Synopsis

The appellant (Titagarh Rail Systems Ltd.) had a contract with the Railway Board. Disputes arose. The appellant invoked arbitration. The Railway Board appointed a serving officer as sole arbitrator under the Fast Track procedure. The arbitrator passed an award. The Railway Board challenged the award under Section 34 on the ground that the arbitrator was ineligible under Section 12(5) of the Arbitration Act (being a serving employee of the Board). The Single Judge set aside the award, holding that there was no express agreement in writing waiving Section 12(5) as required by the proviso and the Supreme Court’s decision in Bhadra International. The Division Bench dismissed the appeal, affirming that waiver under Section 12(5) requires an express written agreement after the dispute has arisen. Mere adoption of a procedure that applies only in case of waiver does not constitute waiver. The appellant had explicitly stated in its invocation notice that it was not waiving Section 12(5). Therefore, the arbitrator was ineligible, and the award was rightly set aside.

Court: High Court of Delhi at New Delhi

Coram: Justice C. Hari Shankar and Justice Om Prakash Shukla

Date of Judgment: 13th April 2026

Citation: FAO(OS) (COMM) 101/2023 & 103/2023 (2026:DHC:3076-DB)

Core Law: Arbitration and Conciliation Act, 1996 – Sections 12(5), proviso; Seventh Schedule

2. Legal Framework

Major laws and provisions involved

• Arbitration and Conciliation Act, 1996 – Section 12(5) (ineligibility of arbitrators as per Seventh Schedule), proviso to Section 12(5) (waiver by express agreement in writing after dispute has arisen), Section 11(6) (appointment of arbitrator), Section 34 (setting aside award)

• Seventh Schedule to the Act – persons ineligible to be appointed as arbitrators (including employees of parties)

Key legal principles applied

• Ineligibility under Section 12(5) is mandatory and automatic: If an arbitrator falls under any category in the Seventh Schedule (e.g., being an employee of a party), he is ineligible to act as arbitrator. Such ineligibility cannot be cured by mere participation or conduct.

• Waiver of Section 12(5) requires express agreement in writing after the dispute has arisen: The proviso to Section 12(5) permits parties to waive the applicability of the section, but only by an “express agreement in writing” made after the dispute has arisen. Implied waiver or waiver by conduct is not sufficient.

• “Express agreement in writing” means explicit words, not inference: Following Bhadra International v. Airport Authority of India, the court hel

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