# Bhadra International (India) Pvt. Ltd. & Ors v. Airports Authority of India

- **Citation:** 2026 INSC 6
- **Court:** Supreme Court of India
- **Decided:** 2026-01-05
- **Bench:** J.B. Pardiwala, K.V. Viswanathan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/bhadra-international-india-pvt-ltd-ors-v-airports-authority-of-india-39060
- **Pages:** 61

## Headnote

i) Whether the sole arbitrator could be said to have become
"ineligible to be appointed as an arbitrator" by virtue of sub-section
(5) of s.12 of the Arbitration and Conciliation Act, 1996; ii) whether
the parties could be said to have waived the applicability of
sub-section (5) of s.12 of the Act, 1996, by way of their conduct,
either expressed or implied; iii) whether the appellants could have
raised an objection to the appointment of the sole arbitrator for the
first time in an application u/s.34 of the Act, 1996.
Headnotes†
Arbitration and Conciliation Act, 1996 - s.12 and s.18 - Position
of law as regards s.12 of the Act, 1996 - Application of principle
of equal treatment of parties provided in s.18:
Held: The principle of equal treatment of parties provided in s.18 of
the Act, 1996, applies not only to the arbitral proceedings but also
to the procedure for appointment of arbitrators - Equal treatment
of the parties entails that the parties must have an equal say in
the constitution of the arbitral tribunal. [Para 123(i)]
Arbitration and Conciliation Act, 1996 - Sub-section (5) of s.12
and Seventh Schedule - When relationship falls within any of
the categories specified in the Seventh Schedule:
Held: Sub-section (5) of s.12 provides that any person whose
relationship with the parties or counsel, or the dispute, whether
direct or indirect, falls within any of the categories specified in
the Seventh Schedule would be ineligible to be appointed as an
arbitrator - Since, the ineligibility stems from the operation of law,
not only is a person having an interest in the dispute or its outcome
* Author
[2026] 1 S.C.R.
31
Bhadra International (India) Pvt. Ltd. & Ors. v.
Airports Authority of India
ineligible to act as an arbitrator, but appointment by such a person
would be ex facie invalid. [Para 123(ii)]
Arbitration and Conciliation Act, 1996 - Proviso to s.12(5) -
The words "an express agreement in writing" in the proviso
to s.12(5):
Held: The words "an express agreement in writing" in the proviso
to s.12(5) means that the right to object to the appointment of an
ineligible arbitrator cannot be taken away by mere implication - The
agreement referred to in the proviso must be a clear, unequivocal
written agreement. [Para 123(iii)]
Arbitration and Conciliation Act, 1996 - s.12(5) - When an
arbitrator is found to be ineligible by virtue of s.12(5) r/w. the
Seventh Schedule:
Held: When an arbitrator is found to be ineligible by virtue of
s.12(5) r/w. the Seventh Schedule, his mandate is automatically
terminated - In such circumstance, an aggrieved party may
approach the court u/s. 14 r/w. s.15 for appointment of a substitute
arbitrator - Whereas, when an award has been passed by such
an arbitrator, an aggrieved party may approach the court u/s. 34
for setting aside the award. [Para 123(iv)]
Arbitration and Conciliation Act, 1996 - s.12 - Parties vest
jurisdiction in the tribunal:
Held: In arbitration, the parties vest jurisdiction in the tribunal
by exercising their consent in furtherance of a valid arbitration
agreement - An arbitrator who lacks jurisdiction cannot make an
award on the merits - Hence, an objection to the inherent lack of
jurisdiction can be taken at any stage of the proceedings. [Para
123(v)]
Arbitration and Conciliation Act, 1996 - sub-section (5) of s.12
and Seventh Schedule - Objective of s.12:
Held: There is a conspectus of decisions of this Court which
lay down that, s.12 was amended with the objective of ensuring
independence and impartiality of arbitrators - By virtue of subsection (5) of s.12, any person whose relationship with the parties
or counsel, or the dispute, whether direct or indirect, falls within any
32
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Supreme Court Reports
of the categories specified in the Seventh Schedule is rendered
ineligible to be appointed as an arbitrator. [Para 51]
Arbitration and Conciliation Act, 1996 - sub-section (5) of
s.12 - When an arbitration agreement is in violation of subsection (5) of s.12:

## Text

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[2026] 1 S.C.R. 30 : 2026 INSC 6
Bhadra International (India) Pvt. Ltd. & Ors.
v.
Airports Authority of India
(Civil Appeal No(s). 37-38 of 2026)
05 January 2026
[J.B. Pardiwala* and K.V. Viswanathan, JJ.]
Issue for Consideration
i) Whether the sole arbitrator could be said to have become
"ineligible to be appointed as an arbitrator" by virtue of sub-section
(5) of s.12 of the Arbitration and Conciliation Act, 1996; ii) whether
the parties could be said to have waived the applicability of
sub-section (5) of s.12 of the Act, 1996, by way of their conduct,
either expressed or implied; iii) whether the appellants could have
raised an objection to the appointment of the sole arbitrator for the
first time in an application u/s.34 of the Act, 1996.
Headnotes†
Arbitration and Conciliation Act, 1996 - s.12 and s.18 - Position
of law as regards s.12 of the Act, 1996 - Application of principle
of equal treatment of parties provided in s.18:
Held: The principle of equal treatment of parties provided in s.18 of
the Act, 1996, applies not only to the arbitral proceedings but also
to the procedure for appointment of arbitrators - Equal treatment
of the parties entails that the parties must have an equal say in
the constitution of the arbitral tribunal. [Para 123(i)]
Arbitration and Conciliation Act, 1996 - Sub-section (5) of s.12
and Seventh Schedule - When relationship falls within any of
the categories specified in the Seventh Schedule:
Held: Sub-section (5) of s.12 provides that any person whose
relationship with the parties or counsel, or the dispute, whether
direct or indirect, falls within any of the categories specified in
the Seventh Schedule would be ineligible to be appointed as an
arbitrator - Since, the ineligibility stems from the operation of law,
not only is a person having an interest in the dispute or its outcome
* Author
[2026] 1 S.C.R.
31
Bhadra International (India) Pvt. Ltd. & Ors. v.
Airports Authority of India
ineligible to act as an arbitrator, but appointment by such a person
would be ex facie invalid. [Para 123(ii)]
Arbitration and Conciliation Act, 1996 - Proviso to s.12(5) -
The words "an express agreement in writing" in the proviso
to s.12(5):
Held: The words "an express agreement in writing" in the proviso
to s.12(5) means that the right to object to the appointment of an
ineligible arbitrator cannot be taken away by mere implication - The
agreement referred to in the proviso must be a clear, unequivocal
written agreement. [Para 123(iii)]
Arbitration and Conciliation Act, 1996 - s.12(5) - When an
arbitrator is found to be ineligible by virtue of s.12(5) r/w. the
Seventh Schedule:
Held: When an arbitrator is found to be ineligible by virtue of
s.12(5) r/w. the Seventh Schedule, his mandate is automatically
terminated - In such circumstance, an aggrieved party may
approach the court u/s. 14 r/w. s.15 for appointment of a substitute
arbitrator - Whereas, when an award has been passed by such
an arbitrator, an aggrieved party may approach the court u/s. 34
for setting aside the award. [Para 123(iv)]
Arbitration and Conciliation Act, 1996 - s.12 - Parties vest
jurisdiction in the tribunal:
Held: In arbitration, the parties vest jurisdiction in the tribunal
by exercising their consent in furtherance of a valid arbitration
agreement - An arbitrator who lacks jurisdiction cannot make an
award on the merits - Hence, an objection to the inherent lack of
jurisdiction can be taken at any stage of the proceedings. [Para
123(v)]
Arbitration and Conciliation Act, 1996 - sub-section (5) of s.12
and Seventh Schedule - Objective of s.12:
Held: There is a conspectus of decisions of this Court which
lay down that, s.12 was amended with the objective of ensuring
independence and impartiality of arbitrators - By virtue of subsection (5) of s.12, any person whose relationship with the parties
or counsel, or the dispute, whether direct or indirect, falls within any
32
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Supreme Court Reports
of the categories specified in the Seventh Schedule is rendered
ineligible to be appointed as an arbitrator. [Para 51]
Arbitration and Conciliation Act, 1996 - sub-section (5) of
s.12 - When an arbitration agreement is in violation of subsection (5) of s.12:
Held: When an arbitration agreement is in violation of sub-section
(5) of s.12 of the Act, 1996, the parties can neither insist on
appointment of an arbitrator in terms of the agreement nor would
any appointment so made be valid in the eyes of law. [Para 57]
Arbitration and Conciliation Act, 1996 - Unilateral appointments:
Held: Unilateral appointments are not consistent with the basic
tenet of arbitration, i.e., mutual confidence in the arbitrator - It
would not be unreasonable for a party to apprehend that an
arbitrator unilaterally appointed by the opposite party may not act
with complete impartiality. [Para 58]
Arbitration and Conciliation Act, 1996 - s.12(5) - s.12(5) and
unilateral appointment of an arbitrator:
Held: It is apposite to understand that s.12(5) does not prohibit
unilateral appointment of an arbitrator - It provides that whenever
an appointment of an arbitrator is hit by the bar u/s.12(5), the
arbitrator would be ineligible to act, irrespective of whether the
appointment was unilateral or with consent of both parties - In
such circumstances, the parties may, in the manner provided under
the proviso, waive the ineligibility. [Para 60]
Arbitration and Conciliation Act, 1996 - s.12(5) - Unilateral
appointment of a sole arbitrator is void ab initio:
Held: The unilateral appointment of a sole arbitrator is void ab
initio, and the sole arbitrator so appointed is de jure ineligible to
act as an arbitrator in terms of s.12(5) r/w. the Seventh Schedule
of the Act, 1996. [Para 68]
Arbitration and Conciliation Act, 1996 - s.21 - Clarification
regarding notice u/s.21of the Act, 1996:
Held: A notice u/s.21 of the Act, 1996, is an expression to set the
arbitration agreement into motion upon arising of disputes between
the parties - The section states that the date of commencement of
[2026] 1 S.C.R.
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Bhadra International (India) Pvt. Ltd. & Ors. v.
Airports Authority of India
arbitration would be the date on which the recipient receives the
notice from the claimant that the dispute be referred to arbitration -
The notice acts as a communication that the sender is aggrieved
and seeks to invoke the arbitration agreement - It does not, by
itself, operate as consent to any appointment to be made in the
future. [Para 70]
Arbitration and Conciliation Act, 1996 - Proviso to s.12 (5) -
Essentials of the proviso to s.12(5):
Held: i) The parties can waive their right to object under subsection (5) of s.12; ii) The right to object under the sub-section can
be waived only subsequent to a dispute having arisen between the
parties; iii) The waiver must be in the form of an express agreement
in writing - The proviso to sub-section (5) of s.12 stipulates that
parties, after disputes have arisen, must expressly agree in
writing to waive the ineligibility of the proposed arbitrator - This
impliedly means that the parties are waiving their right to object
to the arbitrator's ineligibility in terms of s.12(5) of the Act, 1996.
[Paras 75, 76]
Arbitration and Conciliation Act, 1996 - sub-section (5) of
s.12 - An express agreement in writing, waiving the bar under
sub-section (5) of s.12:
Held: It is only through an express agreement in writing,
waiving the bar under sub-section (5) of s.12, that the other
party can be said to have voluntarily consented to the unilateral
appointment of such an arbitrator - The proviso conveys that the
arbitrator, although ineligible to be appointed, yet can continue to
perform his functions, as it is oriented towards facilitating party
autonomy - Thus, the proviso reinforces party autonomy and
equal treatment of parties in arbitration - In other words, even
though the appointment had been made by one of the parties,
by the act of entering into an agreement in writing, the other
party expresses its consent - The manner of the agreement
prescribed by the statute demonstrates voluntariness by the
parties - The ineligibility of an arbitrator can be waived only by
an express agreement in writing - In the present case, there is
no agreement in writing, after the disputes arose, waiving the
ineligibility of the sole arbitrator or the right to object u/s.12(5)
of the Act, 1996. [Paras 81, 82, 89]
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Arbitration and Conciliation Act, 1996 - sub-section (5) of
s.12, s.21, s.33 - What cannot be countenanced to mean
"an express agreement in writing" within the meaning of the
proviso to sub-section (5) of s.12 of the Act, 1996:
Held: A notice invoking the arbitration clause u/s.21 of the Act,
1996, a procedural order, submission of statement of claim by the
appellants, the filing an application seeking interim relief, or a reply
to an application u/s.33 of the Act, 1996, cannot be countenanced
to mean "an express agreement in writing" within the meaning of
the proviso to sub-section (5) of s.12 of the Act, 1996. [Para 96]
Arbitration and Conciliation Act, 1996 - s.12(5), s.14 - Where
a party is aggrieved by the ineligibility of an arbitrator:
Held: Where a party is aggrieved by the ineligibility of an arbitrator
u/s.12(5), it may directly approach the court u/s.14 of the Act,
1996 - There is no doubt that when an arbitrator is ineligible u/s.
12(5), i.e., he lacks inherent jurisdiction to hold the position, his
mandate stands automatically terminated, and it is not necessary
for the parties to challenge his appointment u/s.12 r/w. s.13 -
When such a challenge is made, the court is required to determine
whether the arbitrator suffers from de jure inability u/s.14(1)(a) of
the Act, 1996. [Para 102]
Arbitration and Conciliation Act, 1996 - s.14 and s.15(2) -
Terminating mandate of arbitrator and substituting arbitrator:
Held: An application u/s. 14 is made for the purpose of terminating the
mandate of the arbitrator, and, consequently, a substitute arbitrator
is appointed in terms of s.15(2) - As regards where the mandate
of the arbitrator has been terminated with the consent of both the
parties u/s. 15(1)(b), it is not required for the parties to approach
the court to seek termination of the mandate of the arbitrator,
because it has been terminated by the parties themselves - The
substitution of the arbitrator is sought because the termination of
mandate of the arbitrator does not result in the termination of arbitral
proceedings - The proceedings remain intact, only the composition
of the arbitral tribunal changes. [Paras 103, 104]
Arbitration and Conciliation Act, 1996 - s.34 - Challenge to
the ineligibility of the arbitrator after arbitral award has been
passed:
[2026] 1 S.C.R.
35
Bhadra International (India) Pvt. Ltd. & Ors. v.
Airports Authority of India
Held: When an award has been passed, the proceedings before the
arbitral tribunal conclude, leaving no possibility of substituting the
arbitrator at this stage - In other words, once an award is passed,
the mandate of the arbitral tribunal also arrives at a conclusion - In
such circumstances, a party aggrieved by the arbitrator's ineligibility
may challenge the award by filing an application u/s.34 of the 1996
Act, as an award passed by an ineligible arbitrator is nullity, non-est,
or void ab initio, and against the public policy of India. [Para 109]
Arbitration and Conciliation Act, 1996 - Challenge to the
ineligibility of the arbitrator at any stage of the proceedings:
Held: A challenge to an arbitrator's ineligibility could be raised at
any stage because an award passed in such circumstance is nonest, i.e., it carries no enforceability or recognition in law. [Para 113]
Arbitration and Conciliation Act, 1996 - s.12(5) - Obligation
upon the arbitrator:
Held: An arbitrator is better equipped with the position of law
on appointments, more particularly, unilateral appointments -
Therefore, it becomes incumbent upon the arbitrator that upon
entering reference and at the very first hearing, to ensure from
the parties that they are willing to participate in the proceedings
and to insist upon a written agreement waiving the requirement
of s.12(5) of the Act, 1996. [Para 121]
Arbitration and Conciliation Act, 1996 - When party does not
appear despite receipt of notice:
Held: If any party does not appear despite receipt of notice, the
arbitrator shall not proceed further and shall immediately withdraw
from the arbitral proceedings - The arbitrator must, along with the
waiver agreement, record the minutes even when the parties are
cooperating - This would certainly save time and avoid multiplicity
of proceedings. [Para 122]
Case Law Cited
Dharma Prathishthanam v. Madhok Construction (P) Ltd. [2004]
Supp. 5 SCR 866 : (2005) 9 SCC 686; TRF Ltd. v. Energo
Engineering Projects Ltd. [2017] 7 SCR 409 : (2017) 8 SCC 377;
Bharat Broadband Network Ltd. v. United Telecoms Ltd. [2019] 6
SCR 97 : (2019) 5 SCC 755; Perkins Eastman Architects DPC
36
[2026] 1 S.C.R.
Supreme Court Reports
& Anr. v. HSCC (India) Ltd. [2019] 17 SCR 275 : (2020) 20 SCC
760; Lombardi Engg. Ltd. v. Uttarakhand Jal Vidyut Nigam Ltd.
[2023] 12 SCR 943 : (2024) 4 SCC 341; Central Organization for
Railway Electrification v. ECI SPIR SMO MCML (JV) A Joint Venture
Company [2024] 11 SCR 2173 : (2025) 4 SCC 641 (CORE II);
HRD Corpn v. GAIL (India) Ltd. [2017] 11 SCR 857 : (2018) 12
SCC 471 - relied on.
Lion Engineering Consultants v. State of Madhya Pradesh [2018]
6 SCR 683 : (2018) 16 SCC 758; Hindustan Zinc Ltd. v. Ajmer
Vidyut Vitran Nigam Ltd. [2019] 15 SCR 113 : (2019) 17 SCC 82;
Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. &
Ors. [2018] 2 SCR 829 : (2018) 6 SCC 287; State of Punjab v.
Davinder Pal Singh Bhullar [2011] 15 SCR 540 : (2011) 14 SCC
770; Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman
Nigam Ltd., 2025 SCC OnLine SC 2578; Chennai Metro Rail
Ltd. v. Transtonnelstroy Afcons (JV) [2023] 14 SCR 995 : (2024)
6 SCC 211; Hira Lal Patni v. Kali Nath [1962] 2 SCR 747 : 1961
SCC OnLine SC 42; Hindustan Zinc Ltd. v. Ajmer Vidyut Vitran
Nigam Ltd. [2019] 15 SCR 113 : (2019) 17 SCC 82 - referred to.
Kotak Mahindra Bank Ltd. v. Narendra Kumar Prajapat, 2023 SCC
OnLine Del 3148; McLeod Russel India Ltd. & Ors. v. Aditya Birla
Finance Ltd. & Ors., 2023 SCC OnLine Cal 330; Anuj Kumar v.
Franchise India Brands Ltd., 2023 SCC OnLine Del 2560; Lite
Bite Foods Pvt. Ltd. v. AAI, 2019 SCC OnLine Bom 5163; Clarke
Energy India Pvt. Ltd. v. SAS EPC Solution Pvt. Ltd. & Anr., 2021
SCC OnLine Mad 6121; Man Industries (India) Ltd. v. Indian Oil
Corporation Ltd., 2023 SCC OnLine Del 3537; Govind Singh v.
Satya Group Pvt. Ltd., 2023 SCC OnLine Del 37; Alpro Industries v.
Ambience (P) Ltd., 2025 SCC OnLine Del 8373; Bhim Bahadur v.
Vikram Singh, 2015 SCC OnLine Utt 1563 - referred to.
List of Acts
Arbitration and Conciliation Act, 1996.
List of Keywords
Section 12(5) of Arbitration and Conciliation Act, 1996; Seventh
Schedule of the Arbitration and Conciliation Act, 1996; Proviso to
Section 12(5) of Arbitration and Conciliation Act, 1996; Section 14 of
Arbitration and Conciliation Act, 1996; Section 34 of Arbitration and
Conciliation Act, 1996; Unilateral Appointment; De Jure Ineligibility;
[2026] 1 S.C.R.
37
Bhadra International (India) Pvt. Ltd. & Ors. v.
Airports Authority of India
Doctrine of Inherent Lack of Jurisdiction; Waiver; Equal Treatment
of Parties; Neutrality; Impartiality; Arbitrator; Notice; Agreement in
writing; Arbitration agreement; Sole arbitrator; Arbitral Tribunal.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 37-38
of 2026
From the Judgment and Order dated 11.02.2025 of the High Court
of Delhi at New Delhi in FAO(OS) (COMM) Nos. 23 and 24 of 2025
Appearances for Parties
Advs. for the Appellant(s):
Navin Pahwa, Ashish Mohan, Sr. Advs., Akshit Mago, Akshit
Pradhan.
Advs. for the Respondent(s):
Parag Tripathi, Sr. Adv., Sonal K Singh, Ayan De, Shivang Singh,
Anmol Adhrit, Ms. Sukanya Lal.
Judgment / Order of the Supreme Court
Judgment
J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts:-
INDEX*
I.
FACTUAL MATRIX .......................................................................
3
II.
JUDGMENT OF THE SINGLE JUDGE ON APPLICATION UNDER
SECTION 34 OF THE ACT, 1996 ................................................
8
III.
IMPUGNED JUDGMENT ..............................................................
9
IV.
SUBMISSIONS ON BEHALF OF THE APPELLANTS ............... 11
V.
SUBMISSIONS ON BEHALF OF THE RESPONDENT .............. 14
* Ed. Note: Pagination as per the original Judgment.
38
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Supreme Court Reports
VI.
ISSUES FOR CONSIDERATION ................................................. 16
VII.
ANALYSIS .................................................................................... 17
i.
Whether the sole arbitrator could be said to have become
"ineligible to be appointed as an arbitrator" by virtue of
sub-section (5) of Section 12 of the Act, 1996? ............... 17
a. Interplay between Equal Treatment of Parties and Party
Autonomy ......................................................................... 17
b. Scope and Application of sub-section (5) of Section 12 of
the Act, 1996 ..................................................................
21
c.
Appointment of the sole arbitrator in light of sub-section
(5) of Section 12 of the Act, 1996 ................................... 26
d. De Jure inability of the arbitrator to perform his functions 35
ii. Whether the parties could be said to have waived the
applicability of sub-section (5) of Section 12 of the
Act, 1996, by way of their conduct, either expressed or
implied? ................................................................................. 40
a. Meaning and Import of the expression "express agreement
in writing" used in proviso to sub-section (5) of Section
12 of the Act, 1996 ........................................................... 41
b. "Statement of Claim" as a parameter of waiver .............. 49
c.
"Extension of Time" under Section 29A of the Act, 1996
as a parameter of waiver ................................................. 50
d. "Continued Participation" as a parameter of waiver ....... 52
iii. Whether the appellants could have raised an objection
to the appointment of the sole arbitrator for the first time
in an application under Section 34 of the Act, 1996? ....... 54
a. Challenge to the ineligibility of the arbitrator during the
proceedings ...................................................................... 55
b. Challenge to the ineligibility of the arbitrator after arbitral
award has been passed .................................................. 60
c.
Challenge to the ineligibility of the arbitrator at any stage
of the proceedings ........................................................... 64
VIII. CONCLUSION .............................................................................. 70
[2026] 1 S.C.R.
39
Bhadra International (India) Pvt. Ltd. & Ors. v.
Airports Authority of India
1.
Leave granted.
2.
Since the issues raised in both the captioned appeals are the same,
the parties are same, and the challenge is also to the self-same
judgment and order passed by the High Court, those were taken up
for hearing analogously and are being disposed of by this common
judgment and order.
3.
These appeals arise from the common judgment and order dated
11.02.2025 passed by a Division Bench of the High Court of Delhi in
FAO(OS) (COMM) Nos. 23 and 24 of 2025 respectively (hereinafter,
the "Impugned Judgment"), by which the appeals filed by the
appellants herein under Section 37 of the Arbitration and Conciliation
Act, 1996 (for short, the "Act, 1996") came to be dismissed thereby
affirming the order dated 19.02.2022 passed by a learned Single
Judge of the High Court in OMP (COMM) Nos. 414 and 415 of
2018 respectively under Section 34 of the Act, 1996 (hereinafter,
the "Single Judge") dismissing the preliminary objection raised by
the appellants as regards unilateral appointment of a sole arbitrator
by the respondent.
I.
FACTUAL MATRIX
4.
The facts giving rise to the appeals may be summarized as under:-
i.
The appellant no. 1 and appellant no. 2, viz. Bhadra International
(India) Pvt. Ltd., and Novia International Consulting Aps,
respectively executed an agreement to form a joint consortium
namely Bhadra International (India) Pvt. Ltd. and Novia
International Consulting Aps, for the purposes of undertaking
ground handling services at various airports in India. The
consortium is the appellant no. 3 before us.
ii.
The respondent (Airports Authority of India) floated two tender
notices inviting tenders for appointment of an agency for
ground handling services at some airports. In response to
these notices, the appellant no. 3 emerged as the successful
bidder. Pursuant to the two notices, the parties executed two
License Agreement dated 29.11.2010 ("License Agreement").
As per the License Agreement, the appellant no. 3 was
permitted to provide ground handling services at the specified
airports.
40
[2026] 1 S.C.R.
Supreme Court Reports
iii.
The aforesaid License Agreement, more particularly, Clause 78
provided that in the event of any dispute or difference arising
out of the said license agreement the same would have to be
resolved through arbitration. The said clause read as under:-
"78. All disputes and differences, arising out of or,
in any way, touching or concerning this Agreement,
(except those the decision whereof is otherwise
hereinbefore expressly provided for or to which the
Public Premises (Eviction of Unauthorised Occupants)
Act, 1971 and the rules framed hereunder which are
now in force or which may hereafter come in to force,
are applicable) shall be referred to the sole arbitration
of a person, to be appointed by the Chairman of the
Authority or, in case the designation of Chairman is
changed or his office is abolished, by the person, for
the time being entrusted, whether or not, in addition
to other functions, with the functions of the Chairman,
Airports Authority of India, by whatever designation
such person may be called, and, if the Arbitrator, so
appointed, is unable or unwilling to act, to the sole
arbitrations or some other person to be similarly
appointed. It will be no objection to such appointment
that the Arbitrator so appointment is a servant of
the Authority, that he had to deal with the matters to
which this Agreement relates and that in the course
of his duties, as such servant of the Authority, he
had expressed views on all or any of the matters in
dispute or differences. The award of the arbitrator, so
appointment, shall be final and binding on the Parties.
The Arbitrator may, with the consent of the parties,
enlarge, from time to time, the time for making and
publishing the award. The venue of the arbitration
shall be at New Delhi."
(Emphasis is ours)
iv.
On 23.10.2015, the Arbitration and Conciliation (Amendment)
Act, 2015 came into effect (for short, "the Amendment Act,
2015"), by which sub-section (5) was inserted into Section 12.
The provision reads thus:-
[2026] 1 S.C.R.
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Bhadra International (India) Pvt. Ltd. & Ors. v.
Airports Authority of India
"[(5) Notwithstanding any prior agreement to the
contrary, any person whose relationship, with the
parties or counsel or the subject-matter of the dispute,
falls under any of the categories specified in the
Seventh Schedule shall be ineligible to be appointed
as an arbitrator:
Provided that parties may, subsequent to disputes
having arisen between them, waive the applicability of
this sub-section by an express agreement in writing.]"
v.
Sometime, in the year 2015, various disputes cropped up
between the appellants and the respondent herein. Accordingly,
the appellants vide notice dated 27.11.2015 invoked the
arbitration clause and requested the respondent to appoint
an arbitrator in terms of Clause 78 of the aforesaid License
Agreement. The relevant part of the notice reads thus:-
"We also like to bring out most humbly that it is
incumbent upon the Chairman AAI to appoint the
Sole Arbitrator within a reasonable time, least we
might not be left with no recourse, but to seek a relief
under Section 11, Sub Section 6, Chapter III of the
Arbitration & Reconciliation Act 1996."
vi.
On 22.03.2016, the sole arbitrator passed the first procedural
order recording that none of the parties had any objection to
his appointment. The procedural order reads thus:-
"PROCEDURAL ORDER NO. 1
With
Minutes of, and the Directions made at, the
hearing on 22.03.2016 at 1:00 pm
[AT D-247 (Basement), Defence Colony, New
Delhi-110024]
This preliminary meeting of the Tribunal was
held D-247 (Basement), Defence Colony, New
Delhi-110024 on 22nd March, 2016 at 1:00 PM. None
of the parties have any objection to my appointment
as the Sole Arbitrator. I declare that I have no interest
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in any of the Parties, or in the disputes referred to
the Sole Arbitrator.[...]"
(Emphasis supplied)
vii. At the joint request of the parties, two applications were filed
under Section 29A of the Act, 1966, seeking extension of time
for the completion of the proceedings. On both the occasions,
the applications were allowed by the High Court.
viii. Ultimately, the sole arbitrator passed the arbitral awards dated
30.07.2018 whereby the claims and counter-claims of the
respective parties were rejected. In effect, the arbitrator passed
a 'Nil' award.
ix.
Aggrieved by the dismissal of its claim, the appellants challenged
the award by filing applications under Section 34 of the Act,
1996, bearing O.M.P. (COMM) Nos. 414 and 415 of 2018
respectively, before the Single Judge of the High Court.
x.
Thereafter, by way of applications bearing I.A. Nos. 1834 and
1842 of 2022 respectively, the appellants sought to amend the
aforesaid applications to contend that since the arbitrator was
appointed unilaterally, the award was liable to be set aside
("Amendment Application").
xi.
The aforesaid applications filed by the appellants came to be
rejected by the Single Judge vide order dated 24.12.2024.
xii. Being aggrieved by the aforesaid, the appellants preferred
appeals under Section 37 of the Act, 1996, bearing FAO(OS)
(COMM) Nos. 23 and 24 of 2025 respectively, seeking to
challenge the judgment and order passed by a learned Single
Judge. The said appeals came to be dismissed vide the
impugned judgment.
xiii. In such circumstances referred to above, the appellants are
here before this Court with the present appeals.
II.
JUDGMENT OF THE SINGLE JUDGE ON APPLICATION
UNDER SECTION 34 OF THE ACT, 1996
5.
Aggrieved by the awards passed by the sole arbitrator, the appellants
filed applications under Section 34 of the Act, 1996, raising the
[2026] 1 S.C.R.
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Airports Authority of India
preliminary objection that since the appointment of the sole arbitrator
was made unilaterally by the respondent, the award was liable to
be set aside.
6.
The learned Single Judge held that the appointment of the arbitrator
was in accordance with the procedure agreed upon by the parties
under Clause 78 of the License Agreement. Consequently, it rejected
the challenge to the appointment of the sole arbitrator on the following
grounds:-
i.
First, it observed that the sole arbitrator appointed by the
respondent did not suffer from any disqualification under the
Fifth or Seventh Schedule read with Section 12(5) of the Act,
1996. The parties themselves had agreed to the procedure
of appointment. Moreover, the appellants did not raise any
objection regarding the independence and impartiality of the
arbitrator. Accordingly, the appointment of the arbitrator could
not have been belatedly called into question.
ii.
Secondly, on the issue of waiver, the learned Single Judge
observed that the proviso to Section 12(5) of the Act, 1996,
stipulates the requirement of clear and positive manifestation
of waiver in writing. It observed that mere participation in the
arbitral proceedings without raising any objection would not
constitute an express waiver in writing as per the requirement
of the proviso. However, it arrived at the conclusion that the
first procedural order passed by the sole arbitrator explicitly
recorded that parties had no objection to his appointment.
iii.
Thus, according to the learned Single Judge, the appellants
could be said to have waived the applicability of Section 12(5)
by not raising an objection before the sole arbitrator in the first
procedural order.
III.
IMPUGNED JUDGMENT
7.
Feeling aggrieved and dissatisfied with the order passed by the
learned Single Judge dismissing the preliminary objection in so far
as the appointment of the sole arbitrator, the appellants preferred
appeals under Section 37 of the Act, 1996.
8.
The High Court, in its impugned judgment, held that the appointment of
the sole arbitrator was not unilateral, as the respondent had proceeded
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to appoint arbitrator only pursuant to the written request made by
the appellants. Therefore, it could not be said that the appellants
had not consented to the appointment. The High Court further noted
that the sole arbitrator had expressly obtained the consent of the
parties, and at no point of time the appellants asserted that their
consent was incorrectly recorded or that they had not consented.
9.
The High Court observed that the appellants continued to participate
in the arbitral proceedings without raising any objection. It also
observed that the challenge to the jurisdiction of the arbitrator was
not raised in the first instance but rather made belatedly through the
Amendment Application.
10. The appellants had argued before the High Court that prior to the
insertion of sub-section (5) they had no occasion to challenge the
appointment of the sole arbitrator. Such a challenge, according to
them, could have been raised only after the introduction of subsection (5) of Section 12. However, the High Court held that it was
immaterial as to when the amendment was introduced. The High
Court took the view that, the appellants by their conduct could be
said to have submitted to the jurisdiction of the sole arbitrator.
11. In the aforesaid context, the High Court observed the fact that the
appellants had called upon the respondent to appoint an arbitrator, the
sole arbitrator was accordingly appointed, and having unequivocally
consented to the arbitral proceedings had no bearing on the insertion
of the provision through an amendment. It was further observed that
even after the introduction of sub-section (5), the arbitral proceedings
continued for more than two years, still the appellants did not, at
any stage, raise an objection.
12. Lastly, the High Court observed that the case of the appellants cannot
be equated with cases in which an objection to the appointment of
the arbitrator have been raised throughout the proceedings, or at
every stage.
IV.
SUBMISSIONS ON BEHALF OF THE APPELLANTS
13. Mr. Navin Pahwa, the learned Senior Counsel appearing for the
appellants would argue that the sole arbitrator was ineligible to act
as an arbitrator as he was unilaterally appointed by the Chairman of
the respondent. Such an appointment was void ab initio and non-est
in law, and therefore, the arbitral awards would be a nullity. He relied
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on the decision of this Court in Bharat Broadband Network Ltd. v.
United Telecoms Ltd., reported in (2019) 5 SCC 755, to submit
that an appointment made by an ineligible person is void ab initio.
14. In the same breath, Mr. Pahwa submitted that since the appointment
of the arbitrator was void, the proceedings conducted pursuant to
such appointment would also be a nullity. As a result, the awards
passed by the sole arbitrator would also be contrary to the public
policy of India, and thus, liable to be set aside.
15. He further submitted that where the right to appoint a sole arbitrator
rests solely with one party, that party's choice would inevitably carry
an element of exclusivity in determining the course of the arbitration.
To fortify his submission, he relied on the decision of this Court in
TRF Ltd. v. Energo Engineering Projects Ltd., reported in (2017)
8 SCC 377. He submitted that a Managing Director, ineligible to act
as an arbitrator under Section 12(5) read with Seventh Schedule of
the Act, 1996, could not have appointed an arbitrator or nominate
any other person to be an arbitrator.
16. He highlighted that this Court has affirmed the decision in TRF (supra)
in Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd.,
reported in (2020) 20 SCC 760. In the present case, the Chairman of
the respondent was ineligible to act as an arbitrator by virtue of Items
1, 5, and 12 of the Seventh Schedule respectively. Consequently,
any arbitrator appointed by such an ineligible person would be, by
operation of law, equally ineligible to act as an arbitrator.
17. It was further submitted that an objection to the unilateral appointment
may be raised at any stage, including for the first time in Section 34
proceedings. He added that the appellants by participating in the
proceedings did not waive their right to raise an objection in terms of
the proviso to Section 12(5) of the Act, 1996. To fortify his submission,
he relied on the decision in Lion Engineering Consultants v. State
of Madhya Pradesh, reported in (2018) 16 SCC 758, Hindustan
Zinc Ltd. v. Ajmer Vidyut Vitran Nigam Ltd., reported in (2019) 17
SCC 82, Kotak Mahindra Bank Ltd. v. Narendra Kumar Prajapat,
reported in 2023 SCC OnLine Del 3148 respectively.
18. Mr. Pahwa further submitted that the proviso to Section 12(5) makes
it limpid that ineligibility of an arbitrator could only be waived by
an "express agreement in writing" between the parties, and such
an agreement must be entered into after disputes have arisen. To
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make good his case, Mr. Pahwa placed reliance on the decisions of
this Court in Bharat Broadband (supra) and Central Organization
for Railway Electrification v. ECI SPIR SMO MCML (JV) A Joint
Venture Company, reported in (2025) 4 SCC 641 ("CORE II").
19. He would submit that the law requires a conscious waiver, reduced
into writing and signed by both parties. In this regard, he submitted
that mere participation in proceedings, filing of statement of claim,
silence, or not objecting to the appointment is insufficient to constitute
a waiver. In the present case, the notice of invocation of arbitration,
or not objecting in the first procedural order, or participating in the
proceedings, or filing application under Sections 17 or 29A respectively
would not amount to an "express agreement in writing".
20. In such circumstances referred to above, the learned Senior Counsel
appearing for the appellants-claimants would submit that there being
merit in his appeals, the same may be allowed and the impugned
judgment passed by the High Court may be set aside.
V.
SUBMISSIONS ON BEHALF OF THE RESPONDENT
21. Mr. Parag Tripathi, the learned Senior Counsel appearing for the
respondent would submit that no error, not to speak of any error
of law, could be said to have been committed by the High Court in
passing the impugned judgment.
22. Mr. Tripathi submitted that the limited question that falls for the
consideration of this Court is whether the present case falls within
the proviso to Section 12(5) of the Act, 1996. In other words, whether
there was a waiver by an "express agreement in writing".
23. He submitted that the first procedural order recording the consent of
the appellants would constitute an "express agreement in writing" as
per the proviso as it was subsequent to the dispute arising between
the parties. Mr. Tripathi emphasized that the provision does not
provide a format for an "express agreement". He added that in so
far as proposal or acceptance of any promise is made in words, the
promise is said to be express. To make good this submission, he
relied on the decision in the case of Bharat Broadband (supra).
24. It was further submitted that no objection/consent of the appellants
recorded in the first procedural order acts as an acknowledgment in
writing with respect to the qualifications as well as the appointment
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Bhadra International (India) Pvt. Ltd. & Ors. v.
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of the sole arbitrator. The appellants had also filed their statement of
claim before the sole arbitrator. This is suggestive of the fact that the
appellants in explicit terms had submitted to the jurisdiction of the sole
arbitrator, and agreed to get the dispute resolved by the sole arbitrator.
25. Mr. Tripathi relied on McLeod Russel India Ltd. & Ors. v. Aditya
Birla Finance Ltd. & Ors., reported in 2023 SCC OnLine Cal 330,
and Anuj Kumar v. Franchise India Brands Ltd., reported in 2023
SCC OnLine Del 2560, to submit that the contents of pleadings or
communication constitute an express agreement in writing, and the
decision in Anuj Kumar (supra) is not in conflict with the decision
of this Court in Bharat Broadband (supra).
26. Mr. Tripathi further submitted that although sub-section (5) of Section
12 read with Seventh Schedule of the Act, 1996 was introduced
during the pendency of the arbitral proceedings, yet the appellants
chose not to raise an objection to the appointment of the sole
arbitrator. Accordingly, he submitted that the appellants did not
raise any objection as to the constitution, appointment, jurisdiction,
independence or impartiality of the sole arbitrator under Sections 13,
14, or 16 of the Act, 1996, respectively throughout the proceedings.
27. He added that the appellants raised the objection to the appointment
of the sole arbitration only by way of an amendment to the Section
34 application. The appellants did so as an afterthought, more than
three years after filing the said application.
28. In such circumstances referred to above, the learned Senior Counsel
prayed that there being no merit in the appeals, the same may be
dismissed.
VI. ISSUES FOR CONSIDERATION
29. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the following questions
fall for our consideration:-
i.
Whether the sole arbitrator could be said to have become
"ineligible to be appointed as an arbitrator" by virtue of subsection (5) of Section 12 of the Act, 1996?
ii.
Whether the parties could be said to have waived the applicability
of sub-section (5) of Section 12 of the Act, 1996, by way of
their conduct, either expressed or implied?
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iii.
Whether the appellants could have raised an objection to
the appointment of the sole arbitrator for the first time in an
application under Section 34 of the Act, 1996?
VII. ANALYSIS
i.
Whether the sole arbitrator could be said to have become
"ineligible to be appointed as an arbitrator" by virtue of
sub-section (5) of Section 12 of the Act, 1996?
30. It was submitted on behalf of the appellants herein that the sole
arbitrator appointed by the Chairman of the respondent was ineligible
to act as an arbitrator as he was appointed unilaterally. Further, such
an appointment was void ab initio and non-est in law.
31. On the aforesaid issue, the High Court, in its impugned judgment,
held that the appointment of the sole arbitrator was not unilateral,
as the respondents had proceeded to appoint the arbitrator only
pursuant to the written request of the appellants.