Statutory disqualification voids only the arbitral appointment mechanism, preserving arbitration through independent appointment and COVID-19 limitation exclusion.

Statutory disqualification under Section 12(5) and the Seventh Schedule renders a named arbitrator and an appointing authority controlled by that arbitrator ineligible, including for nomination. The incompatible contractual appointment procedure does not invalidate the underlying arbitration agreement; it may be preserved through appointment of an independent arbitrator under Section 11(6). For limitation, the period during COVID-19 limitation exclusions is excluded when calculating the time to file an arbitrator-appointment application. The notes state that the application was timely and that the dispute should proceed to institutional arbitration.

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Issues: (i) Whether an independent arbitrator may be appointed where the named arbitral appointment mechanism has become legally inoperative owing to statutory disqualification; (ii) Whether the application for appointment of an arbitrator was within limitation.

Issue (i): Whether an independent arbitrator may be appointed where the named arbitral appointment mechanism has become legally inoperative owing to statutory disqualification.

Analysis: Section 12(5) read with the Seventh Schedule disqualifies the respondent's Managing Director and any officer nominated by that Managing Director from acting as arbitrator. That disqualification extends to the power of nomination. The invalidity of the contractual procedure does not extinguish the parties' substantive agreement to refer disputes to arbitration. A purposive construction preserves that agreement and enables appointment of an impartial arbitrator under Section 11(6).

Conclusion: An independent arbitrator may be appointed despite the inoperability of the named appointment procedure, in favour of the appellant.

Issue (ii): Whether the application for appointment of an arbitrator was within limitation.

Analysis: The limitation period commenced when the final bill became due, namely 21.04.2018, and would ordinarily have expired after three years. However, the period from 15.03.2020 to 28.02.2022 stood excluded under the COVID-19 limitation directions. On that exclusion, the Section 11(6) application filed on 15.03.2022 was timely.

Conclusion: The application was within limitation, in favour of the appellant.

Final Conclusion: The arbitration agreement remains enforceable through an independent appointment mechanism, and the dispute is to proceed to institutional arbitration.

Ratio Decidendi: Statutory disqualification of a named arbitrator or appointing authority invalidates only the incompatible appointment procedure, not the underlying agreement to arbitrate; courts may preserve that agreement by appointing an independent arbitrator, and mandatory COVID-19 exclusion applies to limitation for such appointment proceedings.

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