The Delhi High Court has clarified a critical aspect of arbitration law in India—waiver under Section 12(5) of the Arbitration and Conciliation Act, 1996 must occur only after the constitution of the Arbitral Tribunal. The judgment, delivered by Justice Jasmeet Singh, highlights that any no-objection or waiver issued before knowing who the arbitrators are is not legally valid.
Background of the Case
M.V. Omni Projects (India) Ltd. filed three petitions seeking to terminate the mandate of an Arbitral Tribunal that was unilaterally constituted by the Northern Railway, its contractual counterpart. These petitions stemmed from disputes related to three separate contracts awarded on June 17, 2016. The contracts were terminated by the respondent in 2018, leading the petitioner to invoke the arbitration clause (Clause 64 of the General Conditions of Contract) and raise various monetary claims.
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In response, the Railways appointed three serving railway officers as arbitrators. The petitioner attended seven hearings but later filed petitions under Section 14 of the Arbitration Act, arguing that the tribunal’s constitution was unlawful.
The core issue was whether the waiver given by the petitioner on February 23, 2024, before the arbitral panel was officially formed on March 21, 2024, met the legal requirements under Section 12(5) of the Act.
Court’s Observations
The Court emphasized the purpose of Section 12(5):
“It aims to ensure neutrality and independence in arbitration by disqualifying any individual covered under the Seventh Schedule from serving as an arbitrator unless both parties waive this disqualification in writing.”
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The proviso to Section 12(5) allows such waiver, but the Court made it clear that:
“Such a waiver must be specific to the arbitrators appointed and can only be valid after their identities are known.”
The Court referred to the Supreme Court’s decision in Bharat Broadband v. United Telecom, which held that an arbitrator who is ineligible under the Seventh Schedule can only proceed if the parties waive this disqualification in writing after disputes have arisen and after the arbitrator is named.
Important Legal Principle
“Waiver before knowing who the arbitrators are is not a waiver in the eyes of law.”
This was a central quote from the judgment, reinforcing the idea that procedural fairness cannot be undermined by premature consent.
On Unilateral Appointment
The Court also referred to the Supreme Court's ruling in Central Organisation for Railway Electrification, which categorically stated that unilateral appointment clauses in public-private contracts are unconstitutional as they violate Article 14 of the Constitution due to the potential for bias.
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Since the petitioner’s waiver was submitted on February 23, 2024, and the tribunal was constituted only on March 21, 2024, the Court held:
“The waiver was not against specific arbitrators but against the process, and thus not valid.”
Additionally, the arbitrators appointed were serving railway officers, clearly ineligible under the Seventh Schedule.
Case Title – M.V. Omni Projects (India) Ltd. v. Union of India through Chief Engineer Northern Railways & Anr.
Case No. – O.M.P. (T) (COMM.) 5/2025, O.M.P. (T) (COMM.) 6/2025, O.M.P. (T) (COMM.) 7/2025
Appearance-
For Petitioner - Mr. Subodh Kr. Pathak, Mr. Amit Sinha, Mr. Pawan Kumar Sharma, Mr. Niraj Kumar, Advs.
For Respondent - Mr. Ruchir Mishra, Sr. Panel Counsel with Mr. Rajkumar Maurya, GP with Mr. Sanjiv Kr. Saxena, Mr. Mukesh Shukla, Ms. Poonam Shukla, Ms. Reba Jena Mishra, Ms. Harshita Sharma, Advs
