Legal Review and Analysis of Bhadra International India Pvt Ltd & Ors vs Airports Authority of India 2026 INSC 6
Case Synopsis
Case Name & Citation: Bhadra International (India) Pvt. Ltd. & Ors. vs. Airports Authority of India, 2026 INSC 6.
Synopsis: The Supreme Court nullified an arbitral award because the sole arbitrator was unilaterally appointed by the AAI Chairman, a person ineligible to do so under Section 12(5) of the Arbitration Act. The Court established a strict standard, ruling that such ineligibility can only be waived by a post-dispute, express written agreement between the parties. Conduct like participation or joint time extensions is irrelevant. Consequently, the award was held void ab initio for being passed by a tribunal lacking inherent jurisdiction.
1. Heading of the Judgment
Case Name: Bhadra International (India) Pvt. Ltd. & Ors. versus Airports Authority of India
Citation: 2026 INSC 6
Court: Supreme Court of India
Jurisdiction: Civil Appellate Jurisdiction
Civil Appeal Nos.: 37-38 of 2026 (Arising out of SLP(C) Nos. 16107-16108 of 2025)
Judges: Justice J.B. Pardiwala and Justice K.V. Viswanathan
Date of Judgment: January 5, 2026
2. Related Laws and Sections
The judgment interprets and applies the following key statutory provisions:
Section 12(5) of the Arbitration and Conciliation Act, 1996 – Ineligibility of an arbitrator based on relationships specified in the Seventh Schedule.
Proviso to Section 12(5) – Requirement of an "express agreement in writing" to waive ineligibility, entered into after disputes arise.
Section 14(1)(a) of the Arbitration and Conciliation Act, 1996 – De jure inability of an arbitrator to perform functions.
Section 18 of the Arbitration and Conciliation Act, 1996 – Equal treatment of parties.
Section 34(2)(b) of the Arbitration and Conciliation Act, 1996 – Setting aside an award if it conflicts with the public policy of India.
The Seventh Schedule to the Arbitration and Conciliation Act, 1996 – Lists specific relationships (e.g., employee, manager, advisor) that render a person ineligible to be an arbitrator.
3. Basic Judgment Details
Facts of the Case
The appellants (a consortium) entered into License Agreements (2010) with the Airports Authority of India (AAI) for ground handling services.
Clause 78 of the agreement stated that disputes would be referred to a sole arbitrator appointed by the Chairman of AAI.
Disputes arose in 2015. The appellants invoked arbitration, and AAI's Chairman appointed a sole arbitrator in March 2016.
The arbitrator's first procedural order recorded that "none of the parties have any objection to my appointment."
The arbitral proceedings continued for over two years, with the parties jointly seeking extensions of time under Section 29A. The arbitrator ultimately passed a 'Nil' award in July 2018.
The appellants challenged the award under Section 34, contending the arbitrator's appointment was unilateral and void under Section 12(5). The Single Judge and Division Bench of the Delhi High Court rejected the challenge, leading to this appeal.
Issues Framed by the Supreme Court
I. Whether the sole arbitrator was "ineligible to be appointed as an arbitrator" by virtue of Section 12(5) of the Act?
II. Whether the parties could be said to have waived the applicability of Section 12(5) by their conduct?
III. Whether the appellants could raise an objection to the appointment for the first time in a Section 34 application?
Ratio Decidendi (Court’s Reasoning)
The Supreme Court allowed the appeal, set aside the High Court's judgment, and also set aside the arbitral awards. Its core reasoning is:
The Appointment was Void and the Arbitrator Ineligible: Following precedents like TRF Ltd., Bharat Broadband, and Perkins Eastman, the Court held that the Chairman of AAI, being in a relationship specified in the Seventh Schedule (Items 1, 5, 12), was himself ineligible to act as an arbitrator. Consequently, he was also ineligible to appoint another person as an arbitrator. The unilateral appointment was void ab initio, and the arbitrator was de jure ineligible under Section 12(5). The fact that the appellants had invoked arbitration did not constitute consent to this unilateral appointment.
Waiver Requires an Express Agreement in Writing: The Court strongly emphasized that the proviso to Section 12(5) is a mandatory and exclusive route for waiving an arbitrator's ineligibility. Such a waiver must be an "express agreement in writing" entered into after disputes have arisen. Mere conduct—such as participating in proceedings, filing a statement of claim, jointly applying for extension of time under Section 29A, or a recorded "no objection" in a procedural order—cannot constitute a valid waiver. The requirement is for a conscious, deliberate, and written agreement demonstrating informed intent to waive the statutory bar.
Objection to Jurisdiction Can Be Raised at Any Stage, Including Under Section 34: An appointment made in violation of Section 12(5) results in an inherent lack of jurisdiction (coram non judice). An award passed by an ineligible arbitrator is a nullity and void ab initio. A challenge on this ground goes to the root of the tribunal's authority and can be raised for the first time in a petition to set aside the award under Section 34, as such an award is contrary to the fundamental policy of Indian law and public policy. There is no estoppel against challenging a nullity.
4. Core Principles of the Judgment: Analysis
Title: Reinforcing Arbitral Neutrality: Strict Adherence to Section 12(5) and the Sanctity of Express Waiver
A. The Imperative of Equal Treatment in Tribunal Constitution
The judgment roots its analysis in Section 18, which guarantees equal treatment. It holds that party autonomy in choosing an appointment procedure is not absolute and must operate within the Act's framework, which includes ensuring equality. A clause granting one party the exclusive right to appoint a sole arbitrator violates this principle of equal participation in constitution, creating a reasonable apprehension of bias and compromising the tribunal's neutrality from the outset. (Paras 32-39)
B. The Absolute Bar of Section 12(5) and the "Unilateral Appointment" Doctrine
The Court reaffirmed and expanded the principle from Perkins Eastman. If a person (like the AAI Chairman) is ineligible under the Seventh Schedule, they cannot appoint an arbitrator. This is not merely about the appointed individual's impartiality but about the taint in the appointment process itself. The power to appoint is "obliterated" once the appointing authority is rendered ineligible by law. This makes such unilateral appointments void ab initio. (Paras 51-59, 67-68)
C. The Rigorous Standard of "Express Agreement in Writing" for Waiver
This is the judgment's most significant contribution. It draws a sharp distinction between:
Waiver by conduct under Section 4 of the Act (e.g., continuing participation without objecting to procedural irregularities).
Waiver of ineligibility under the Proviso to Section 12(5).
The latter has a heightened standard. The Court minces no words: "The absence of a prescribed format cannot be construed to mean that the waiver may be inferred impliedly or through conduct." The agreement must be an express, conscious, and written document entered into with full knowledge of the ineligibility. Participation, claims, extensions, or silence are irrelevant. This strict interpretation is meant to prevent parties from being deemed to have waived a fundamental statutory protection inadvertently. (Paras 71-98)
D. Jurisdictional Nullity and Challenge at Any Stage
The Court treated an appointment violating Section 12(5) as a defect causing inherent lack of jurisdiction. Borrowing principles from civil procedure, it held that a decision by a forum lacking inherent jurisdiction is a nullity and can be challenged in collateral proceedings, at any stage, including execution or, in this context, under Section 34. This places such defects in the highest category of legal infirmity. (Paras 99-122)
E. Proactive Duty of the Arbitrator
The Court issued a crucial obiter direction: an arbitrator, upon entering reference, must ensure parties provide a written waiver agreement under the proviso to Section 12(5) if the appointment is unilateral. If a party does not appear or consent in writing, the arbitrator must withdraw immediately. This places a proactive duty on arbitrators to safeguard the proceedings' validity. (Paras 121-122)
5. Final Outcome and Directions
The Supreme Court
Allowed the appeals and set aside the impugned judgment of the Delhi High Court dated February 11, 2025.
Set aside the arbitral awards dated July 30, 2018, as being passed by an arbitrator who was de jure ineligible.
Held that the unilateral appointment was void and no valid waiver existed.
Left it open for the parties to initiate fresh arbitration proceedings in accordance with law. (Paras 123-126)
6. MCQs Based on the Judgment
Question 1: According to the Supreme Court in Bhadra International (India) Pvt. Ltd. vs. Airports Authority of India (2026 INSC 6), which of the following actions by parties can constitute a valid waiver of an arbitrator's ineligibility under Section 12(5) of the Arbitration and Conciliation Act, 1996?
A. Jointly filing an application for extension of the arbitrator's mandate under Section 29A of the Act.
B. Expressly stating "no objection" to the appointment in the arbitrator's first procedural order.
C. An express agreement in writing between the parties, signed after disputes have arisen, specifically waiving the applicability of Section 12(5).
D. Actively participating in the arbitral proceedings and filing a detailed statement of claim.
Question 2: In the aforementioned judgment, what was the Supreme Court's ruling regarding an arbitral award passed by a sole arbitrator who was unilaterally appointed by the other party in violation of Section 12(5)?
A. The award is valid but can be challenged on the merits under Section 34.
B. The award is a nullity (void ab initio) and can be set aside under Section 34 as being in conflict with the fundamental policy of Indian law.
C. The award is valid if the challenging party did not raise an objection during the proceedings.
D. The award must first be challenged before the arbitrator under Section 13 before approaching the court under Section 34.
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