The Delhi High Court recently reiterated that any arbitration agreement providing for unilateral appointment of a sole or presiding arbitrator is invalid in India [M/s Mahavir Prasad Gupta and Sons v. Govt of NCT of Delhi]. .A Bench of Justices Vibhu Bakhru and Tejas Karia held that a unilateral appointment by any party in arbitration seated in India is strictly prohibited and considered as null and void since its very inception.“Resultantly, any proceedings conducted before such unilaterally appointed Arbitral Tribunal are also nullity and cannot result into an enforceable award being against Public Policy of India and can be set aside under Section 34 of the Act and/or refused to be enforced under Section 36 of the [Arbitration and Concilliation] Act,” the Court said. .The Bench ruled that an award passed by a unilaterally appointed arbitrator is a nullity and the courts can set them aside on their own without the parties even raising such an objection. Further, the Court said that an objection to the lack of inherent jurisdiction of an arbitrator can be taken at any stage during or after the arbitration proceedings, including by a party who has appointed the sole or presiding arbitrator unilaterally. “Such objection can be taken even at stage of challenge to the award under Section 34 of the Act or during the enforcement proceedings under Section 36 of the Act.”.The Court rendered these findings while dealing with an appeal filed by a company named Mahavir Prasad Gupta and Sons against the Delhi government, challenging a district court order which set aside an arbitration award of ₹1.76 crore in their favour. The trial court had ruled that the appointment of the sole arbitrator violated the law and the award passed by him was a nullity. .After considering the case, the Court upheld the district judge’s order.On the issue of deemed waiver, the Bench held that the ineligibility of a unilaterally appointed arbitrator can be waived only by an express written agreement between the parties after the dispute has arisen between them. The conduct of the parties, no matter how acquiescent or conducive, is inconsequential and cannot constitute a valid waiver under the proviso to Section 12(5) of the Arbitration and Conciliation Act, the Court said.“The proviso to Section 12(5) of the Act requires an ‘express agreement in writing’ and deemed waiver under Section 4 of the Act will not be applicable to the proviso to Section 12(5) of the Act.”.Advocates MK Ghosh and Tina Garg appeared for the petitioner company.The Delhi government was represented through Advocates Tushar Sannu and Ankita Bhadouriya. .[Read Judgment]
