Himachal Pradesh High Court
Balbir Singh vs Sarkaghat on 13 July, 2026
Author: Ajay Mohan Goel
Bench: Ajay Mohan Goel
2026:HHC:28759
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CARBC No. 90 and 91 of 2025
.
Decided on : 13.07.2026
CARBC No. 90 of 2025
Balbir Singh ....Petitioner
Versus
of
The Executive Engineer, B & R Division, HPPWD,
Sarkaghat, District Mandi, HP. ...Respondent
CARBC No. 91of 2025
The Executive Engineer, B & R Division, HPPWD,
rt
Sarkaghat, District Mandi, H.P. ....Petitioner
Versus
Balbir Singh ...Respondent
Coram
The Hon'ble Mr. Justice Ajay Mohan Goel, Judge.
Whether approved for reporting?1 Yes
CARBC No. 90 of 2025
For the petitioner : Mr. J.S. Bhogal, Senior Advocate
with M/s T.S. Bhogal and Swati
Verma, Advocates.
For the respondent : M/s S.D. Vasudeva and Ayushi
Negi, Deputy Advocate Generals.
CARBC No. 91 of 2025
For the petitioner : M/s S.D. Vasudeva and Ayushi
Negi, Deputy Advocate Generals.
For the respondent : Mr. J.S. Bhogal, Senior Advocate
with M/s T.S. Bhogal and Swati
Verma, Advocates.
1
Whether reporters of the local papers may be allowed to see the judgment?
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Ajay Mohan Goel, Judge (Oral)
These two petitions have been filed by the
.
petitioners against the award dated 24.09.2022 passed by the
learned Arbitrator in Claim petition titled Balbir Singh vs The
Executive Engineer, Division Sarkaghat, HPPWD, in terms
whereof, the claim preferred by the claimant was partly
of
allowed. A perusal of the award demonstrates that it was
passed by Er.Ashok Kumar Chauhan, who was a retired
rt
Engineer-in-Chief from the Himachal Pradesh Public Works
Department, i.e. the contesting respondent-Department
before learned Arbitrator. Record further demonstrates that
learned Arbitrator was appointed unilaterally by the serving
Chief Engineer (Mandi Zone), HPPWD, Mandi, vide
communication dated 04.03.2021, which is not in dispute.
2. During the course of hearing of these two
petitions, learned Senior Counsel appearing for the claimant/
petitioner argued that in the present case, the award in
issue is void ab initio and against the Public Policy of India,
for the reason that the appointment of the learned Arbitrator,
in the facts and circumstances of the case was bad and thus
the Award, is non est in the eyes of law. Learned Senior
Counsel submitted that in terms of sub section (5) of Section
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12 of the Arbitration and Conciliation Act, 1996 (hereinafter
to be referred as ‘the Act’ for short), notwithstanding any prior
.
agreement to the contrary, any person whose relationship,
with the parties or Counsel or the subject-matter of the
dispute, was falling under any of the categories specified in
the 7th Schedule thereof, such person was ineligible to be
of
appointed as an Arbitrator. Learned Senior Counsel further
submitted that
rt proviso to this sub-section saved the
appointment of the Arbitrator, provided that the parties,
subsequent to the disputes having arisen between them,
waive the applicability of this sub-section by an express
agreement in writing. Learned senior counsel submitted that
in terms of the 7th schedule of the Act, no one can be an
Arbitrator, who is an employee, consultant, advisor or has
any other past or present business relationship with a party.
Learned Senior Counsel submitted that in the light of this
bar, obviously, the serving Chief Engineer (MZ) HPPWD,
Mandi, could not have been an Arbitrator in the case. Learned
Senior Counsel further submitted that the issue as to whether
a person, who is barred to be an Arbitrator in terms of
provisions of 7th Schedule of the Arbitration and Conciliation
Act, can appoint an arbitrator, has been answered by Hon’ble
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Supreme Court of India in Perkins Eastman Architects DPC
and another vs. HSCC (India) Limited, (2020) 20 Supreme
.
Court Cases 760, in which judgment, Hon’ble Supreme Court
has been pleased to hold that in case the Authority
appointing an Arbitrator is disqualified from being appointed
as an Arbitrator, then an Arbitrator so appointed by the said
of
authority is also disqualified to be an Arbitrator.
3. On the other hand, learned Deputy Advocate
rt
General submitted that record also suggests that after his
appointment as an Arbitrator, learned Arbitrator in terms of
order dated 22.04.2021, had conveyed to the parties that he
has no interest in the subject matter of the dispute between
the parties or any relationship with any of the parties to the
arbitration and the parties had conveyed to the Tribunal that
they have no objection to the appointment of the Arbitrator, to
arbitrate the dispute between the parties. Learned Deputy
Advocate General further submitted that as the parties herein
had waived off their right to object to the appointment of the
Arbitrator in terms of the proviso to Section 12(5) of the Act,
the objection taken by learned Senior Counsel for the
petitioner/claimant was not sustainable in the eyes of law.
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4. I have heard learned Senior Counsel appearing for
the claimant as also learned Deputy Advocate General and
.
have also gone through the award as also the record of the
learned Arbitrator.
5. In the present case, in terms of the contract
entered between the parties, after a dispute arose between the
of
parties, there was unilateral appointment of the learned
Arbitrator by the Chief Engineer (MZ), HPPWD Mandi. Said
rt
appointment was in terms of communication dated
04.03.2021, which is being reproduced herein below, which
reads as under:-
“Subject -In the matter of arbitration between Sh.
Balbir Singh Govt. contractor Village Tatiha PO &
Tehsil Sarkaghat Distt. Mandi HP and State of
HP through Executive Engineer, Sarkaghat
Division, HP: PWD Sarkaghat for the work
Metalling/Tarring and CD on Bag Saroli road
km.0/0 to 4/750 (SH: Removal of formation
deficiency, CD, P/L soling, M/T, Parapets and
road sicie drain in km. 0/0 to 4/750 under
NABARD RIDF-XX. against agreement No. 214
for the year 2015-16.
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Whereas disputes have arisen between the
.
Executive Engineer. Sarkaghat Division HP:PWD
Sarkaghat and Sh. Balbir Singh Govt. contractor
Village Tatiha PO & Tehsil Sarkaghat Distt.
Mandi HP in respect of above noted work and
of
whereas dispute arisen between the parties arerequired to be settled under clause 25 of the
rt
agreement No.214 for 2015-16 and to bereferred to the Sole Arbitration of the person to
be appointed by the Chief Engineer (MZ)
HP.PWD. Mandi (HP).
Therefore, in pursuance of the powers delegated
to me under the said clause of the agreement 1,
Ajay Gupta, Chief Engineer (MZ), HP.PWD.
Mandi, hereby appoint Er. Ashok Kumar
Chauhan, Engineer-in-Chief (Retd), as an
Arbitrator, to decide and make his award
regarding claims / disputes given by the
Contractor for the subject cited work and also
regarding the counter claim of the Executive
Engineer, Sarkaghat Division HP:PWD
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2026:HHC:28759Sarkaghat if any, followed subsequently, subject
always, however, to their admissibility under
.
Clause-25 of the aforesaid agreement.”
6. Record demonstrates that the appointment of
learned arbitrator besides being unilateral by one of the
parties, was also by an employee of one of the contesting
of
parties, that is to say the Chief Engineer (MZ), of the Public
Works Department between whom and the Claimant a
rt
dispute had arisen out of the terms of the contract entered
into between it and the Claimant. Therefore, obviously, as the
Chief Engineer (MZ), HPPWD, was an employee of one of the
parties, in terms of Section 12(5) of the Act, he was ineligible
to be appointed as an Arbitrator. In this backdrop, if one
peruses the judgment of Hon’ble Supreme Court of India in
Perkins Eastman Architects DPC and another vs. HSCC (India)
Limited, (2020) 20 Supreme Court Cases 760 (supra), one finds
that after referring to the earlier adjudications made by
Hon’ble Supreme Court, on the subject, Hon’ble Supreme
Court was therein pleased to hold as under:-
“17. In TRF Limited4, the Agreement was en-
tered into before the provisions of the Amending
Act (Act No.3 of 2016) came into force. It was sub-
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mitted by the appellant that by virtue of the provi-
sions of the Amending Act and insertion of the
.
Fifth and Seventh Schedules in the Act, the Man-
aging Director of the respondent would be a per-
son having direct interest in the dispute and as
such could not act as an arbitrator. The extension
of
of the submission was that a person who himselfwas disqualified and disentitled could also not
rt
nominate any other person to act as an arbitrator.
The submission countered by the respondent
therein was as under (SCC p. 385, para 701) –
“7.1. The submission to the effect that since
the Managing Director of the respondent has
become ineligible to act as an arbitrator sub-
sequent to the amendment in the Act, he
could also not have nominated any other per-
son as arbitrator is absolutely unsustain-
able, for the Fifth and the Seventh Schedules
fundamentally guide in determining whether
circumstances exist which give rise to justifi-
able doubts as to the independence and im-
partiality of the arbitrator. To elaborate, if
any person whose relationship with the par-
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ties or the counsel or the subject-matter of
dispute falls under any of the categories
.
specified in the Seventh Schedule, he is ineli-
gible to be appointed as an arbitrator but not
otherwise.”
18. The issue was discussed and decided by this
of
Court as under(TRF case2 SCCpp.403-04, paras
50-54-
rt
“50. First, we shall deal with Clause (d). There
is no quarrel that by virtue of Section 12(5) of
the Act, if any person who falls under any of
the categories specified in the Seventh Sched-
ule shall be ineligible to be appointed as the
arbitrator. There is no doubt and cannot be, for
the language employed in the Seventh Sched-
ule, the Managing Director of the Corporation
has become ineligible by operation of law. It is
the stand of the learned Senior Counsel for the
appellant that once the Managing Director be-
comes ineligible, he also becomes ineligible to
nominate. Refuting the said stand, it is can-
vassed by the learned Senior Counsel for the
respondent that the ineligibility cannot extend
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to a nominee if he is not from the Corporation
and more so when there is apposite and requi-
.
site disclosure. We think it appropriate to
make it clear that in the case at hand we are
neither concerned with the disclosure nor ob-
jectivity nor impartiality nor any such other cir-
of
cumstance. We are singularly concerned with
the issue, whether the Managing Director, af-
rt
ter becoming ineligible by operation of law, is
he still eligible to nominate an arbitrator. At
the cost of repetition, we may state that when
there are two parties, one may nominate an
arbitrator and the other may appoint another.
That is altogether a different situation. If there
is a clause requiring the parties to nominate
their respective arbitrator, their authority to
nominate cannot be questioned. What really in
that circumstance can be called in question is
the procedural compliance and the eligibility of
their arbitrator depending upon the norms pro-
vided under the Act and the Schedules ap-
pended thereto. But, here is a case where the
Managing Director is the “named sole arbitra-
tor” and he has also been conferred with the
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power to nominate one who can be the arbitra-
tor in his place. Thus, there is subtle distinc-
.
tion. In this regard, our attention has been
drawn to a two-Judge Bench decision in State
of Orissa v. Commr. Of Land Records and Set-
tlement7. In the said case, the question arose,
of
can the Board of Revenue revise the order
passed by its delegate. Dwelling upon the said
rt
proposition, the Court held: (SCC p. 173, para
25)
’25. We have to note that the Commissioner
when he exercises power of the Board dele-
gated to him under Section 33 of the Settle-
ment Act, 1958, the order passed by him is to
be treated as an order of the Board of Revenue
and not as that of the Commissioner in his ca-
pacity as Commissioner. This position is clear
from two rulings of this Court to which we
shall presently refer. The first of the said rul-
ings is the one decided by the Constitution
Bench of this Court in Roop Chand vs. State
of Punjab8. In that case, it was held by the
majority that where the State Government
had, under Section 41(1) of the East Punjab
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Holdings (Consolidation and Prevention of
Fragmentation) Act, 1948, delegated its appel-
.
late powers vested in it under Section 21(4) to
an “officer”, an order passed by such an offi-
cer was an order passed by the State Govern-
ment itself and “not an order passed by any
of
officer under this Act” within Section 42 and
was not revisable by the State Government. It
rt
was pointed out that for the purpose of exer-
cise of powers of revision by the State under
Section 42 of that Act, the order sought to be
revised must be an order passed by an officer
in his own right and not as a delegate of the
State. The State Government was, therefore,
not entitled under Section 42 to call for the
records of the case which was disposed of by
an officer acting as its delegate.’ (emphasis in
original)
51. Be it noted in the said case, reference was
made to Behari Kunj Sahkari Awas Samiti v.
State of U.P.9, which followed the decision
in Roop Chand v. State of Punjab6. It is
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seemly to note here that the said principle has
been followed in Indore Vikas Pradhikaran8.
.
52. Mr Sundaram has strongly relied on Prat-
apchand Nopaji11. In the said case, the three-
Judge Bench applied the maxim “qui facit per
alium facit per se”. We may profitably repro-
of
duce the passage: (SCC p. 214, para 9)
rt
“9. … The principle which would apply, if the
objects are struck by Section 23 of the Con-
tract Act, is embodied in the maxim: “qui facit
per alium facit per se” (what one does through
another is done by oneself). To put it in an-
other form, that which cannot be done directly
may not be done indirectly by engaging an-
other outside the prohibited area to do the ille-
gal act within the prohibited area. It is immate-
rial whether, for the doing of such an illegal
act, the agent employed is given the wider
powers or authority of the “pucca adatia”, or,
as the High Court had held, he is clothed with
the powers of an ordinary commission agent
only.”
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53. The aforesaid authorities have been com-
mended to us to establish the proposition that
.
if the nomination of an arbitrator by an ineligi-
ble arbitrator is allowed, it would tantamount
to carrying on the proceeding of arbitration by
himself. According to the learned counsel for
of
the appellant, ineligibility strikes at the root of
his power to arbitrate or get it arbitrated upon
rt
by a nominee.
54. In such a context, the fulcrum of the con-
troversy would be, can an ineligible arbitrator,
like the Managing Director, nominate an arbi-
trator, who may be otherwise eligible and a re-
spectable person. As stated earlier, we are
neither concerned with the objectivity nor the
individual respectability. We are only con-
cerned with the authority or the power of the
Managing Director. By our analysis, we are
obligated to arrive at the conclusion that once
the arbitrator has become ineligible by opera-
tion of law, he cannot nominate another as an
arbitrator. The arbitrator becomes ineligible as
per prescription contained in Section 12(5) of
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the Act. It is inconceivable in law that person
who is statutorily ineligible can nominate a
.
person. Needless to say, once the infrastruc-
ture collapses, the superstructure is bound to
collapse. One cannot have a building without
the plinth. Or to put it differently, once the
of
identity of the Managing Director as the sole
arbitrator is lost, the power to nominate some-
rt
one else as an arbitrator is obliterated. There-
fore, the view expressed by the High Court is
not sustainable and we say so.”
19. It was thus held that as the Managing Direc-
tor became ineligible by operation of law to act as
an arbitrator, he could not nominate another per-
son to act as an arbitrator and that once the iden-
tity of the Managing Director as the sole arbitrator
was lost, the power to nominate someone else as
an arbitrator was also obliterated. The relevant
Clause in said case had nominated the Managing
Director himself to be the sole arbitrator and also
empowered said Managing Director to nominate
another person to act as an arbitrator. The Man-
aging Director thus had two capacities under said
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Clause, the first as an arbitrator and the second
as an appointing authority. In the present case
.
we are concerned with only one capacity of the
Chairman and Managing Director and that is as
an appointing authority.
20. We thus have two categories of cases. The
of
first, similar to the one dealt with in TRF Limited4
where the Managing Director himself is named as
rt
an arbitrator with an additional power to appoint
any other person as an arbitrator. In the second
category, the Managing Director is not to act as
an arbitrator himself but is empowered or autho-
rised to appoint any other person of his choice or
discretion as an arbitrator. If, in the first category
of cases, the Managing Director was found incom-
petent, it was because of the interest that he
would be said to be having in the outcome or re-
sult of the dispute. The element of invalidity
would thus be directly relatable to and arise from
the interest that he would be having in such out-
come or decision. If that be the test, similar inva-
lidity would always arise and spring even in the
second category of cases. If the interest that he
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has in the outcome of the dispute, is taken to be
the basis for the possibility of bias, it will always
.
be present irrespective of whether the matter
stands under the first or second category of
cases. We are conscious that if such deduction is
drawn from the decision of this Court in TRF Lim-
of
ited4, all cases having clauses similar to that
with which we are presently concerned, a party
rt
to the agreement would be disentitled to make
any appointment of an Arbitrator on its own and
it would always be available to argue that a
party or an official or an authority having interest
in the dispute would be disentitled to make ap-
pointment of an Arbitrator.
21. But, in our view that has to be the logical de-
duction from TRF Limited4. Paragraph 50 of the
decision shows that this Court was concerned
with the issue, “whether the Managing Director,
after becoming ineligible by operation of law, is
he still eligible to nominate an Arbitrator” The in-
eligibility referred to therein, was as a result of
operation of law, in that a person having an inter-
est in the dispute or in the outcome or decision
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thereof, must not only be ineligible to act as an
arbitrator but must also not be eligible to appoint
.
anyone else as an arbitrator and that such per-
son cannot and should not have any role in chart-
ing out any course to the dispute resolution by
having the power to appoint an arbitrator. The
of
next sentences in the paragraph, further show
that cases where both the parties could nominate
rt
respective arbitrators of their choice were found to
be completely a different situation. The reason is
clear that whatever advantage a party may de-
rive by nominating an arbitrator of its choice
would get counter balanced by equal power with
the other party. But, in a case where only one
party has a right to appoint a sole arbitrator, its
choice will always have an element of exclusivity
in determining or charting the course for dispute
resolution. Naturally, the person who has an in-
terest in the outcome or decision of the dispute
must not have the power to appoint a sole arbitra-
tor. That has to be taken as the essence of the
amendments brought in by the Arbitration and
Conciliation (Amendment) Act, 2015 (Act 3 of
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2016) and recognised by the decision of this
Court in TRF Ltd.2″
.
7. It is evident from the said judgment of Hon’ble
Supreme Court that the person, who is interested in the
outcome of decision of the dispute, must not have the power
of
to appoint the Sole Arbitrator. Hon’ble Supreme Court hasalso held that where a person has become ineligible by
rt
operation of law to act as an Arbitrator, he could notnominate another person to act as an Arbitrator and that
once the identity of said person as the Sole Arbitrator is lost,
the power to nominate some else as an Arbitrator was also
obliterated. Hon’ble Supreme Court in para 20 of the
judgment has further observed that there can be two kind of
situations, i.e. one where the officer himself is named as an
arbitrator with an additional power to appoint any other
person as an Arbitrator and the second category where the
officer is not to act as an Arbitrator himself but is empowered
or authorized to appoint any other person of his choice or
discretion as an Arbitrator. By referring to its earlier judgment
in TRF Ltd. Vs. Energo Engg. Projects Ltd. (2017) 8 SCC 377,
Hon’ble Supreme Court further held that if in the first
category of cases, the officer was found incompetent, it was
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2026:HHC:28759because of the interest that he would be said to be having in
the outcome or result of the dispute, the element of validity
.
would thus be directly relatable to and arise from the interest
that he would be having in such outcome or decision and if
that be the test, similar invalidity would always arise and
spring even in the second category of cases. Hon’ble Supreme
of
Court further held that if the interest that he has in theoutcome of the dispute, is taken to be the basis for the
rt
possibility of bias, it will always be present irrespective ofwhether the matter stands under the first or second category
of cases.
8. Therefore, it is evident from the said judgment of
Hon’ble Court that wherein an officer himself is ineligible to
act as an arbitrator, then any Arbitrator appointed by such an
ineligible officer, will be an invalid appointment. Therefore, in
the light of said judgment of the Hon’ble Supreme Court, this
Court has no hesitation in holding that as the Chief
Secretary (MZ), HPPWD, Mandi, was ineligible to be
appointed as an Arbitrator being the employee of one of the
contesting parties and having a direct interest in the outcome
of the litigation, he was ineligible to appoint Er. Ashok Kumar
Chauhan as an Arbitrator in the matter. Therefore, the
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2026:HHC:28759appointment of Er.Ashok Kumar Chauhan as a Sole
Arbitrator by the Chief Engineer (MZ) HPPWD was bad in law.
.
On this count, the award passed by said learned Arbitrator
being in conflict with Public Policy of India as also law
declared by Hon’ble Supreme Court of India in Perkins
Eastman (supra) is obviously bad in law and is held as such.
of
9. As far as the issue raised by learned Deputy
Advocate General of waiver and the compliance of the proviso
rt
to Section 12(5) of the Act is concerned, this Court is of theconsidered view that this proviso does not come to the rescue
of the State in the facts of this case.
10. The proviso to Section 12(5) of the Act provides
that the parties may, subsequent to disputes having arisen
between them, waive the applicability of sub-section (5) of
Section 12 “by an express agreement in writing”. Therefore,
the condition precedent for this proviso to come into force is
that subsequent to the dispute having been arisen, there has
to be a waiver of the applicability of proviso to Section 12(5) of
the Act and this waiver has to be by way of an express
agreement in writing.
11. A perusal of the record of the arbitration
proceedings demonstrates that there is no express agreement
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22
2026:HHC:28759in writing on record entered into between the parties and
executed after the dispute has arisen, to the effect that they
.
are waiving off the applicability of Section 12(5) of the Act.
12. Reliance upon the order passed by the learned
Arbitrator dated 22.04.2021 by the learned Deputy Advocate
General is not a substitute to the statutory requirement of the
of
proviso to Section 12(5) of the Act.
13. Inrt the absence of there being an express
agreement in writing, mentioning therein the waiver on the
part of the parties to the applicability of Section 12(5) of the
Act in the proceedings, what is contained in the order passed
by learned Arbitrator dated 22.04.2021 is of no consequence.
14. In fact, this issue is no more res integra. Hon’ble
Supreme Court in Bharat Broadband Network Limited vs.
United Telecoms Limited (2019) 5 Supreme Court Cases
755, has been pleased to hold with regard to the applicability
of Section 12(5) of the Act that unlike Section 4 of the
Arbitration and Conciliation Act, which deals with deemed
waiver of the right to object by conduct, the proviso to Section
12(5) of the Act 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
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2026:HHC:28759agreement in writing. Hon’ble Supreme Court has held that
Section 12(5) of the Act refers to an express agreement in
.
writing and 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. Hon’ble
Supreme Court has also held that it is thus necessary that
of
there has to be an express agreement in writing and thisagreement must be an agreement by which both parties with
rt
full knowledge of the fact that the learned Arbitrator isineligible to be appointed as an arbitrator still go ahead and
say that they have full faith and confidence in the arbitrator
to continue as such.
15. Thereafter, recently, Hon’ble Supreme Court of
India in Bhadra International (India) Pvt. Ltd. And others
vs. Airports Authority of India, 2026 SCC Online SC 7, has
again been pleased to reiterate that ineligibility of an
arbitrator can be waived off only by way of an express
agreement in writing and conduct of the parties is
inconsequential and does not constitute a valid waiver under
the proviso.
16. Therefore, in the light of above discussion, as
obviously, the so called waiver to the appointment on the part
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2026:HHC:28759of the parties to the appointment of the Arbitrator cannot save
the said invalid appointment of the Arbitrator, both these
.
petitions are disposed of by setting aside the award dated
24.09.2022, passed by the learned Arbitrator on the ground
that the said award is against the Public Policy of India as
well as in contravention to the law declared by Hon’ble
of
Supreme Court of India in judgments referred to herein aboveas the appointment of the learned Arbitrator was bad in law.
rt
The parties are at liberty to have recourse qua the redressal oftheir grievance in accordance with law. Pending
miscellaneous application(s), if any, also stand disposed of
accordingly.
(Ajay Mohan Goel)
July 13, 2026 Judge
(narender)
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