Unilateral arbitrator appointment and ineligibility under Section 12(5) cannot be waived by conduct or participation.

A unilateral appointment of a sole arbitrator from a restricted panel was inconsistent with the agreed appointment mechanism and the requirement of independence and neutrality under Section 12(5) of the Arbitration and Conciliation Act, 1996. The ineligibility of such an arbitrator went to the root of jurisdiction and rendered the resulting awards unsustainable. Waiver of the statutory bar could arise only through an express written agreement made after disputes had arisen, and not from conduct, participation in the proceedings, or a recorded statement withdrawing the objection.

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Issues: Whether the arbitral awards were liable to be set aside on the ground that the sole arbitrator had been appointed unilaterally from a restricted panel, contrary to the governing arbitration clause and the statutory bar under Section 12(5) of the Arbitration and Conciliation Act, 1996, and whether any waiver could be inferred from the petitioner's participation in the arbitral proceedings or from the recorded statement withdrawing the objection.

Analysis: The arbitration clause required the lessor to propose three names and permitted the lessee to choose the sole arbitrator from that restricted panel. Such a procedure was inconsistent with the settled law on party autonomy and impartial appointment of arbitrators. A unilateral appointment made after the lessee had expressly ed the panel was contrary to the mandate of Section 12(5) and the principles governing independence and neutrality of the arbitral tribunal. The Court held that waiver under the proviso to Section 12(5) can arise only from an express agreement in writing after disputes have arisen, and not from conduct, participation, or a statement recorded in arbitral proceedings. The ineligibility of the arbitrator went to the root of jurisdiction and rendered the resulting awards unsustainable.

Conclusion: The arbitral awards were set aside because the arbitrator was ineligible to continue as sole arbitrator, and the objection to appointment was not waived in the manner required by law.

Ratio Decidendi: An arbitrator appointed unilaterally in breach of the agreed appointment mechanism is de jure ineligible under Section 12(5), and such ineligibility can be waived only by an express agreement in writing after disputes have arisen, not by conduct or procedural participation.

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