Sec.12(5) Arbitration & Conciliation Act Applies With Full Vigour When There Is No Express Waiver In Writing By Parties: Delhi High Court

The High Court rendered such a finding while holding the appointment of an arbitrator in terms of the contract between the parties to be ex facie illegal.

The Division Bench of Justice C. Hari Shankar and Justice Om Prakash Shukla held, “There being no express waiver of Section 12(5) in writing by either of the parties, Section 12(5) applies with full vigour.”

Senior Advocate Raj Shekhar Rao represented the Petitioner, while Advocate Ankur Mahindro represented the Respondent.

Factual Background

Disputes, which emanated out of an agreement dated January 12, 2016, between the appellant and the respondent, were referred to arbitration and culminated in an arbitral award which was adverse to the respondent. The respondent challenged the said award before the Court under Section 34 of the Arbitration and Conciliation Act, 1996. A Single Judge of the Court allowed the petition and set aside the arbitral award, solely on the ground that the appointment of the arbitrator was in violation of Section 12(5). Aggrieved thereby, the appellant instituted the appeal before the High Court.

Reasoning

The Bench explained that Section 12(5) of the 1996 Act proscribes any person whose relationship with the parties, their Counsel or the subject matter of dispute, falls under any of the categories specified in the Seventh Schedule to the 1996 Act, from being appointed as an arbitrator. It was further noted that arbitration clauses which allow either one of the parties to appoint the arbitrator have been held to be illegal and incapable of being enforced in law. “The rigour of this stipulation is relaxed only in the proviso to Section 12(5). The proviso entitles either party to waive the applicability of Section 12(5) by an express agreement in writing”, it added.

Reference was made to the judgment of the Supreme Court in Bhadra International (India) (P) Ltd v. Airports Authority of India (2026), where the Court held that an express agreement in writing has to be exactly that and nothing less. The Court held that no amount of consent, therefore, can substitute the requirement of an express agreement in writing. It was further observed therein that the parties have, to expressly waive the applicability of Section 12(5), in writing, for the proviso to Section 12(5) to apply. Otherwise, if the arbitrator has been appointed by one of the parties, the proceedings stand vitiated ab initio, and the resultant arbitral award can be challenged even on that sole ground.

The Bench thus stated, “Once the Supreme Court has spoken on an issue, it is the duty of every Court, both under Article 141 and Article 144 of the Constitution of India, to follow the law declared by the Supreme Court.”

On a perusal of the Office Memorandum dated September 6, 2019, issued by the ADG, the Bench noted that the same clearly disclosed that the arbitrator was appointed by the ADG unilaterally. Even though one of the endorsements below the said letter purported to state that the appointment was in terms of the order dated August 23, 2019, passed by the Single Judge, that did not materially alter the legal position. “Had the learned Single Judge appointed the arbitrator on 23 August 2019, exercising jurisdiction under Section 11(6) of the 1996 Act, things might have been different. The position might also had been different, had the parties submitted in writing to this Court, prior to the passing of the order dated 23 August 2019, that they were waiving the applicability of Section 12(5) of the 1996 Act”, it added.

The Bench further stated that the appointment of the arbitrator in terms of the contract between the parties was ex facie illegal, in view of the law declared by the Supreme Court in Bhadra (Supra). Thus, upholding the view of the Single Judge that the appointment of the arbitrator was illegal, being in the teeth of Section 12(5) read with the decision of the Supreme Court in Bharat Broadband and Perkins, the Bench dismissed the appeal.

Cause Title: M/S. M.V. Omni Projects (India) Ltd. v. Union of India Through Executive Engineer CPWD (Neutral Citation: 2026:DHC:287-DB)

Appearance

Petitioner: Senior Advocate Raj Shekhar Rao, Advocates Subodh Kr. Pathak, Amit Sinha, Abhishek Sandillya, Pawan Kumar Sharma, Wamic Wasim

Respondent: Advocates Ankur Mahindro, Ruchir Mishra, Rohan Taneja, Ankush Satija, Aditya Kapur, Mohit Dagar, Raghav Kalra, Animesh Dubey, Raghav Kalra, Creesha Shashtri, Jhanak Setia, Radhika Agrawal

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