Delhi High Court
Union Of India vs M/S Goodrich Foodtech Ltd on 6 August, 2026
Author: Subramonium Prasad
Bench: Subramonium Prasad
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 06th AUGUST, 2026
IN THE MATTER OF:
# CNR No.DLHC010338262022
+ O.M.P. (COMM) 375/2022 & I.A. 14481/2022, I.A. 14485/2022,
I.A. 14486/2022
UNION OF INDIA .....Petitioner
Through: Mr. Bhagvan Swarup Shukla, CGSC
with Mr. Sarvan Kumar, Mr.
Pradyumn Singh, Mr. Mukesh Kumar
Pandey, Mr. Dashmesh Tripathi and
Ms. Jyoti Yadav, Advocates
versus
M/S GOODRICH FOODTECH LTD .....Respondent
Through: Mr. Jayant Mehta, Senior Counsel,
Mr. Parthiv Goswami, Senior Counsel
with Mr. Deepanshu Jain, Mr.
Shaantanu Jain and Ms. Jahanvi
Khanna, Advocates
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
1. The present Petition under Section 34 of the Arbitration and
Conciliation Act, 1996 [“Arbitration Act“], has been filed against the
Arbitral Award dated 27.04.2022, modified on 06.05.2022, passed in favor
of the Respondent by the learned Sole Arbitrator [“Impugned Award”].
2. A brief factual background leading to the filing of the present Petition
is stated as under:
(i) The Petitioner invited online bids from indigenous bidders and
floated the tender documents on the official website, with aSignature Not Verified
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submission deadline of 28.04.2017. Through this bid, the Petitioner
called upon the registered and unregistered vendors interested in
meeting the terms and conditions of the Request for Proposal dated
17.04.2017 [“RFP”], for supply of malted milk food with cocoa
[“MMF with Cocoa”] as per the Defence Food Specification No.
51A [“the Project”].
(ii) The Respondent emerged as the successful bidder for Defence
procurement of 1390 MT of MMF with Cocoa for the consumption
year 2017-18.
(iii) The parties entered into five identical contracts through the
Petitioner communicating the acceptance for and on behalf of the
Union of India, by issuing separate letters regarding acceptance of
tender on 19.05.2017 for the quoted delivery period. All the five
acceptance letters are identically worded in the terms and conditions
mentioned therein. Details of the five contracts between the parties
are stated as under:
Sr. AT No. Delivery Period Quantity
No. (MT)
1. 62879/Q/AT/13/MMF/2017- June 2017 40
18/APO/PUR.IV
2. 62879/Q/AT/8/MMF/2017- November 2017 450
18/APO/ PUR.IV
3. 62879/Q/AT/19/MMF/2017- December 2017 100
18/APO/ PUR.IV
4. 62879/Q/AT/10/MMF/2017- January 2018 400
18/APO/ PUR.IV
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5. 62879/Q/AT/12/MMF/2017- March 2018 400
18/APO/ PUR.IV
(iv) In accordance with the terms of the Contracts between the
parties, five Performance Bank Guarantees totaling to an amount of
Rs. 2,49,87,020/- were furnished by the Respondent.
(v) Out of the total of 1390MT of MMF with Cocoa to be supplied
to the Petitioner, approximately 70% was scheduled for delivery by
the end of January 2018. Out of this, 40% of the supplies as contained
in the three contracts, AT/13 of 40MT, AT/8 of 450 MT and AT/19 of
50 MT was duly made by the Respondent, against which payments
were also released by the Competent Financial Authority to the
Respondent.
(vi) Disputes arose between the parties when the Petitioner issued a
Defect Notice dated 19.01.2018 to the Respondent, alleging that the
Respondent’s product contained soya protein and non-milk fat (palm
oil), which was contrary to the specifications under the five Contracts.
(vii) The Petitioner thereafter issued a Show-Cause Notice dated
24.03.2018inter alia alleging the violation of the Warranty provisions
contained in Clause 7.2 of the RFP. Later, the Petitioner terminated
the four contracts on 21.08.2018, forfeiting the BGs submitted by the
Respondent and went ahead to encash them.
(viii) Against the Termination Letter dated 21.08.2018, the
Respondent approached this Court by way of a writ petition bearing
W.P. (C) No. 10986/2018, inter alia praying for the quashing of the
Termination Letter dated 21.08.2018 and restraining the Petitioner
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from taking further coercive actions against the Respondent.
However, this Writ Petition came to be withdrawn on 12.10.2018,
though the Coordinate Bench of this Court granted to the Respondent
a liberty to avail alternative remedies.
(ix) Consequently, the Respondent invoked arbitration on
25.10.2018 invoking Clause 21 contained in Part I, Clause 3 contained
in Part III of the RFP read with Form DPM-7 of the Defence
Procurement Manual [“Arbitration Clause”]. The Arbitration Clause
reads as under:
“21.Arbitration. All disputes or differences arising out of
or in connection with the Contract shall be settled bv
bilateral discussions. (Refer Part Ill and other terms and
conditions of this RFP).
3.Arbitration. All disputes or differences out of or in
connection with the Contract shall be settled by bilateral
discussions. Any dispute, or question arising out of or
relating to the Contract or relating to construction or
performance, which cannot be settled amicably, may be
resolved through arbitration. The standard clause of
arbitration is as per Forms DPM-7and DPM-9 (Available
on MoD website and can be provided on request). The
arbitrator will be appointed by the Competent Financial
Authority (CFA) and it will be binding on both the
parties.”
(x) The learned Sole Arbitrator, appointed with approval of the
Competent Authority, Ministry of Defence (Army), who is stated to be
the competent authority to appoint the officials nominated by the
Department of Legal Affairs, Ministry of Law and Justice, entered
into reference on 14.01.2021.
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(xi) The Respondent filed its Statement of Claims on 13.05.2019,
while the Petitioner filed its Statement of Defence cum Counter
Claims on 07.08.2019. Based on the pleadings, the learned Sole
Arbitrator framed four issues for adjudication of the disputes between
the parties, all of which were found against the Petitioner.
(xii) The final reliefs granted by the learned Sole Arbitrator are
stated as under:
“11. RELIEF
(1) Claim No.1:-
The 1st claim is made under to the contract AT/19
(December, 2017) which relates to the finished
stock amounting to Rs.77,15,336/- and the Unpaid
Amount against supplies amounting to Rs.
55,84,852/- and Rs. 1,30.689/- towards samples.
Total amount Rs.1,34,30,877/- is fully awarded.
(2) Claim No.2:-
The 2nd claim is made under the contract AT/10
(January, 2018) which relates to the finished stock
amounting to Rs. 5,01,66,660/- is also awarded.
(3) Claim No.3:-
The 3rd claim is made under to the contract AT/10
(January, 2018) which relates to the raw materials
amounting to Rs. 27,30,003/- is rejected.
(4) Claim No.4:-
The 4th claim is made under to the contract AT/10
(January. 2018) & AT/12 (March, 2018) which
relates to the packing materials including outer
cartons, 500gm Refill paths, Liner amounting to
Rs.6,04,140/- is rejected.
(5) Claim No. 5:-
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The 5th claim is made relatable to the dedicated
investment as per the terms of the contract which
has been assessed at a value of 72,42,446/- is also
rejected.
(6) Claim No.6:-
The 6th claim is made relatable to the dedicated
manpower as per the terms of the contract which
has been assessed at a value of 27,05,407/- is also
liable to be rejected.
(7) Claim No.7:-
The 7th claim is made for the refund of the amount
of bank guarantees for a sum of Rs.2,41,99,300/-.
This claim is awarded in favour of claimant. The
amount is to be refunded alongwith interest at the
rate of 8% p.a. from the date of forfeiture of Bank
Guarantee till the date of its realisation.
(8) Claim No.8:-
The claimant has also claimed the interest as per
the MSME Act, 2006. Since nothing is mentioned
in the contract about grant of interest as per
MSME Act, only reasonable interest as per Sub
Section 7 of Section 31 of Arbitration Act, is to be
allowed, In my opinion in view of facts
circumstances and nature of case interest @ 8%
p.a. is allowed on the sum awarded under claim 1
and 2 i.e. Rs.1,34,30,877/- plus Rs.5,01,66,660/-,
totalling Rs.6,35,97,537/- from the date of
institution of claim to the date of its payment.
(9) Apart from above, the following relief is also
being guaranteed in favour of claimant
a) The termination letter dated 21.08.2018,
terminating the contract for 450 MT malted
milk food and forfeiture of bank guarantee
dated 31.05.2017 for amount Rs.80,02,800/-
is hereby quashed.
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(b) The letters dated 06.09.2018 and
24.10.2018 for freezing of stock and refund
of amount mentioned therein is also
quashed.
(c) The debarment letter dated 20.11.2018
dedarring the claimant from participating in
procurement with Army Purchase
Organization is quashed being issued
without following the principle of natural
justice.”
3. Against the aforesaid findings and directions, the Petitioner has now
approached this Court praying for Impugned Award to be set aside under
Section 34 of the Arbitration Act.
4. Though the Petitioner has raised numerous grounds against the
Impugned Award inter alia alleging that the findings are against the
provisions of the Indian Contract Act, 1872, etc., this Court, during the
course of final hearing, noted that the learned Sole Arbitrator was
unilaterally appointed by the Petitioner pursuant to the Arbitration Clause
contained in the RFP. Against this prima facie observation, the learned
Senior Counsel appearing for the Respondent submits as under:
(i) Vide the invocation letter dated 25.10.2018, the Respondent
itself called upon the Competent Financial Authority to appoint an
arbitrator in terms of the Arbitration Clause. For this reason, it cannot
be said that the Respondent in any way was opposed to the unilateral
appointment of a sole arbitrator by the Petitioner and this, in itself, can
be considered a waiver of Section 12(5) of the Arbitration Act.
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(ii) The Apex Court’s observations in the case of Bhadra
International (India) (P) Ltd. v. Airports Authority of India, 2026 SCC
OnLine SC 7, make it abundantly clear that there is no set format of a
waiver under Section 12(5) of the Arbitration Act. As such, the
Respondent’s invocation letter dated 25.10.2018 and participation in
the arbitration proceedings sans any objection to the appointment of the
learned Sole Arbitrator, must be seen as a waiver of the applicability of
Section 12(5) of the Arbitration Act.
(iii) Even in the present Petition, the Petitioner has failed to raise
the ground of the Impugned Award being bad in law on account of
unilateral appointment of the learned Sole Arbitrator.
5. Heard the learned Counsels for the parties and perused the material on
record.
6. The relevant observations of the Apex Court in Bhadra International
(Supra), on which reliance has been placed by the learned Senior Counsel
for the Respondent reads as under:
“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.
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We must be mindful of the fact that if 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 withSignature Not Verified
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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 Director of the appellant was
certainly not aware that Shri Khan could not be
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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.
Energo Engg. 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. Energo
Engg. 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
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an application before the sole arbitrator for
termination of his mandate.” (Emphasis supplied)
88. In CORE II (supra), 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, (2016) 5 SCC 808,
para 30 : (2016) 3 SCC (Civ) 492 : (2016) 3 SCC
(Cri) 173 : (2016) 2 SCC (L&S) 253] 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, (2011) 14
SCC 770, para 41 : (2012) 4 SCC (Civ) 1034 :
(2012) 4 SCC (Cri) 496 : (2014) 1 SCC (L&S)
208] 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. [
“Explanation 3.–For the removal of doubts, it is
clarified that it may be the practice in certain
specific kinds of arbitration, such as maritime or
commodities arbitration, to draw arbitrators from
a small, specialised pool. If in such fields it is the
custom and practice for parties frequently, to
appoint the same arbitrator in different cases, this
is a relevant fact to be taken into account while
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applying the rules set out above.”] 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.
xxx
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,Signature Not Verified
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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.
iv. When an arbitrator is found to be ineligible by
virtue of Section 12(5) read with the Seventh Schedule,
his mandate is automatically terminated. In such
circumstance, an aggrieved party may approach the
court under Section 14 read with Section 15 for
appointment of a substitute arbitrator. Whereas, when
an award has been passed by such an arbitrator, an
aggrieved party may approach the court under Section
34 for setting aside the award.
v. In arbitration, the parties vest jurisdiction in the
tribunal by exercising their consent in furtherance of a
valid arbitration agreement. An arbitrator who lacks
jurisdiction cannot make an award on the merits.
Hence, an objection to the inherent lack of jurisdiction
can be taken at any stage of the proceedings.”
7. Another relevant decision which requires reference has been delivered
by a Division Bench of this Court in Mahavir Prasad Gupta & Sons v. State
(NCT of Delhi), 2025 SCC OnLine Del 4241, wherein the following
observations were made:
“Objection by the party that made the unilateral
appointment itself:
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74. This issue requires consideration of following
questions:
a) When a party itself has unilaterally appointed the
arbitrator, whether that party can object to the
unilateral appointment of the arbitrator at any stage
during or after the arbitration proceedings?
b) If a party has unilaterally appointed an arbitrator,
can that party be deemed to have given express waiver
in writing under Section 12(5) of the Act while making
the appointment itself?
xxx
81. Accordingly, the party that unilaterally appointed
the arbitrator cannot be deemed to have agreed in
writing to waive the ineligibility of the arbitrator by
act of appointment. When appointment itself is
ineligible under the provisions of Section 12(5) of the
Act read with Seventh Schedule of the Act, it does not
take away the right of the party to challenge such an
appointment merely because that party had made the
appointment in absence of express agreement in
writing between the parties to waive the applicability
of Section 12(5) of the Act.
82. Hence, a party which unilaterally appointed the
arbitrator has right to object to such appointment
irrespective of fact that that party itself made the
appointment of the arbitrator. Mere fact of making
appointment in writing will not make the ineligible
appointment a valid appointment unless there is
express agreement in writing waiving such ineligibility.
83. Although it appears disingenuous, a party
appointing an the sole or presiding arbitrator
unilaterally can challenge the award on the ground
that the award has been rendered in contravention of
Section 12(5) of the Act read with Seventh Schedule of
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the Act notwithstanding that the said party itself made
such an appointment. When the Arbitral Tribunal
inherently lacked jurisdiction to act, the arbitration
proceedings are void ab initio, rendering the award
unenforceable irrespective of which party made such
unilateral appointment. The arbitral proceedings and
an award made by an unilaterally appointed sole or
presiding arbitrator, who is de jure ineligible to be
appointed as an arbitrator by virtue of the Seventh
Schedule of the Act are void ab initio. The waiver
under the proviso to Section 12(5) of the Act must be
express and subsequent to the disputes having been
arisen between the parties. Hence, the party which
appointed the sole or presiding arbitrator unilaterally
can also challenge the award under Section 34 of the
Act on the ground of such ineligibility.
CONCLUSION
84. In view of the above discussion, the legal position
on the unilateral appointment of the Sole and Presiding
Arbitrator is summarized as under:
a) Mandatory Requirement: Any arbitration
agreement providing unilateral appointment of the sole
or presiding arbitrator is invalid. A unilateral
appointment by any party in the arbitrations seated in
India is strictly prohibited and considered as null and
void since its very inception. Resultantly, any
proceedings conducted before such unilaterally
appointed Arbitral Tribunal are also nullity and cannot
result into an enforceable award being against Public
Policy of India and can be set aside under Section 34
of the Act and/or refused to be enforced under Section
36 of the Act.
b) Deemed Waiver: The proviso to Section 12(5) of the
Act requires an express agreement in writing. The
conduct of the parties, no matter how acquiescent or
conducive, is inconsequential and cannot constitute a
valid waiver under the proviso to Section 12(5) of the
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Act. The ineligibility of a unilaterally appointed
arbitrator can be waived only by an express agreement
in writing between the parties after the dispute has
arisen between them. Section 12(5) of the Act is an
exception to Section 4 of the Act as there is no deemed
waiver under Section 4 of the Act for unilateral
appointment by conduct of participation in the
proceedings. The proviso to Section 12(5) of the Act
requires an „express agreement in writing‟ and deemed
waiver under Section 4 of the Act will not be applicable
to the proviso to Section 12(5) of the Act.
c) Award by an Ineligible Arbitrator is a Nullity: An
award passed by a unilaterally appointed arbitrator is
a nullity as the ineligibility goes to the root of the
jurisdiction. Hence, the award can be set aside under
Section 34(2)(b) of the Act by the Court on its own if it
„finds that‟ an award is passed by unilaterally
appointed arbitrator without even raising such
objection by either party.
d) Stage of Challenge: An objection to the lack of
inherent jurisdiction of an arbitrator can be taken at
any stage during or after the arbitration proceedings
including by a party who has appointed the sole or
presiding arbitrator unilaterally as the act of
appointment is not an express waiver of the ineligibility
under proviso to Section 12(5) of the Act. Such
objection can be taken even at stage of challenge to the
award under Section 34 of the Act or during the
enforcement proceedings under Section 36 of the Act.”
(emphasis supplied)
8. Thus, the position of law now settled dictates that after amendment of
Section 12(5) of the Arbitration Act an employee of a party in dispute can
neither be appointed arbitrator nor can nominate or appoint any other person
as an arbitrator. The unilateral appointment in absence of an express
agreement in writing between the parties to waive applicability of Section
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12(5) of the Act is void ab initio. Moreover, mere participation in the arbitral
proceedings, such as filing of the statement of claim, also cannot be
construed as a valid waiver under the proviso to Section 12(5) of the
Arbitration Act [Ref: TRF Ltd. v. EnergoEngg. Projects Ltd., (2017) 8 SCC
377]. Most importantly, after the judgment of the Division Bench of this
Court in Mahavir Prasad (Supra), it is settled that the unilateral appointment
of an arbitrator can be objected to for the first time under Section 34 of the
Arbitration Act, even by the very same party who unilaterally appointed the
arbitrator.
9. A perusal of the Judgment passed by the Division Bench of this Court
indicates that just because the party has unilaterally appointed its own
arbitrator, does not mean that it has deemed to have agreed in writing to
waive the ineligibility of the arbitrator by act of appointment. In fact, the
said Judgment further goes on to say that the party which has unilaterally
appointed the arbitrator also has the right to object to such appointment,
irrespective of the fact that that party itself has appointed the arbitrator. It is
thus clear that the mere fact of making appointment in writing will not make
the ineligible appointment, a valid appointment. In this view of the matter,
the argument of the learned Senior Counsel for the Respondent, relying on
the Judgment of the Apex Court in Bhadra International (supra) that there is
no fixed format of a waiver under Section 12(5) is of no consequence
against the unilateral appointment. Further, the argument that no ground has
been raised by the Petitioner, does not bar the Petitioner from making such a
point when the appointment is contrary to the law laid down by the Apex
Court, which the law of the land under Article 141 of the Constitution of
India.
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By:PRATEEK
Signing Date:07.08.2026
21.08.45
10. In the present case, the Arbitration Clause provides that for all
disputes, or questions arising out of or relating to the Contract or relating to
construction or performance, which cannot be settled amicably, may be
resolved through arbitration and the arbitrator shall be appointed by the
Competent Financial Authority, who is a part of the Ministry of Defence,
and thus, an official of the Petitioner/Union of India, who is a party to the
dispute herein and as such, not qualified to appoint an arbitrator.
11. In the absence of compliance of proviso to Section 12(5) of the
Arbitration Act by the parties, the appointment of the arbitrator by the
petitioner is in violation of Section 12(5) read with Seventh Schedule of the
Arbitration Act. The appointment of the arbitrator is void ab-initio and
renders the Impugned Award nullity.
12. The Petition accordingly stands allowed and the Impugned Award is
set aside.
13. Pending application(s), if any, also stand disposed of.
SUBRAMONIUM PRASAD, J
AUGUST 06, 2026
AP
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By:PRATEEK
Signing Date:07.08.2026
21.08.45
