Unilateral appointment of sole arbitrator void ab initio, award rendered a nullity: Delhi high court

Delhi High Court declares unilateral appointment of a sole arbitrator as void from the beginning, nullifying the award.

Case Details

Case Title: Airports Authority of India v. Ahluwalia Contracts India Ltd.

Coram: Justice Avneesh Jhingan The Delhi High Court has set aside an arbitral award on the ground that the appointment of the sole arbitrator was unilateral and in violation of the amended Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996.

Justice Avneesh Jhingan was hearing a petition under Section 34 of the Act filed by the Airports Authority of India (AAI) against an award dated 10.08.2023 passed in favour of Ahluwalia Contracts India Ltd.

Background

AAI had awarded the construction of the New Integrated Passenger Terminal Building at Birsa Munda Airport, Ranchi, to the respondent vide Letter of Award dated 21.01.2009, followed by an agreement dated 02.02.2009. Clause 57(c) of the General Conditions of Contract provided that disputes be referred to a sole arbitrator appointed by AAI, and stated that there would be no objection even if the appointed arbitrator was an AAI employee.

Disputes arose regarding delay in execution of the work, levy of liquidated damages and release of pending amounts. The respondent invoked arbitration by notice dated 16.04.2019, and AAI appointed the sole arbitrator on 13.05.2019. The Tribunal allowed claims no. 1, 4 and 5 in favour of the respondent.

Arguments

AAI contended that the appointment of the arbitrator was void ab initio under Section 12(5), relying on the Supreme Court's decision in Bhadra International (India) Pvt. Ltd. and Ors. v. Airports Authority of India, 2026 INSC 6, and on the Delhi High Court's decisions in Railways Board, Ministry of Railways v. Titagarh Rail Systems Limited, 2026:DHC:1720, and Engineering Projects (India) Ltd. v. Allied Construction, 2026:DHC:2540, to submit that the objection could be raised for the first time under Section 34.

The respondent argued that AAI, having appointed the arbitrator, participated in the arbitral proceedings and awaited the outcome, could not now challenge the appointment, and that the appointment was made jointly at the respondent's own request rather than unilaterally.

Findings

The Court relied on Bhadra International, which held that a person ineligible under Section 12(5) cannot be appointed as arbitrator, that such ineligibility goes to the root of jurisdiction since it stems from operation of law, and that an objection to jurisdiction can be raised at any stage, including under Section 34. It also relied on the Division Bench ruling in Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi, 2025 SCC OnLine Del 4241, which held that a unilateral appointment of a sole or presiding arbitrator is null and void from inception, that waiver under the proviso to Section 12(5) must be an express agreement in writing made after disputes have arisen, and that even the party which made the unilateral appointment can challenge it.

The Court held that the filing of a statement of claim or participation in arbitral proceedings cannot be construed as a waiver under the proviso to Section 12(5), and that there was no express agreement in writing between the parties waiving the ineligibility. It further held that the express consent contemplated under the proviso has to be of both parties, and that AAI having itself appointed the arbitrator could not be construed as compliance with the proviso.

The Court accordingly held the appointment of the arbitrator to be void ab initio and the impugned award a nullity. The petition was allowed and the award was set aside.