The case revolved around a contract between Bhadra International and AAI for ground-handling services at multiple airports. Clause 78 of the agreement stipulated dispute resolution through arbitration, with the Chairman of AAI empowered to appoint a sole arbitrator. In accordance with this clause, Bhadra International requested arbitration on November 27, 2015, stating that “it is incumbent upon Chairman AAI to appoint the Sole Arbitrator within a reasonable time.”
AAI proceeded to appoint Justice S.S. Nijjar, a retired Supreme Court judge, as the sole arbitrator. Both parties initially consented to his appointment, as recorded in the procedural order dated March 22, 2016: “None of the parties have any objection to my appointment as the Sole Arbitrator.”
The arbitration process spanned over two years, culminating in an award on July 30, 2018, which rejected all claims by Bhadra International. The company subsequently challenged the ruling under Section 34 of the Arbitration and Conciliation Act, 1996, but did not initially object to the arbitrator’s appointment.
However, during arguments before a single judge, Bhadra International contended that the arbitrator’s appointment was unilateral and therefore violated Section 12(5) of the Arbitration Act, which was amended in 2015 to prohibit unilateral appointments. The single judge dismissed this argument, holding that Bhadra International had acquiesced to the arbitrator’s appointment and participated in the proceedings without objection. “It was not open to the appellants to challenge the arbitral award on the ground that the appointment of the learned Arbitrator was unilateral and therefore bad,” the ruling stated.
In its appeal before the division bench, Bhadra International relied on Supreme Court precedents, including Bharat Broadband Network Ltd. v United Telecoms Ltd. and Perkins Eastman Architects DPC v HSCC (India) Ltd., arguing that an explicit written waiver of Section 12(5) was required.
The division bench, comprising Justices C. Hari Shankar and Ajay Digpaul, dismissed the appeal, emphasizing that the appellant had itself invited AAI to appoint an arbitrator and had provided written consent to the appointment. The court stated: “The entire integrity of the arbitral process would be irremediably eroded if parties were allowed to challenge awards at a belated stage after suffering an adverse outcome.”
This ruling reinforces judicial precedent that parties cannot selectively challenge arbitration proceedings after having actively participated in them. Legal experts believe this decision will have significant implications for arbitration jurisprudence in India, particularly in contractual disputes involving government entities.
Read The Judgment Here
keywords: arbitration, bhadra international, aai dispute, delhi high court, arbitration act, legal ruling
