Introduction
In Tarsem Jain v. Bharat Forge Limited and Anr. [2026:DHC:8624-DB], the Delhi High Court considered whether a sole arbitrator unilaterally appointed by one party, contrary to the appointment mechanism contained in the contract and Section 11 of the Arbitration and Conciliation Act, 1996, could be sustained because the other parties subsequently participated in the arbitral proceedings.
The Delhi High Court held that where the parties had not agreed that either side could appoint the sole arbitrator unilaterally, one party could not alter the agreed appointment mechanism by issuing a notice and then make the appointment on its own. In the absence of consensus on the sole arbitrator, the party invoking arbitration was required to follow the statutory route under Section 11 of the Arbitration Act.
The Delhi High Court further held that participation in the arbitral proceedings did not ratify the invalid appointment, particularly where the respondents had objected at the first opportunity and continued to participate under protest. The appointment was void and the resulting award was a nullity.
The judgment also reiterates the narrow scope of an appeal under Section 37 and clarifies that the non-applicability of Section 12(5) to an arbitration commenced before the 2015 amendments does not validate an appointment made contrary to the contractual and statutory appointment procedure.
In this article, we navigate through the facts of the case and the findings rendered by the Delhi High Court.
Brief Facts
The appellant entered into a Share Purchase Agreement dated 18 December 2010 (the "SPA") with BF Infrastructure Limited ("BF Infra"), a subsidiary of Bharat Forge Limited ("BFL"). The transaction was followed by an engagement letter dated 18 January 2011 under which the appellant was appointed as Advisor - Global Mining by BFL.
Disputes subsequently arose between the parties. BF Infra terminated the SPA on 16 August 2012 and BFL terminated the engagement of the appellant.
Clause 20 of the SPA contained the dispute resolution mechanism. Clause 20.4 provided that if the dispute could not be resolved through amicable negotiations, it would be submitted to arbitration before a single arbitrator appointed in accordance with the Arbitration Act, upon the request of either party. New Delhi was designated as the seat of arbitration.
On 3 June 2013, the appellant invoked arbitration and called upon BF Infra to appoint a sole arbitrator with the consent of the appellant. A reminder dated 24 July 2014 stated that if BF Infra failed to appoint an arbitrator with the appellant's consent within fifteen days, the appellant would make the appointment. On 15 December 2014, the appellant nominated the sole arbitrator.
BF Infra thereafter raised a counter-claim. After the statement of claim was served, BF Infra objected to the unilateral appointment of the sole arbitrator and filed an affidavit raising the objection. BFL separately filed an application under Section 16 of the Arbitration Act contending that it was not a signatory to the SPA and was not bound by the arbitration agreement.
On 16 December 2015, the sole arbitrator rejected the objection raised by BF Infra and dismissed the Section 16 application filed by BFL. BF Infra subsequently filed a memo recording that it was participating in the proceedings under protest and continued to object to the unilateral appointment.
The arbitral proceedings culminated in an award dated 10 May 2019. The appellant's claim was allowed and compensation of INR 77 crore was awarded, while the counter-claims were dismissed.
BFL and BF Infra filed petitions under Section 34 of the Arbitration Act challenging the award, including on the ground that the sole arbitrator had been unilaterally appointed. The Single Judge held the appointment to be void ab initio, treated the arbitral proceedings as a nullity and set aside the award. The appellant's enforcement petition was also dismissed.
Aggrieved by the common judgment, the appellant approached the Division Bench under Section 37 of the Arbitration Act.
Arguments from Both Sides
The appellant contended that the appointment of the sole arbitrator could not be characterised as unilateral. It was submitted that the respondents had failed to respond to the notices invoking arbitration and had not objected when the sole arbitrator was nominated.
The appellant further argued that after the objection to the appointment was rejected by the sole arbitrator on 16 December 2015, BF Infra did not take steps under Section 11(6) or Section 14 of the Arbitration Act and instead continued to participate in the arbitral proceedings.
It was also submitted that no ground for challenge under Section 12(3) of the Arbitration Act had been established. According to the appellant, Section 18, which requires equal treatment of the parties, operates during the arbitral proceedings and has no application to the appointment of the arbitrator.
The appellant also relied on Section 4 of the Arbitration Act to contend that the respondents had waived their right to object to the appointment by participating in the proceedings.
Finally, the appellant submitted that the arbitral proceedings had commenced in 2013 and therefore the amendments introduced in 2015, including Section 12(5), were inapplicable. It was also argued that the Section 34 petitions had to be examined under the unamended statutory framework.
The respondents, on the other hand, emphasised the limited scope of interference under Section 37. They contended that the appointment was contrary to Clause 20.4 of the SPA and the procedure prescribed under Section 11 of the Arbitration Act, since the respondents had never consented to the appointment of the sole arbitrator.
The respondents further submitted that participation in the proceedings could not amount to waiver where the appointment had been objected to and participation thereafter was expressly under protest. They also contended that Sections 12 and 13 did not validate an appointment made unilaterally and contrary to the agreed procedure.
On the question of the applicable Section 34 regime, the respondents relied on ONGC Ltd. v. Saw Pipes Ltd. [(2003) 5 SCC 705] and BCCI v. Kochi Cricket (P) Ltd. [(2018) 6 SCC 287] to submit that the relevant grounds of challenge were available and that the amended Section 34 applied to petitions instituted after the 2015 amendments.
Findings of the Delhi High Court
The Delhi High Court dismissed the appeal and affirmed the judgment setting aside the arbitral award.
The Delhi High Court first reiterated that the scope of an appeal under Section 37 is narrower than the already limited jurisdiction under Section 34. The appellate court cannot undertake an independent reassessment of the merits of the award and must examine whether the Section 34 court exercised its jurisdiction within the statutory limits.
In this regard, the Delhi High Court referred to Bombay Slum Redevelopment Corpn. (P) Ltd. v. Samir Narain Bhojwani [(2024) 7 SCC 218], Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills [2024 SCC OnLine SC 2632] and Larsen Air Conditioning & Refrigeration Co. v. Union of India [(2023) 15 SCC 472]. The Delhi High Court also noted that issues not raised in the Section 34 proceedings cannot ordinarily be introduced for the first time in an appeal under Section 37.
The Delhi High Court noted that the appellant had pressed only limited objections before the Single Judge. Several contentions advanced in the appeal had not been pressed in the Section 34 proceedings, and it was not pleaded that such contentions had been raised but remained unconsidered.
The Delhi High Court thereafter examined the appointment mechanism. Clause 20.4 of the SPA required the dispute to be referred to a single arbitrator appointed in accordance with the Arbitration Act. Under Section 11(5), where parties fail to agree on a sole arbitrator within the prescribed period, the appointment is to be made upon a request under the statutory mechanism.
The Delhi High Court found that the respondents had never expressly consented to the appointment made by the appellant. The notice dated 24 July 2014 stated that if the respondents failed to appoint an arbitrator with the appellant's consent within fifteen days, the appellant would himself appoint the sole arbitrator. The Delhi High Court held that this unilaterally altered the procedure agreed between the parties.
Accordingly, the Delhi High Court held that the appointment made by the appellant was contrary to the unambiguous language of Clause 20.4 and the statutory procedure under Section 11. The Single Judge was therefore correct in holding the appointment to be void.
The Delhi High Court rejected the contention that the respondents' participation in the arbitral proceedings ratified the appointment. Both respondents had objected to the unilateral appointment at the first instance before the sole arbitrator, and the subsequent participation was under protest.
The Delhi High Court also observed that the challenge to the rejection of such objections could be raised under Section 34 after the final award.
The Delhi High Court also rejected the argument that the respondents themselves ought to have approached the court under Section 11(6) after their objections were rejected. Since arbitration had been invoked by the appellant, it was for the appellant, in the absence of consensus on the appointment, to approach the court under Section 11 for appointment of the sole arbitrator.
On the issue of independence and impartiality, the Delhi High Court rejected the contention that a unilateral appointment did not offend Section 12(3). The Delhi High Court held that unilateral appointment itself gives rise to doubts regarding independence and impartiality.
The Delhi High Court relied on Central Organisation for Railway Electrification v. ECI SPIC & SMO MCML (JV) A Joint Venture Co. [(2025) 4 SCC 641], where the Supreme Court held that a clause permitting one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts regarding independence and impartiality and impairs equal participation in the appointment process.
The Delhi High Court acknowledged that the decision in Central Organisation for Railway Electrification (supra) concerned the post-2015 statutory framework. However, it held that the underlying requirement of an independent and impartial, or mutually appointed, arbitrator remained unaffected by the amendments.
The Delhi High Court also rejected the appellant's narrow reading of Section 18. It held that equal treatment of parties is integral to the arbitral process and that the concern regarding equality cannot be divorced from the manner in which a sole arbitrator is appointed.
The Delhi High Court accepted that Section 12(5), introduced by the 2015 amendments, did not apply to an arbitration that had commenced before October 2015. However, this did not validate an appointment made in contravention of Clause 20 of the SPA and Section 11 of the Arbitration Act.
The plea of waiver under Section 4 was also rejected. Apart from not having been pressed before the Single Judge, the plea failed on the facts because the respondents had objected upon receiving notice from the sole arbitrator, raised their jurisdictional objections and continued to participate under protest.
The Delhi High Court further held that the case concerned a void appointment and an award which was a nullity. Such a challenge was available under both the amended and unamended statutory framework. The Delhi High Court also referred to BCCI v. Kochi Cricket (P) Ltd. (supra), which held that the amended Section 34 applies to Section 34 petitions filed after the commencement of the 2015 amendments even where the arbitral proceedings had commenced earlier.
Accordingly, the Delhi High Court found no ground to interfere with the decision of the Single Judge and dismissed the appeal.
Comment
The judgment in Tarsem Jain (supra) is an important reaffirmation that the procedure for constituting an arbitral tribunal cannot be rewritten unilaterally by the party invoking arbitration.
Where the arbitration agreement does not confer a unilateral right of appointment and the parties fail to agree on the sole arbitrator, silence or inaction by the opposite party does not create such a right. The invoking party must follow the appointment mechanism contemplated by the contract and the Arbitration Act.
The decision also clarifies the effect of participation after an objection to the constitution of the tribunal has been raised. Participation does not necessarily amount to ratification or waiver where the objection was taken at the first opportunity and the party continues in the proceedings under protest.
The judgment is particularly relevant to arbitrations commenced before the 2015 amendments. The inapplicability of Section 12(5) does not, by itself, cure an appointment that was contrary to the agreed procedure and the statutory mechanism under Section 11. The Delhi High Court treated independence, impartiality and equal participation in the appointment process as foundational considerations.
The decision also reinforces procedural discipline under Section 37. A party cannot use the appellate stage to reconstruct its challenge through arguments that were not pressed before the Section 34 court. The Section 37 court remains confined by the same statutory limits that govern interference with an arbitral award under Section 34.
From a practical perspective, the judgment underscores the importance of adhering strictly to the agreed appointment clause. Where consensus on a sole arbitrator is required and cannot be achieved, the safer course is to invoke the statutory appointment mechanism rather than assume a unilateral power that the contract does not confer.
The judgment therefore reinforces that an agreement to arbitrate does not dispense with the requirement that the arbitral tribunal itself be constituted in accordance with the parties' agreement and the applicable statutory framework.
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