator which according to Mr. Mishra, learned

counsel for the respondent, was a premature request as on the date

of representation the process of Dispute Resolution Committee was

not complete.

3. Mr. Mishra concedes that the Dispute Resolution

Committee’s decision has now come, rejecting the claims of the

petitioner.

4. If that be so, learned counsel for the petitioner, today,

submits before the Court that he would be happy if the respondent

considers the appointment of an arbitrator in terms of the contract.

5. Mr. Mishra states, the respondent shall appoint a contractor

within four weeks. The statement is taken on record.

6. The present petition is disposed of accordingly.

Dasti.”

11. Subsequently, by order dated 11 September 2019, in IA

12502/2019, para 5 of the order was corrected to read thus:

“Mr. Mishra states, respondent shall appoint an Arbitrator within

four weeks. The statement is taken on record”.

12. In the interregnum, on 6 September 2019, the Additional Director

General

10

of the CPWD, vide the following office memorandum dated

6 September 2019, appointed an advocate as the sole arbitrator to

10

“ADG” hereinafter

FAO(OS) (COMM) 110/2024 Page 8 of 22

arbitrate on the disputes between the parties:

“Office Memorandum

Sub: - In the matter of arbitration between M/s M.V. Omni Projects

(India) Limited and Union of India, regarding the work C/o IIIDEM

Campus at Plot No.1, Sector-13, Dwarka, New Delhi. (SH: Hostel

Block with basement, Auditorium, Institutional Block and Boundary

Wall including Superstructure, Interior, Water supply, Sanitary

installation, Drainage, External Development, Internal Electrical

Installation, HVAC, Lifts, Sub-station, DG sets, Fire Alarm & Fire

Fighting System, Solar Water Heating, Solar Power Generation,

Conducting for Telephone/LAN, etc.). Agreement No.

01/EE/IIIDEMPD/2015-16.

Whereas M/s M. V. Omni Projects (India) Ltd. has written vide letter

no MVOPIL/19-20/CPWD-IIIDEM/667 dated 16.05.2019 that

certain disputes have arisen between the above noted parties in

respect of the above noted work. I, Shashi Kant, ADG(PRD), CPWD

by powers conferred on me under clause 25 of the said Agreement

hereby appoint Shri Anil Kumar Sharma Arbitrator B-99, Sector-30,

Noida, Gautam Budh Nagar, U.P. 201303 as Sole Arbitrator to

decide and make his award regarding the claims/disputes by the

contractor, if any, as shown in the statements enclosed, subject

always, however, to their admissibility under clause 25 of the

aforesaid agreement, copy of which is enclosed.

The Arbitrator shall give reasons for the award.

Encl.: List of claims and counter claims.

Sd/-

(Shashi kant)

Addl. Director General

Project Region Delhi”

13. Arbitral proceedings commenced without any protest from either

side. The proceedings concluded with the rendition of award dated 30

May 2023, which was adverse to the respondent.

14. Aggrieved by the aforesaid award, the respondent instituted

OMP (Comm) 355/2023 before this Court, which stands allowed by the

FAO(OS) (COMM) 110/2024 Page 9 of 22

impugned judgment dated 8 May 2024 passed by a learned Single

Judge. The learned Single Judge has held that the appointment of the

learned arbitrator was in the teeth of Section 12(5) of the 1996 Act and

that, therefore, the proceedings stood vitiated ab initio.

Analysis

15. Having heard Mr. Rao, we are of the opinion that, in view of the

presently extant legal position, essentially following the recent decision

of the Supreme Court in Bhadra, the learned Single Judge is correct in

the view that he has taken.

16. Section 12(5) of the 1996 Act proscribes any person, whose

relationship with the parties, their Counsel or the subject matter of

dispute, falls under any of categories specified in the Seventh Schedule

to the 1996 Act, from being appointed as an arbitrator. This principle

was extended by the Supreme Court, in TRF Ltd v. Energo Engg.

Projects Ltd

11

, Bharat Broadband, Perkins and Haryana Space

Application Centre v. Pan India Consultants (P) Ltd

12

to hold that a

person who was not entitled to act as an arbitrator was equally not

entitled to appoint an arbitrator.

17. As a result, arbitration clauses which allow either one of the

parties to appoint the arbitrator have been held, in the said decisions, to

be illegal and incapable of being enforced in law. In all such cases,

therefore, it is the Court who has to appoint the arbitrator.

11

(2017) 8 SCC 377

12

(2021) 3 SCC 103

FAO(OS) (COMM) 110/2024 Page 10 of 22

18. The rigour of this stipulation is relaxed only in the proviso to

Section 12(5). The proviso entitles either party to waive the

applicability of Section 12(5) by an express agreement in writing.

19. Bhadra clearly explains the scope of the proviso to Section

12(5). In that case, which arose from a judgment rendered by one of us

(C. Hari Shankar, J.), sitting singly in this Court, both parties consented,

before the arbitrator, to the assumption of jurisdiction by the said

arbitrator in that case. The said consent was reduced to writing by an

order issued by the arbitrator. This Court adopted the view that the

reduction, to writing, of the consent of both parties to the arbitrator,

amounted to a waiver of the applicability of Section 12(5) by express

agreement in writing. As such, this Court held that the arbitral award

could not be challenged on the ground that the appointment of the

arbitrator was unilateral.

20. The Supreme Court has, however, reversed the decision of this

Court and has held that an express agreement in writing has to be

exactly that and nothing less. No amount of consent, therefore, can

substitute the requirement of an express agreement in writing. The

parties have, therefore, in writing to expressly waive the applicability

of Section 12(5), in order for the proviso to Section 12(5) to apply. Else,

if the arbitrator has been appointed by one of the parties, the

proceedings stand vitiated ab initio and the resultant arbitral award can

be challenged even on that sole ground. We may reproduce, to

advantage, the relevant paragraphs from Bhadra, thus:

FAO(OS) (COMM) 110/2024 Page 11 of 22

“48. If any entry in the Seventh Schedule is attracted, the

consequences under Section 12(5) follow. In such circumstances,

the disclosure made by the arbitrator does not save the mandate of

the arbitrator, and an agreement referred to in the proviso assumes

importance. We shall discuss the scope and application of the sub-

section (5), as well as its proviso, in more detail in the latter part of

this judgment.

*****

57. When an arbitration agreement is in violation of sub-section

(5) of Section 12 of the Act, 1996, the parties can neither insist on

appointment of an arbitrator in terms of the agreement nor would

any appointment so made be valid in the eyes of law.

58. Unilateral appointments are not consistent with the basic

tenet of arbitration, i.e., mutual confidence in the arbitrator. It would

not be unreasonable for a party to apprehend that an arbitrator

unilaterally appointed by the opposite party may not act with

complete impartiality.

*****

60. It is apposite to understand that Section 12(5) does not

prohibit unilateral appointment of an arbitrator. It provides that

whenever an appointment of an arbitrator is hit by the bar under

Section 12(5), the arbitrator would be ineligible to act, irrespective

of whether the appointment was unilateral or with consent of both

parties. In such circumstances, the parties may, in the manner

provided under the proviso, waive the ineligibility. We shall discuss

the scope and application of the proviso in more detail in the latter

part of this judgment.

*****

68. We are in complete agreement that the present case is squarely

covered by the decisions of this Court in Perkins Eastman (supra)

and Bharat Broadband (supra) respectively. The unilateral

appointment of a sole arbitrator is void ab initio, and the sole

arbitrator so appointed is de jure ineligible to act as an arbitrator in

terms of Section 12(5) read with the Seventh Schedule of the Act,

1996.

69. Thus, we have no hesitation in saying that its High Court, in

the impugned judgment, committed an error in holding that the

appointment was not unilateral merely because the respondent

proceeded to appoint the sole arbitrator pursuant to notice invoking

arbitration.

FAO(OS) (COMM) 110/2024 Page 12 of 22

*****

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?

71. It was submitted on behalf of the appellants herein that the

appellants never waived their right to object in terms of

the proviso to Section 12(5) of the Act, 1996. The proviso to Section

12(5) requires that the ineligibility of an arbitrator could only be

waived by an “express agreement in writing” between the parties,

and such agreement must be entered into after the dispute has arisen.

It was further canvassed by the appellants that no agreement was

executed, signed, or even contemplated by the parties to this effect

after the dispute arose.

72. In this regard, the respondent vociferously submitted that the

present case falls within the proviso to Section 12(5). To indicate

the same, instances like recording of “no objection” in the first

procedural order, submission of statement of claim, the joint request

to extend the mandate under Section 29A, and continued

participation in the proceedings, were highlighted to submit that the

appellants had waived their right to object. The procedural order

constitutes an “express agreement in writing” and satisfies the

requirement under the proviso to Section 12(5) of the Act, 1996. At

the cost of repetition, the procedural order reads thus:—

“PROCEDURAL ORDER NO. 1

With

Minutes of, and the Directions made at, the hearing on 22.03.2016

at 1 : 00 pm

[AT D-247 (Basement), Defence Colony, New Delhi-110024]

This preliminary meeting of the Tribunal was held D-247

(Basement), Defence Colony, New Delhi-110024 on 22

nd

March,

2016 at 1 : 00 PM. None of the parties have any objection to my

appointment as the Sole Arbitrator. I declare that I have no interest

in any of the Parties, or in the disputes referred to the Sole

Arbitrator.[…]”

(Emphasis supplied)

73. On the aforesaid issue, the High Court, in its impugned

judgment, observed that the sole arbitrator obtained the consent of

the parties for the purpose of continuing to arbitrate in the form of

the procedural order. What weighed with the High Court was that

the appellants participated in the proceedings, which continued for

over two years, and did not they invoke Section 12(5), or object

against the jurisdiction of the arbitrator at any stage.

FAO(OS) (COMM) 110/2024 Page 13 of 22

a. Meaning and Import of the expression “express

agreement in writing” used in proviso to sub-section (5) of

Section 12 of the Act, 1996

*****

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.

76. The proviso to sub-section (5) of Section 12 stipulates that

parties, after disputes have arisen, must expressly agree in writing

to waive the ineligibility of the proposed arbitrator. This impliedly

means that the parties are waiving their right to object to the

arbitrator's ineligibility in terms of Section 12(5) of the Act, 1996.

77. Waiver means the intentional giving up of a right. It involves

a conscious decision to abandon an existing legal right, benefit,

claim, or privilege that a party would otherwise have been entitled

to. It amounts to an agreement not to enforce that right. A waiver

can occur only when the person making it is fully aware of the right

in question and, with complete knowledge, chooses to give it up.

[See: State of Punjab v. Davinder Pal Singh Bhullar

13

]

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.

79. The expression “express agreement in writing”

demonstrates a deliberate and informed act that although a party is

fully aware of the arbitrator's ineligibility, yet it chooses to forego

the right to object against the appointment of such an arbitrator. The

requirement of an express agreement in writing has been introduced

13

(2011) 14 SCC 770

FAO(OS) (COMM) 110/2024 Page 14 of 22

as it reflects awareness and a conscious intention to waive the right

to object under sub-section (5) of Section 12. A clear manifestation

of the expression of waiver assumes greater importance in light of

the fact that the parties are overcoming a restriction imposed by law.

80. It is in the same breath we say that appointment of an

arbitrator with the consent of both parties is the general rule, while

unilateral appointment is an exception. When one party appoints an

arbitrator unilaterally, even if its own consent is implicit, the consent

of the opposite party stands compromised, and the choice of the

former is effectively imposed upon the latter.

81. It is only through an express agreement in writing, waiving

the bar under sub-section (5) of Section 12, that the other party can

be said to have voluntarily consented to the unilateral appointment

of such an arbitrator. The proviso conveys that the arbitrator,

although ineligible to be appointed, yet can continue to perform his

functions, as it is oriented towards facilitating party autonomy.

Thus, the proviso reinforces party autonomy and equal treatment of

parties in arbitration.

82. In other words, even though the appointment had been made

by one of the parties, by the act of entering into an agreement in

writing, the other party expresses its consent. The manner of the

agreement prescribed by the statute demonstrates voluntariness by

the parties.

83. In a case of unilateral appointment, the waiver mentioned in

the proviso is an indication of party autonomy in two ways : first,

that the parties, by entering into an agreement, are waiving the bar

under Section 12(5). Secondly, by the act of entering into an

agreement, the parties, more particularly, the non-consenting party,

are expressing their consent for appointment of the proposed

arbitrator.

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.

85. The conscious use of the prefatory expression also serves to

differentiate such waiver from ‘deemed waiver’ as stipulated under

Section 4 of the Act, 1996. We must be mindful of the fact that if

FAO(OS) (COMM) 110/2024 Page 15 of 22

the legislature intended that waiver under Section 12(5) could

similarly arise by implication or conduct as mentioned under

Section 4, it would have refrained from introducing a heightened

and mandatory requirement, more particularly, in light of the rigours

of the Seventh Schedule. The statutory design therefore makes it

evident that the bar under Section 12(5) can be removed only by a

clear, unequivocal, and written agreement executed after the dispute

has arisen, and not by any form of tacit acceptance or procedural

participation.

86. The mandate of an express agreement in writing in the

present case may looked at from one another angle. The unilateral

appointment of an arbitrator is assessed from the viewpoint of the

parties. However, when the parties later execute an express written

agreement waiving the ineligibility of the proposed arbitrator, the

position gets altered. Such written waiver supplies the very consent

that was previously missing, thereby placing the appointment on the

same footing as a mutually agreed appointment and addresses

concerns regarding neutrality and fairness.

87. In Bharat Broadband (supra), this Court categorically held

that the expression “express agreement in writing” refers to an

agreement made in words and cannot be inferred by conduct. The

word “express” denotes that the agreement must be entered into with

complete knowledge that although the proposed arbitrator is

ineligible to be appointed as an arbitrator, yet they express their

confidence in him to continue as the arbitrator. The relevant

observations read thus:—

“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

FAO(OS) (COMM) 110/2024 Page 16 of 22

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 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. 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. 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.”

(Emphasis supplied)

FAO(OS) (COMM) 110/2024 Page 17 of 22

88. In CORE II (supra)

14

, this Court underscored the rationale

behind the first two essentials of the proviso. It reads thus:—

“121. An objection to the bias of an adjudicator can be

waived. [Supreme Court Advocates -on-Record

Assn. v. Union of India

15

]. A waiver is an intentional

relinquishment of a right by a party or an agreement not to

assert a right. [State of Punjab v. Davinder Pal Singh

Bhullar

16

]. The Arbitration Act allows parties to waive the

application of Section 12(5) by an express agreement after

the disputes have arisen. However, the waiver is subject to

two factors. First, the parties can only waive the

applicability of Section 12(5) after the dispute has arisen.

This allows parties to determine whether they will be

required or necessitated to draw upon the services of

specific individuals as arbitrators to decide upon specific

issues. To this effect, Explanation 3 to the Seventh Schedule

recognises that certain kinds of arbitration such as maritime

or commodities arbitration may require the parties to draw

upon a small, specialised pool. … The second requirement

of the proviso to Section 12(5) is that parties must

consciously abandon their existing legal right through an

express agreement. Thus, the Arbitration Act reinforces the

autonomy of parties by allowing them to override the

limitations of independence and impartiality by an express

agreement in that regard.”

(Emphasis supplied)

89. What can be discerned from the above discussion is that the

ineligibility of an arbitrator can be waived only by an express

agreement in writing. In the present case, there is no agreement in

writing, after the disputes arose, waiving the ineligibility of the sole

arbitrator or the right to object under Section 12(5) of the Act, 1996.

90. The conduct of the parties is inconsequential and does not

constitute a valid waiver under the proviso. The requirement of the

waiver to be made expressly in the form of agreement in writing

ensures that parties are not divested of their right to object

inadvertently or by procedural happenstance.

*****

96. The net effect of the aforesaid is that a notice invoking the

arbitration clause under Section 21 of the Act, 1996, a procedural

14

Central Organization for Railway Electrification v. ECI SPIR SMO MCML (JV) A Joint Venture

Company, (2025) 4 SCC 641

15

(2016) 5 SCC 808

16

(2011) 14 SCC 770

FAO(OS) (COMM) 110/2024 Page 18 of 22

order, submission of statement of claim by the appellants, the filing

an application seeking interim relief, or a reply to an application

under Section 33 of the Act, 1996, cannot be countenanced to mean

“an express agreement in writing” within the meaning of

the proviso to sub-section (5) of Section 12 of the Act, 1996.

97. One could argue that a miscreant party may participate in the

arbitral proceedings up to the passing of the award, despite having

full knowledge of the arbitrator's ineligibility. While after an adverse

award is rendered, such a party may then seek to challenge it with a

view to having it set aside. Such an apprehension is reasonable,

however, to obviate the possibility of such misuse, the party making

unilateral appointment must endeavour to enter into an express

written agreement as stipulated in the proviso to Section 12(5), so as

to safeguard the proceedings from being rendered futile.

98. Thus, all the High Court decisions taking a contrary view to

the present judgment would stand overruled.

*****

123. A conspectus of the aforesaid detailed discussion on the

position of law as regards Section 12 of the Act, 1996, is as

follows:—

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 in

the proviso must be a clear, unequivocal written agreement.

FAO(OS) (COMM) 110/2024 Page 19 of 22

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.”

21. Mr. Rao sought to distinguish the decision in Bhadra on the

ground that the proceedings in that case did not traverse the Section 11

route. He submits that once an application was filed by either of the

parties under Section 11(6), the other party lost its right to appoint the

Arbitrator. The appellant had to move this Court in ARB.P. 199/2019

under Section 11(6) of the 1996 Act, only because the respondent did

not appoint an arbitrator in response to the Section 21 notice dated 11

October 2018 issued by the appellant. Once the appellant had thus

galvanised this Court under Section 11(6), the respondent lost its right

to appoint the Arbitrator. The appointment of the arbitrator by the

respondent, thereafter, he submits cannot be treated as an appointment

in terms of the agreement between the parties. It was as good as an

appointment by the Court under Section 11(6). The order dated 23

August 2019, passed by the learned Single Judge of this Court,

disposing of ARB.P. 199/2019 was never challenged and attained

finality. In these circumstances, Mr. Rao submits that the respondent

could not seek to contend that the appointment of the arbitrator was

unilateral.

FAO(OS) (COMM) 110/2024 Page 20 of 22

22. We are compelled to acknowledge that the submission of Mr.

Rao is undoubtedly attractive. Law, however, is law, and we are

powerless to modify it. Once the Supreme Court has spoken on an issue,

it is the duty of every Court, both under Article 141 and Article 144 of

the Constitution of India, to follow the law declared by the Supreme

Court.

23. The emphasis, by Mr. Rao, on the fact that the appointment of

the arbitrator in the present case followed the filing of ARB.P. 199/2019

by the appellant and the order dated 23 August 2019 passed by the

learned Single Judge therein, really cuts no ice. A bare reading of the

Office Memorandum dated 6 September 2019 issued by the ADG

clearly discloses that the arbitrator was appointed by the ADG

unilaterally. Even though one of the endorsements below the said letter

purports to state that the appointment was in terms of the order dated

23 August 2019 passed by the learned Single Judge, that does not

materially alter the legal position. Had the learned Single Judge

appointed the arbitrator on 23 August 2019, exercising jurisdiction

under Section 11(6) of the 1996 Act, things might have been different.

The position might also had been different, had the parties submitted in

writing to this Court, prior to the passing of the order dated 23 August

2019, that they were waiving the applicability of Section 12(5) of the

1996 Act.

24. Nothing of that sort, however, happened.

25. A reading of the order dated 23 August 2019, disposing of

FAO(OS) (COMM) 110/2024 Page 21 of 22

ARB.P. 199/2019, makes it clear that this Court has only recorded the

submission of the respondent that it was appointing the arbitrator. The

appointment was, even as per the order dated 23 August 2019, in terms

of the contract between the parties. As such, this is not a case in which

this Court appointed the arbitrator under Section 11(6) of the 1996 Act.

The Court only disposed of the Section 11(6) petition on the statement

of the respondent that the respondent was appointing the arbitrator in

terms of the contract between the parties.

26. The appointment of the arbitrator in terms of the contract

between the parties was ex facie illegal, in view of the law declared by

the Supreme Court in Bharat Broadband, Haryana Space Application

Centre and, most recently, in Bhadra.

27. There being no express waiver of Section 12(5) in writing by

either of the parties, Section 12(5) applies with full vigour.

28. Resultantly, we are of the opinion that the learned Single Judge

was correct in holding that the appointment of the learned arbitrator was

illegal, being in the teeth of Section 12(5) read with the decision of the

Supreme Court in Bharat Broadband and Perkins.

29. We, therefore, find no cause to interfere with the impugned

judgment of the learned Single Judge, which is, accordingly affirmed in

its entirety.

FAO(OS) (COMM) 110/2024 Page 22 of 22

30. The appeal is, accordingly, dismissed with no orders as to costs.

C. HARI SHANKAR, J.

OM PRAKASH SHUKLA, J .

JANUARY 14, 2026/aky/yg