India: Appointment Of Arbitrator By A Person Ineligible Under Section 12(5) Of The Arbitration And Conciliation Act, 1996 Is Void Ab Initio

Last Updated: 13 May 2019
Article by Rajeev Rambhatla


The Hon'ble Supreme Court of India in its recent judgement in the case of Bharat Broadband Networks Limited ("BBNL") v. United Telecoms Limited ("UTL")1, held that the appointment of arbitrator by a person who is himself ineligible to be an arbitrator as per Section 12 (5) of the Arbitration and Conciliation Act, 1996 ("the Act") is void ab initio. The bench consisting of Justice R F Nariman and Justice Vineet Saran has pronounced a similar judgement in the case of TRF Limited v. Energy Engineering Projects Limited2 wherein it was held that an ineligible person cannot appoint an arbitrator.

Factual Background:

The disputes in the matter at hand arose out of an agreement between BBNL and UTL, wherein the contractual disputes were referred to arbitration. The agreement provided that the Chairman and Managing Director of BBNL or any person appointed by him shall be the arbitrator to whom disputes arising from the contract should be referred. UTL invoked the arbitration clause on 03/01/2017 and in response the Chairman and Managing Director of BBNL appointed Mr. K H Khan as an arbitrator. Thereafter, on 03/07/2019 the judgement in the case of TRF Limited3 was pronounced. In light of judicial developments, BBNL sought withdrawal of Mr. K H Khan as arbitrator, however Mr. K H Khan rejected the request for withdrawal. BBNL challenged the rejection under the provisions of Section 144 and Section 155 of the Act before the High Court of Delhi. The Hon'ble High Court was pleased to dismiss BBNL's application while holding that BBNL was estopped from questioning the mandate of the arbitrator appointed by itself. Further, the High Court observed that it is evident from the conduct of the parties that they have accepted the mandate of the arbitrator as BBNL itself had appointed the arbitrator and UTL filed waiver of objections under the proviso of Section 12 Clause (5) of the Act. BBNL approached the Hon'ble Supreme Court of India, challenging the judgment of the High Court of Delhi.


The Hon'ble Justices heard contentions of both parties and after due consideration was given to averments of both sides, the bench allowed BBNL's appeal while holding that the ineligibility under Section 12 (5) of the Act is de jure in nature which leads to an automatic termination of the arbitrator's mandate.


Justice Nariman authored the judgement and allowing the instant appeal he observed:

"where such person becomes "ineligible" to be appointed as an arbitrator, there is no question of challenge to such arbitrator, before such arbitrator. In such a case, i.e., a case which falls under Section 12(5), Section 14(1)(a) of the Act gets attracted inasmuch as the arbitrator becomes, as a matter of law (i.e., de jure), unable to perform his functions under Section 12(5), being ineligible to be appointed as an arbitrator. This being so, his mandate automatically terminates, and he shall then be substituted by another arbitrator under Section 14(1) itself. It is only if a controversy occurs concerning whether he has become de jure unable to perform his functions as such, that a party has to apply to the Court to decide on the termination of the mandate, unless otherwise agreed by the parties. Thus, in all Section 12(5) cases, there is no challenge procedure to be availed of. If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the categories mentioned in Section 12(5), read with the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated"

Wherefore, if a person is by law ineligible to be appointed as an arbitrator then appointment of such a person as arbitrator is void ab initio, consequently, appointment of another person by a person so ineligible under Section 12 (5) of the Act is also void ab initio as the mandate of the ineligible person itself stands terminated. In cases of ineligibility in accordance with Section 12 (5) of the Act there is no procedure for challenge of the ineligibility, however if a person continues to operate as an arbitrator despite being ineligible for appointment, the court may decide on termination of his mandate upon an application being made by one of the parties.

Further, appointment of another person by a person ineligible under Section 12 (5) of the Act is void. In the instant case, the bench took notice of the fact that the Chairman and Managing Director of BBNL was himself an ineligible person as per the seventh schedule to the Act which barred managers, directors and other employees of a company which is a party to the arbitration from being an arbitrator. The bench applied its decision in the case of TRF Limited6 and held that the Chairman and Managing Director of BBNL could not appoint another arbitrator as he was himself ineligible for appointment as Arbitrator. UTL argued that as per Section 12 (4) of the Act a party who appointed the arbitrator can only challenge his mandate for reasons which they became aware of after the appointment was made. UTL insisted that BBNL was well aware of the ineligibility before the appointment, the Hon'ble Supreme Court rejected this contention while observing that the ineligibility arose only after the TRF Judgement was pronounced which was after the appointment of the arbitrator by BBNL. The Bench also clarified that Section 12 (4) of the Act has no applicability to an application made under Section 14 (2) of the Act to determine whether the mandate of an arbitrator has terminated owing to his ineligibility stemming from Section 12 (5) of the Act.

The Hon'ble Bench further observed:

"Whether such ineligible person could himself appoint another arbitrator was only made clear by this Court's judgment in TRF Ltd. (supra) on 03.07.2017, this Court holding that an appointment made by an ineligible person is itself void ab initio. Thus, it was only on 03.07.2017, that it became clear beyond doubt that the appointment of Shri Khan would be void ab initio. Since such appointment goes to "eligibility", i.e., to the root of the matter, it is obvious that Shri Khan's appointment would be void. There is no doubt in this case that disputes arose only after the introduction of Section 12(5) into the statute book, and Shri Khan was appointed long after 23.10.2015. The judgment in TRF Ltd. (supra) nowhere states that it will apply only prospectively, i.e., the appointments that have been made of persons such as Shri Khan would be valid appointments even if they were made before the date of the judgment in the case of TRF Ltd. (supra)".

The Hon'ble Bench then considered the question of waiver of objections to ineligibility of an arbitrator under Section 12 (5) of the Act as it did not agree with the High Court's interpretation of waiver. The Bench noted that as per Section 12 (5) of the Act the waiver of objections to ineligibility of an arbitrator should be express and in writing. The Bench further noted that BBNL objected to the continuation of Mr. K H Khan after the judgement in TRF Limited7 however it concluded that the fact that UTL filed its claim statement before the arbitrator cannot be considered or presumed as waiver of objections to the appointment/continuation of the arbitrator. Consequently, the Hon'ble Bench set aside the Delhi High Court's judgement and allowed BBNL's appeal.   


Since the decision in TRF Limited8 was pronounced it was clear that a person ineligible to be appointed as an arbitrator cannot appoint an arbitrator however there were several questions as the retrospective application of the said judgment and the impact on appointments made before the pronouncement of the judgement which were clarified by the Hon'ble Supreme Court in this successful appeal. The instant judgement will be instrumental in questioning the technicality of the appointment of a certain arbitrator and is thus a boon for many litigants having disputes resolved by arbitration.


1. CIVIL APPEAL NO. 3972 OF 2019 (Arising out of Special Leave Petition (Civil) No.1550 of 2018)

2. (2017) 8 SCC 377

3. Ibid

4. Failure or impossibility to act.

5. Termination of mandate and substitution of arbitrator.

6. Ibid

7. Ibid

8. Ibid

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions