Mr. Ashish Mohan, Sr. Adv. with Mr. Akshit Mago, Adv v. AIRPORTS AUTHORITY OF INDIA

Judgment

1. The contract between the appellants and respondent Airport Authority of India1 envisages arbitration of disputes by a Sole Arbitrator to be appointed by the respondent. In terms thereof, the appellants wrote to the AAI, call on the respondent to appoint a Sole Arbitrator. The respondent appointed a learned retired Judge of the Supreme Court. Before learned Arbitrator, both the parties submitted that they had no objection to his arbitrating on the disputes. The Record of Proceedings, so prepared, was communicated to the parties, and neither party objected. An arbitral award was passed. The unsuccessful appellant challenged the award under Section 34 of the Arbitration and Conciliation Act, 19962. No dispute, regarding the legality of appointment of the Arbitrator, was raised in the Section 34 petition. However, during arguments before a learned Single Judge of this Court, a preliminary submission was advanced, by the appellant, that the arbitral award was entirely vitiated as the appointment of the arbitrator was unilateral and, therefore, vitiated in view of Section 12(5)3 of the 1996 Act. The learned Single Judge has dismissed the

1 “AAI” hereinafter 2 “the 1996 Act” hereinafter 3 [(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 Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:11.02.2025 18:12:23 FAO(OS) (COMM) 23/2025 & FAO(OS) (COMM) 24/2025 objection. The appellant is in appeal.

2. The question that arises is whether, in such circumstances, the appellants can maintain a successful challenge against the impugned judgment of the learned Single Judge.

3. Cases turn on facts. In deciding the above issue, we have to note that: (i) the arbitration agreement between the parties envisaged appointment of the arbitrator by AAI, (ii) in terms of the said Clause, Appellant 1 wrote to AAI, requesting AAI to appoint the arbitrator, (iii) the appointment of the arbitrator by AAI was, thus, effectively ad invitum, (iv) before the learned Arbitrator, the appellant stated, on 22 March 2016, that it had no objection to his arbitrating on the dispute, (v) this submission was reduced to writing by the learned Arbitrator, (vi) the said order was communicated to both parties, and the appellant never questioned the correctness of what was recorded therein, (vii) rather, the appellant participated, without demur, in the arbitration, and even preferred applications, before the learned Arbitrator, under Section 17 of the 1996 Act, 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.] Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:11.02.2025 18:12:23 FAO(OS) (COMM) 23/2025 & FAO(OS) (COMM) 24/2025 (viii) during the currency of the arbitral proceedings, Section 12 of the 1996 Act was amended to introduce, therein, sub- section (5), which proscribed, unilateral appointment of the arbitrator by one of the parties, (ix) even thereafter, the appellant never moved any application before the learned Arbitrator, or before this Court, questioning his jurisdiction or competence, (x) even in the Section 34 petition4, which came to be filed by the appellant challenging the arbitral award, no contention that the appointment of the learned Arbitrator was unilateral and that, therefore, the arbitral award was vitiated, was taken, (xi) it was only by a subsequent application5 that the appellant suddenly found the entire arbitral proceedings to have been conducted in violation of the law, as the appointment of the arbitrator was, as the appellant would seek to contend, “unilateral”, and (xii) even in this application, the appellant, inadvertently or otherwise, never disclosed, to this Court, the Procedural Order dated on 22 March 2016, which records the fact that the parties had no objection to the learned Arbitrator arbitrating on the dispute.

4. Mr. Ashish Mohan, learned Senior Counsel has, with commendable skill, tried to convince us, by referring to several judgments, including the judgments of the Supreme Court in Bharat 4 OMP (Comm) 414/2018 and OMP (Comm) 415/2018, in which the presently impugned judgment has been passed 5 IA 1842/2022 Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:11.02.2025 18:12:23 FAO(OS) (COMM) 23/2025 & FAO(OS) (COMM) 24/2025 Broadband Network Limited v United Telecoms Ltd6, Perkins Eastman Architects DPC v HSCC (India) Ltd7 and TRF Limited v Energo Engineering Projects Ltd8, as well as the judgment of one of us (C. Hari Shankar J) in JMC Projects (India) Ltd. v Indure Pvt Ltd9, that there can be no compromise on the statutory requirement of a waiver, of Section 12(5) of the 1996 Act, having to be in writing, and that, in fact, no such express written waiver of Section 12(5) was forthcoming on the record.

5. We have to decide cases based on the facts before us. The law cannot be applied academically or mechanically. We are afraid that if we were to permit a party who (i) first invites the opposite party to appoint the arbitrator, as permitted by the contract, whereupon the opposite party does so, (ii) thereafter states, before the learned Arbitrator, that it had no objection to his arbitrating on the disputes, (iii) thereafter participates, without a whisper of any objection to the jurisdiction of the learned Arbitrator, to his jurisdiction or competence, even after Section 12(5) was introduced in the 1996 Act in the interregnum, (iv) thereafter does not choose to raise any ground of incompetence of the learned Arbitrator in view of his appointment having been “unilateral” (as the appellant would seek to contend) even in the Section 34 petition filed

1 “AAI” hereinafter 2 “the 1996 Act” hereinafter 3 [(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 Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:11.02.2025 18:12:23 FAO(OS) (COMM) 23/2025 & FAO(OS) (COMM) 24/2025 objection. The appellant is in appeal.

2. The question that arises is whether, in such circumstances, the appellants can maintain a successful challenge against the impugned judgment of the learned Single Judge.

3. Cases turn on facts. In deciding the above issue, we have to note that: (i) the arbitration agreement between the parties envisaged appointment of the arbitrator by AAI, (ii) in terms of the said Clause, Appellant 1 wrote to AAI, requesting AAI to appoint the arbitrator, (iii) the appointment of the arbitrator by AAI was, thus, effectively ad invitum, (iv) before the learned Arbitrator, the appellant stated, on 22 March 2016, that it had no objection to his arbitrating on the dispute, (v) this submission was reduced to writing by the learned Arbitrator, (vi) the said order was communicated to both parties, and the appellant never questioned the correctness of what was recorded therein, (vii) rather, the appellant participated, without demur, in the arbitration, and even preferred applications, before the learned Arbitrator, under Section 17 of the 1996 Act, 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.] Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:11.02.2025 18:12:23 FAO(OS) (COMM) 23/2025 & FAO(OS) (COMM) 24/2025 (viii) during the currency of the arbitral proceedings, Section 12 of the 1996 Act was amended to introduce, therein, sub- section (5), which proscribed, unilateral appointment of the arbitrator by one of the parties, (ix) even thereafter, the appellant never moved any application before the learned Arbitrator, or before this Court, questioning his jurisdiction or competence, (x) even in the Section 34 petition4, which came to be filed by the appellant challenging the arbitral award, no contention that the appointment of the learned Arbitrator was unilateral and that, therefore, the arbitral award was vitiated, was taken, (xi) it was only by a subsequent application5 that the appellant suddenly found the entire arbitral proceedings to have been conducted in violation of the law, as the appointment of the arbitrator was, as the appellant would seek to contend, “unilateral”, and (xii) even in this application, the appellant, inadvertently or otherwise, never disclosed, to this Court, the Procedural Order dated on 22 March 2016, which records the fact that the parties had no objection to the learned Arbitrator arbitrating on the dispute.

4. Mr. Ashish Mohan, learned Senior Counsel has, with commendable skill, tried to convince us, by referring to several judgments, including the judgments of the Supreme Court in Bharat 4 OMP (Comm) 414/2018 and OMP (Comm) 415/2018, in which the presently impugned judgment has been passed 5 IA 1842/2022 Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:11.02.2025 18:12:23 FAO(OS) (COMM) 23/2025 & FAO(OS) (COMM) 24/2025 Broadband Network Limited v United Telecoms Ltd6, Perkins Eastman Architects DPC v HSCC (India) Ltd7 and TRF Limited v Energo Engineering Projects Ltd8, as well as the judgment of one of us (C. Hari Shankar J) in JMC Projects (India) Ltd. v Indure Pvt Ltd9, that there can be no compromise on the statutory requirement of a waiver, of Section 12(5) of the 1996 Act, having to be in writing, and that, in fact, no such express written waiver of Section 12(5) was forthcoming on the record.

5. We have to decide cases based on the facts before us. The law cannot be applied academically or mechanically. We are afraid that if we were to permit a party who (i) first invites the opposite party to appoint the arbitrator, as permitted by the contract, whereupon the opposite party does so, (ii) thereafter states, before the learned Arbitrator, that it had no objection to his arbitrating on the disputes, (iii) thereafter participates, without a whisper of any objection to the jurisdiction of the learned Arbitrator, to his jurisdiction or competence, even after Section 12(5) was introduced in the 1996 Act in the interregnum, (iv) thereafter does not choose to raise any ground of incompetence of the learned Arbitrator in view of his appointment having been “unilateral” (as the appellant would seek to contend) even in the Section 34 petition filed