In a couple of petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 (Act) against an award dated 27-07-2022, a Single Judge Bench of Justice Avneesh Jhingan held that the appointment of the arbitrator by the Air Force Naval Housing Board (AFNHB) (petitioner) was void ab initio, rendering the impugned award null.
The AFNHB issued a Notice Inviting Tender dated 05-03-2010 for the construction of a residential apartment, and the respondent was the successful bidder. The contract was executed between the parties on 10-06-2010, and the work was completed on 28-11-2017. A dispute arose between the parties, and the respondent invoked arbitration on 18-11-2019, after which a sole arbitrator was unilaterally appointed. The AFNHB submitted that the arbitrator’s appointment was in violation of Section 12(5) and that the impugned award was liable to be set aside.
The Court stated that after the amendment of Section 12(5) of the Act, an employee of a party in dispute could neither be appointed as an arbitrator nor could they nominate or appoint any other person as an arbitrator. It was stated that the unilateral appointment, in the absence of a written express agreement between the parties to waive the applicability of Section 12(5), is void ab initio. The Court said that filing of the claim statement or participation in arbitral proceedings could not be construed as a waiver under the proviso to Section 12(5) of the Act.
The Court stated that an official of a party to the dispute could neither be appointed as an arbitrator nor appoint one, and found that, in the present dispute, the arbitrator was appointed by the petitioner. Referring to the Supreme Court’s decision in Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India 2026 INSC 6 and this court’s decision in Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi 2025 SCC OnLine Del 4241, the Court held that the arbitrator’s appointment was violative of the amended provisions of Section 12(5) of the Act.
Regarding the existence of an express waiver in writing between the parties for non-applicability of Section 12(5), the Court said that even though there was no prescribed format under the proviso to Section 12(5) for an express agreement in writing, it would not mean that the waiver could be inferred by implication or through conduct. Hence, the Court held that the arbitrator’s appointment was void ab initio and that it rendered the impugned award null.
Thus, the petition was allowed, and the impugned award was set aside.
