{"id":355319,"date":"2025-08-01T17:30:55","date_gmt":"2025-08-01T12:00:55","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=355319"},"modified":"2025-08-01T18:11:27","modified_gmt":"2025-08-01T12:41:27","slug":"del-hc-on-invalidity-of-unilateral-arbitrator-appointment","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2025\/08\/01\/del-hc-on-invalidity-of-unilateral-arbitrator-appointment\/","title":{"rendered":"Delhi High Court: Unilateral arbitrator appointment invalid without express written waiver under Section 12(5) of Arbitration Act"},"content":{"rendered":"
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Delhi High Court:<\/span> The present appeal was filed under Section 37<\/a> of the Arbitration and Conciliation Act, 1996<\/a> (\u2018Arbitration Act\u2019) challenging the order dated 23-5-2023 passed by the Commercial Court. By the said order, the Arbitration Award dated 12-10-2020 granting the appellant Rs. 1,76,01,359, was set aside on the ground that the Sole Arbitrator was unilaterally appointed by the State of Delhi (\u2018Respondent\u2019), and the Award by a person ineligible to be appointed as an arbitrator under Section 12(5)<\/a> read with Seventh<\/a> Schedule of the Arbitration Act<\/a>, was against public policy of India.<\/p>\n

The Division Bench of Vibhu Bakhru and Tejas Karia*<\/span>, JJ., while dismissing the present appeal observed that any proceedings conducted before unilaterally appointed Arbitrator were a nullity and could not result into an enforceable award being against Public Policy of India and could be set aside under Section 34<\/a> of the Arbitration Act<\/a> and\/or refused to be enforced under Section 36. Further, the ineligibility of a unilaterally appointed arbitrator could be waived only by an express agreement in writing between the parties after the dispute had arisen between them and the award passed by a unilaterally appointed arbitrator was a nullity as the ineligibility goes to the root of the jurisdiction.<\/p>\n

Background<\/h3>\n

The dispute arose from a contract entered into by the appellant for strengthening of a Road (\u2018Project\u2019), for which the appellant was issued a work order on 25-11-2014 for a total contract value of Rs. 5,16,82,612\/-, and commenced work on 9-12-2014. The project, which was expected to be completed in three months, was finished on 21-5-2015. Post-completion, Quality Assurance Unit of State of Delhi conducted an inspection and found the road thickness at several points to be below the required thickness of 165mm. Consequently, the respondent withheld the appellant\u2019s final bill submitted on 16-11-2015, on grounds that the thickness of the constructed road was allegedly less than the prescribed specifications.<\/p>\n

In response, a Third-Party Quality Audit (\u2018TPQA\u2019) was conducted by IIT Roorkee and PWD officials and their report, dated 28-3-2016, found the executed work to be within permissible tolerances and acceptable. Upon consideration of the said inspection, the respondent directed to lay an additional layer of 37mm thick Dense Bituminous Concrete (\u2018DBC\u2019) over a 20-meter stretch and continued withholding the payment.<\/p>\n

Consequently, the appellant invoked arbitration clause on 18-10-2018 and the respondent appointed former DG (Works), CPWD, as the Sole Arbitrator. The Arbitrator upheld the report dated 28-3-2016 submitted by TPQA and declared that the report was comprehensive, reliable, and impartial and noted that the measured total average thickness was found to be within the permissible limits and, accordingly, the report recommended acceptance of the work. Thereafter, the Arbitrator awarded the appellant Rs. 1,76,01,359\/-.<\/p>\n

The respondent challenged the Award under Section 34<\/a> of the Arbitration Act<\/a> arguing that the Arbitrator’s appointment violated Section 12(5) and Seventh Schedule. The challenge succeeded, and the Award was set aside, against which the appellant had filed the present appeal.<\/p>\n

The Court identified the following key legal issues for determination:<\/p>\n