Arbitrator ineligibility and written waiver: belated challenge barred where parties appointed and participated after disputes arose.

Section 12(5) makes persons falling within the Seventh Schedule ineligible to act as arbitrator to preserve neutrality and impartiality, but the proviso permits waiver only by an express agreement in writing after disputes arise. On the facts stated, a party that knowingly appointed the ineligible arbitrator could not later object to the appointment, and both parties' written appointment and participation in the proceedings were treated as an express written waiver. The belated challenge was therefore barred, and the arbitral tribunal was permitted to continue.

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Issues: (i) Whether a party that knowingly appointed an arbitrator who was ineligible under Section 12(5) of the Arbitration and Conciliation Act, 1996 could later challenge that appointment; (ii) whether the conduct of both parties amounted to waiver of the statutory objection under the proviso to Section 12(5).

Issue (i): Whether a party that knowingly appointed an arbitrator who was ineligible under Section 12(5) of the Arbitration and Conciliation Act, 1996 could later challenge that appointment.

Analysis: Section 12(5) introduces a mandatory ineligibility for persons falling within the Seventh Schedule, and the object is to secure neutrality, independence, and impartiality in arbitration. The governing principles recognised by the Court were that an ineligible person cannot ordinarily act as arbitrator, and the statutory scheme discourages belated objections by a party that itself chose the arbitrator despite knowledge of the disqualification. The Court treated the petitioner's conduct as inconsistent with a later challenge to the same appointment.

Conclusion: The petitioner could not later challenge the appointment on the ground of ineligibility.

Issue (ii): Whether the conduct of both parties amounted to waiver of the statutory objection under the proviso to Section 12(5).

Analysis: The proviso to Section 12(5) permits waiver only after disputes have arisen and only by an express agreement in writing. Here, the arbitrator was appointed after disputes had arisen, the respondent accepted the appointment and participated in the proceedings, and no timely objection was raised until much later. The Court held that the written appointment and the respondent's written participation together satisfied the requirement of express waiver in writing in the facts of the case. The petitioner had also participated in proceedings before the arbitrator without raising the objection, reinforcing the waiver and barring the belated challenge.

Conclusion: The objection under Section 12(5) stood waived by the parties.

Final Conclusion: The petition failed because the challenge to the arbitrator's appointment was barred by the petitioner's own conduct and by waiver under the statute, and the arbitral tribunal was allowed to continue.

Ratio Decidendi: A party that knowingly appoints an ineligible arbitrator and then participates in the arbitration without timely objection cannot subsequently invoke Section 12(5) to impeach the appointment where the parties' post-dispute conduct amounts to an express written waiver under the proviso.

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