Delhi High Court
Ptc Techno Pvt. Ltd vs Samsung India Electronics Pvt. Ltd on 25 April, 2026
$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 25.04.2026
+ O.M.P. (COMM) 129/2019 & I.A. 4353/2021
PTC TECHNO PVT. LTD. .....Petitioner
Through: Mr. Tarun Diwan & Ms. Pyari,
Advs.
versus
SAMSUNG INDIA ELECTRONICS
PVT. LTD. .....Respondent
Through: Mr. Sudhir Nandrajog, Sr.
Adv. with Mr. Niraj Singh, Ms.
Ankita Singh & Mr. Karteek,
Advs.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
AVNEESH JHINGAN, J. (ORAL)
1. This matter is taken up today as 03.03.2026 was declared
holiday vide Notification No. 64/G-4/Gen1.-I/DHC dated 27.02.2026.
2. This petition is filed under Section 34 of the Arbitration and
Conciliation Act, 1996 (for short „the Act‟) challenging the arbitral
award dated 17.11.2018.
3. The short controversy involved is whether the appointment of
the arbitrator by the Vice President of the respondent company is in
violation of the amended Section 12(5) of the Act.
4. The brief facts are that the parties to the lis entered into a Mould
Agreement dated 01.06.2009 (hereinafter referred to as „MA‟) and two
Purchase and Sale Agreements dated 26.11.2009 and 20.06.2013. As
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per the MA, the respondent was to supply moulds for the
manufacturing of parts to be carried out by the petitioner. The
agreements were terminated and disputes arose between the parties
with regard to the return of the moulds. Clause 18 of the MA
reproduced below provided for dispute resolution through arbitration.
On 25.04.2017, a sole arbitrator was appointed by the Vice President
of the respondent company.
“18. Any dispute or differences whatsoever arising
between the Parties out of relating to the construction,
meaning or operation or effect of this Agreement shall,
unless resolved amicably, be settled referring the matter to
Arbitration of a Sole Arbitrator to be appointed by the
Vice President of Samsung under the Arbitration and
Conciliation Act 1996. The venue of Arbitration shall be at
New Delhi and the Courts of Delhi shall have the
exclusive jurisdiction under this Agreement.”
4.1 An application under Section 9 of the Act was filed by the
respondent and the parties were directed to maintain status quo.
During the pendency of the application, the respondent appointed the
arbitrator. The application was disposed of by order dated 20.07.2017,
which is reproduced below:
“The learned counsel for the petitioner states that Mr.
Justice Sunil Ambwani (Retd.) has been appointed as a
sole arbitrator to adjudicate the disputes between the
parties.
The learned counsel for the parties agree that
without prejudice to their rights and contentions and
objections, the present issue may be heard by the learned
sole arbitrator by exercising powers under Section 17 of
the Act.
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Parties may accordingly file appropriate pleadings
before the learned arbitrator who may deal with the same
as per law. Interim order passed by this court on
03.05.2017 shall continue to operate till disposal of the
application that will be filed by the petitioner under
Section 17 of the Act.
The learned arbitrator is free to modify or vacate the
order as per law.
The petition stands disposed of.”
5. Learned counsel for the petitioner contends that the
appointment of the arbitrator is in violation of Section 12(5) read with
Seventh Schedule of the Act and relies upon the decision of the
Supreme Court in Bhadra International (India) Pvt. Ltd. & Ors. v.
Airports Authority of India, 2026 INSC 6.
6. Learned senior counsel for the respondent contends that the
appointment of arbitrator was never objected to by the petitioner.
Contention is that from the perusal of the order dated 20.07.2017 of
this Court, it is evident that the petitioner had in writing given consent
for waiver of Section 12(5) of the Act. The submission is that the
petitioner filed three applications under Sections 12, 14 & 15 and 16
of the Act but the objection of violation of Section 12(5) of the Act
was never raised.
6.1 Reliance is on the decision of the Supreme Court in Quippo
Construction Equipment Ltd. v. Janardan Nirman Pvt. Ltd.,
(2020) 18 SCC 277 to argue that the non-raising of an objection to the
appointment tantamounts to consent. A decision of this Court in D.K.
Gupta & Anr. v. Renu Munjal, 2017 SCC OnLine Del 12385 is
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pressed into service to buttress the contention that the objection of
unilateral appointment cannot be raised for the first time in a petition
under Section 34 of the Act that to after having participated in the
arbitration proceedings.
7. Before proceeding further, it would be apposite to quote the
following decisions:
7.1 The Supreme Court in Bhadra International (supra) dealt with
the following three issues:
“29….i. Whether the sole arbitrator could be said to have
become “ineligible to be appointed as an arbitrator”
by virtue of sub-section (5) of Section 12 of the Act,
1996?
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?
iii. Whether the appellants could have raised an objection
to the appointment of the sole arbitrator for the first
time in an application under Section 34 of the Act,
1996?”
Held:
“123…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, theSignature Not Verified
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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.”
7.2 The Division Bench of this Court in Mahavir Prasad Gupta
and Sons v. Govt. of NCT of Delhi, 2025 SCC OnLine Del 4241
dealt with the following issues:
“74…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?
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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?”
The Court concluded:
“84….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
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
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„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.”
8. After amendment of Section 12(5) of the 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 by the
parties to waive applicability of Section 12(5) of the Act is void ab
initio. The filing of the statement of claim or participation in the
arbitral proceedings cannot be construed to be waiver under the
proviso to Section 12(5) of the Act. The unilateral appointment of the
arbitrator can be objected to for the first time under Section 34 of the
Act.
9. Clause 18 of the MA provides for resolution of disputes through
arbitration and the arbitrator was to be appointed by the Vice
President of the respondent company.
10. The law is well settled that an official of a party to the dispute
can neither be appointed as an arbitrator nor can appoint an arbitrator
but in the case in hand the arbitrator was appointed by the Vice
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President of the respondent company.
11. The contention that the appointment of the arbitrator was never
objected to and that this issue was never raised before the arbitrator
during the arbitration proceedings is of no avail. The Supreme Court
in Bhadra International (supra) held that there should be express
written consent by the parties for waiver of the applicability of Section
12(5) of the Act. It is also held that the objection to unilateral
appointment can be raised for the first time in a petition under Section
34 of the Act. The relevant paragraphs are reproduced below:
“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.
*** *** ***
109. When an award has been passed, the proceedings
before the arbitral tribunal conclude, leaving no possibility
of substituting the arbitrator at this stage. In other words,
once an award is passed, the mandate of the arbitral
tribunal also arrives at a conclusion. In such
circumstances, a party aggrieved by the arbitrator’s
ineligibility may challenge the award by filing an
application under Section 34 of the 1996 Act, as an award
passed by an ineligible arbitrator is nullity, non-est, or void
ab initio, and against the public policy of India.”
12. The Supreme Court in Bhadra International (supra) held that
waiver under the proviso to Section 12(5) of the Act involves a
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conscious decision to waive rigour of statutory provisions and the
person waiving such right should be aware of the right. A legal right
cannot be taken away by implication and the waiver has to be an
unequivocal expression.
13. There is no prescribed format under the proviso to Section 12(5)
of the Act for an express agreement in writing but it shall not mean
that the waiver can be inferred by implication or through conduct. It
would be relevant to quote the following paragraph from Bhadra
International (supra):
“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.”
14. Decisions of Quippo Construction Equipment (supra) and
D.K. Gupta (supra) relied by respondent are not applicable in the
facts of the present case in view of the law laid down by the Supreme
Court in Bhadra International (supra).
15. Reliance of the learned senior counsel for the respondent on the
order of this Court dated 20.07.2017 to contend that there was a
written consent by the petitioner for waiver of Section 12(5) of the Act
lacks merit. The issue of the appointment of the arbitrator was not
before this Court. In view of the appointment of the arbitrator during
pendency of the application, the parties agreed that the relief claimed
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under Section 9 of the Act shall be pressed under Section 17 of the
Act.
16. The matter needs to be considered from another angle. The
express consent in writing under proviso to Section 12(5) of the Act
has to be of both the parties. It is not the case set up before this Court
that the respondent had given written consent under proviso to Section
12(5) of the Act.
17. The non- compliance of proviso to Section 12(5) of the Act by
the parties brings the appointment of the arbitrator in teeth of Section
12(5) read with Seventh Schedule of the Act. The appointment of the
arbitrator is void ab-initio and renders the impugned award nullity.
18. The petition is allowed and the impugned award is set aside.
Pending application is also disposed of.
AVNEESH JHINGAN, J
APRIL 25, 2026
Ch/kp
Reportable:- Yes
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