Delhi High Court: In a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Act’) challenging an interim award dated 6-9-2019 (‘impugned award’) wherein the Arbitral Tribunal dismissed the prayer of the petitioner for impleadment of Respondent 2, the Single Judge Bench of Amit Bansal, J, held that a letter consenting to the unilateral appointment of a sole arbitrator does not amount to waiver under Section 12(5) of the Act.
Thus, the Court held the appointment of the sole arbitrator to be void ab initio and set aside the impugned award.
Background
The petitioner, Alpro Industries is a partnership firm engaged in the promotion of aluminum doors, windows and façade works. In 2014, Respondent 1, Ambience Pvt. Ltd., and the petitioner had entered into a contract for supply and installation of a glass façade system at the NH-8 Commercial Tower Project, Ambience Island, Gurgaon. Through subsequent amendments, the scope of work was expanded and the payment terms were modified accordingly.
The petitioner had invoked arbitration proceedings in 2018. Pursuant to the notice of invocation of arbitration proceedings, Respondent 1 had appointed the sole arbitrator in terms of Clause 23 of the contract. Respondent 1 had raised the preliminary issue that Respondent 2 was not a party to the arbitration agreement and need not be impleaded.
Vide the impugned award, the Arbitral Tribunal had held that no arbitration agreement existed between the petitioner and Respondent 2. The Tribunal had further observed that it lacked the jurisdiction to extend the scope of the arbitration clause and had accordingly declined the petitioner’s prayer to implead Respondent 2.
The instant petition had been filed seeking setting aside of the impugned award on the ground of unilateral appointment of the arbitrator by Respondent 1 in absence of an express agreement in writing, waiving the requirement under proviso to Section 12(5) of the Act.
Analysis, Law and Decision
The Court noted that the arbitration clause in the contract between the parties evidently provided for a unilateral appointment of arbitrator. The issue for consideration was whether there was a waiver on behalf of the petitioner in terms of proviso to Section 12(5) of the Act.
The Court referred to the case of Bharat Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755, wherein the Supreme Court had emphasized that the agreement between the parties must be with the full knowledge that the arbitrator is ineligible to appointed as an arbitrator and yet the parties have full faith and confidence in him to continue as an arbitrator.
The Court also referred to the case of Mahavir Prasad Gupta v. GNCTD, 2025 SCC OnLine Del 4241 (‘Mahavir Case’) wherein the Division Bench of the Court had held that an arbitration agreement providing for unilateral appointment of a sole arbitrator is a nullity and cannot be enforced. Additionally, the waiver under Section 12(5) must be express and in writing. The ineligibility of a unilaterally appointed sole arbitrator can be waived only by an express agreement in writing between the parties.
Applying the ratio of the aforementioned case to the facts at hand, the Court observed that a letter sent by the petitioner, consenting to the appointment of a sole arbitrator, would not constitute a waiver for the purposes of Section 12(5) of the Act. At best, it would constitute a conditional acceptance of the appointment of a sole arbitrator.
The Court further noted that the Mahavir Case also clarified that the issue of unilateral appointment of an arbitrator is a fundamental issue which goes to the root of the matter and can be examined by the Court suo moto at any stage.
Thus, the Court held that since the appointment of the sole arbitrator was invalid an there was no express waiver in writing in terms of the proviso to Section 12(5) of the Act, the impugned award was liable to be set aside.
[Alpro Industries v. Ambience Pvt. Ltd., O.M.P.(COMM) No. 480 of 2019, decided on 14-11-2025]
Advocates who appeared in this case:
For the Petitioner: Kirtiman Singh, Senior Advocate, Ajay Singh, Amit Kumar, Vivek Kumar Singh, Animesh Mishra, Mohak Gulati, Maulik Khurana, Advocates
For the Respondent: P. K. Agrawal, Akshay Chitkara, Sanjoli Gupta, Sudhir Bisla, Advocates
Buy Arbitration and Conciliation Act, 1996 HERE
