Grounds for challenge
Section 12 of the Arbitration and Conciliation Act, 1996 deals with grounds for challenge. When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances,— (a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-mat The Act came into force on 22 Aug 1996.
1[(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances,—
(a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and
(b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months.
Explanation 1.—The grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator.
Explanation 2.—The disclosure shall be made by such person in the form specified in the Sixth Schedule.]
(3) An arbitrator may be challenged only if—
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.
2[(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.]
Section 12, The Arbitration and Conciliation Act, 1996 (Act 26 of 1996).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Perkins Eastman Architects DPC v. HSCC (India) Ltd.
Court's Decision & Legal Precedent
A person who is ineligible to be an arbitrator (s.12(5) / Seventh Schedule) also cannot nominate the sole arbitrator. Unilateral appointment by an interested party is void. TRF Ltd. principle extended to nomination.
On this section: s.12(5) ineligibility infects the power to nominate, not only the power to act as arbitrator.
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Glock Asia-pacific Limited vs Union of India
Court's Decision & Legal Precedent
A serving government employee cannot be appointed as sole arbitrator in a contract where the government is a party, even if the contract contains a pre-dispute arbitration clause authorizing such appointment, because Section 12(5) of the Arbitration and Conciliation Act, 1996, read with Paragraph 1 of the Seventh Schedule, prohibits appointment of persons who are employees of a party to the dispute, and this prohibition applies 'notwithstanding any prior agreement to the contrary.' The statutory requirement of arbitrator independence and impartiality is mandatory and cannot be waived by prior contractual agreement, particularly when the State is the party appointing the arbitrator, as the duty to appoint an impartial and independent adjudicator is even more onerous in such circumstances.
On this section: Statutory prohibition on appointment of arbitrators with specified relationships to parties, applicable 'notwithstanding any prior agreement to the contrary'; core provision at issue in this case
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Union of India Thr. Chief Engineer (construction) 1 vs B. M. Construction Company Thr. Proprietor Bal Kishan Sharma
Court's Decision & Legal Precedent
The core ratio of the judgment comprises three holdings: (1) Amendment Act 2015 does not apply to arbitration proceedings where dispute request was received before October 23, 2015; pre-amended Arbitration and Conciliation Act 1996 alone applies per Section 21 read with Section 26. Therefore High Court cannot invoke Section 12(5) for such cases. (2) Execution of 'no claim certificate' by contractor does not bar arbitration when prima facie evidence suggests financial coercion by employer who conditions payment on certificate execution. Such certificates are not genuine accord and satisfaction but forced settlement under economic duress, following the National Insurance vs. Boghara Polyfab framework, particularly illustration 52(iii). (3) High Court under Section 11(6) must first ensure contractually agreed appointment procedure is exhausted before appointing independent arbitrator. Contractual appointment procedure takes precedence; High Court is last resort. Deviation is permissible only when appointed arbitrator's independence is in doubt or when appointed tribunal has failed to function. Mere preference for independent arbitrator does not justify skipping agreed procedure.
On this section: Added by Amendment Act 2015, requires arbitrator independence and impartiality. Court held this should not be applied retroactively to disputes arising before October 23, 2015.
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North Western Railway General Manager vs Anil Trading Company Proprietor Shri Dinesh Kumar Khinchi S/o Shri Chandra Ram
Court's Decision & Legal Precedent
Where arbitration request predates Amendment Act 2015 (23-10-2015), proceedings are governed by pre-amended Arbitration and Conciliation Act 1996. In such cases: (1) Execution of 'no claim' or 'no dues' certificates does not automatically bar arbitration if executed under economic duress or coercion; (2) Chief Justice/designate must first ensure agreed arbitration appointment procedure is exhausted before invoking Section 11(6); (3) Deviation from agreed procedure is permissible only when independence/impartiality of agreed arbitrator is in justified doubt or agreed Tribunal has failed to function; (4) Small/petty contractors required to execute no claim certificates as condition precedent to release of admitted payments constitute cases of presumed coercion absent clear evidence of voluntary accord and satisfaction; (5) Arbitral disputes subsist despite no claim certificates when circumstances indicate economic duress, and such disputes are arbitrable notwithstanding purported full and final discharge.
On this section: Amendment Act 2015 provision on independence and impartiality of arbitrators; prohibits arbitrators with conflicting interests; applies only to arbitrations commenced after 23-10-2015
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Union of India General Manager vs Parmar Construction Company Partner Achhar Singh Parmer
Court's Decision & Legal Precedent
1. Where an arbitration request is received before the Arbitration And Conciliation (Amendment) Act, 2015 came into force (23rd October 2015), the arbitral proceedings are governed by the pre-amended Act, 1996, and the Amendment Act provisions cannot be invoked retroactively unless parties explicitly otherwise agree. 2. Signing of a 'no-claim certificate' does not per se discharge the arbitration agreement or eliminate arbitrable disputes; if the certificate is executed under economic duress or coercion (such as making payment of admitted bill amounts conditional on signing the certificate), the discharge is involuntary and does not constitute valid accord and satisfaction, leaving arbitral disputes arbitrable. 3. The Chief Justice or designate, while exercising powers under Section 11(6) of the Arbitration Act, 1996, must first ensure that the appointment procedure agreed upon by the parties in the arbitration clause is exhausted before invoking Section 11(6) to appoint an independent arbitrator; the agreed procedure must be given effect as closely as possible, and the Court is the last resort. 4. Only in circumstances where the independence and impartiality of the person designated in the arbitration agreement is in doubt (with reasons recorded), or where the Arbitral Tribunal appointed per the agreement has failed to function and discharge its obligations, may the Chief Justice appoint an independent arbitrator as an alternative; mere failure to appoint by the agreed party does not trigger independent appointment power.
On this section: Amended provision (post-23rd October 2015) requiring arbitrators to be independent and impartial. Court held this cannot be invoked for proceedings where request for arbitration predates the Amendment.
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Union of India General Manager vs Rajendra Prasad Bansal Partner
Court's Decision & Legal Precedent
Where arbitration request is received before Amendment Act 2015 comes into force, pre-amended provisions of 1996 Act apply to the arbitration proceedings unless parties expressly agree otherwise. No-claim certificates executed by contractors under economic duress (where payments withheld unless certificates signed) do not bar arbitration. Courts must exhaust agreed appointment procedures before appointing independent arbitrators under Section 11(6), and should only depart from such procedures when genuine grounds exist (bias or tribunal failure), not merely because amended statutory requirements prefer independent arbitrators. The appointment procedure agreed upon in contracts must be given priority and effect to the extent possible before court intervention.
On this section: Independence and impartiality requirements for arbitrator appointment; applicability only to proceedings commenced after Amendment Act came into force
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Union of India General Manager vs Maya Construction Pvt. Ltd. Director B L. Jhedu
Court's Decision & Legal Precedent
When a request for arbitration is received before the Arbitration and Conciliation (Amendment) Act, 2015 comes into force (October 23, 2015), the arbitral proceedings are governed by the pre-amended Act under Section 26 of the Amendment Act. No-claim certificates obtained as a condition precedent for release of admitted dues constitute discharge under economic duress and do not bar arbitration. The Chief Justice or designate must first ensure exhaustion of the contractually agreed arbitrator appointment procedure before invoking Section 11(6) to appoint an independent arbitrator, and can only do so if the agreed procedure fails, or the appointed arbitrator shows bias or failure to perform, or other compelling circumstances warrant such deviation. The agreed procedures in contracts must be respected and given effect as closely as possible, with the court acting as a measure of last resort.
On this section: Discussed amended provision requiring arbitrator independence and impartiality. Court noted this was correctly understood by High Court but could not be invoked retroactively to proceedings commenced before amendment.
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North Western Railway General Manager vs Bharat Spun Pipes and Construction Company Partner Dinesh Chandra
Court's Decision & Legal Precedent
When an arbitration agreement contains a specific procedure for appointment of arbitrators and a request for arbitration is received before the Arbitration and Conciliation (Amendment) Act, 2015 came into force (23rd October 2015), the arbitration shall proceed under pre-amended 1996 Act provisions. The Chief Justice or designate, exercising power under Section 11(6), shall not appoint an independent arbitrator bypassing the agreed appointment procedure unless: (a) the party responsible for appointment has failed to appoint within stipulated time and the matter cannot be further delayed, or (b) the agreed Tribunal, once appointed, fails to function or perform its obligations, or (c) prima facie evidence of bias, mala fides, or lack of independence in the person nominated is established before appointment is made. Mere execution of a no-claim certificate does not discharge a contract or bar arbitration where prima facie evidence of economic duress or coercion in its execution is present; such invalidity questions are arbitrable and must be decided by the arbitrator. The Court must first exhaust agreed procedures before resorting to alternative arrangements.
On this section: As amended in 2015, prescribes criteria for arbitrator independence and impartiality; rendered Railway employees ineligible in certain circumstances.
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Union of India vs Harinarayan Khandelwal Th. Director
Court's Decision & Legal Precedent
In arbitration matters governed by the pre-amended Arbitration and Conciliation Act, 1996, where a request for arbitration has been received before October 23, 2015, the amended provisions of the Arbitration and Conciliation (Amendment) Act, 2015 do not apply unless parties otherwise agree. The Chief Justice or designate must first ensure that the contractually agreed appointment procedure for arbitrators is exhausted before invoking Section 11(6) to appoint an independent arbitrator. Appointment of independent arbitrators may only be done when the Chief Justice is satisfied that circumstances warrant departure from agreed procedure, such as justified apprehension of bias of the contractually designated arbitrator or failure of the appointed arbitrator to discharge functions. Further, no-claim certificates signed by contractors as condition precedent for release of admitted dues, when signed by petty contractors with unequal bargaining power and without voluntary agreement, can be presumed to be signed under economic duress and therefore do not bar arbitration proceedings.
On this section: Requirements for independence and impartiality of arbitrators (as amended in 2015). Court held this applies only to arbitrations commencing on or after October 23, 2015.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… (C) NO. 20675 OF 2017) J U D G M E N T R.F. Nariman, J. 1. Leave granted. 2. The present appeals raise interesting questions relating to the applicability of Sections 12 and 14 of the Arbitration and Conciliation Act, 1996, in particular with respect to sub-section (5) of Section 12 added by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) (hereinafter referred to as the 2016 Amendment Act). 3. Briefly stated, the relevant facts necessary to decide this case are as follows. The respondent, GAIL (India), issued a notice inviting tenders …
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… The Sole Arbitrator may proceed with the arbitration proceedings, subject to furnishing to the parties, requisite disclosures as required under Section 12 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as " A&C Act "). 12. The Sole Arbitrator shall be entitled to fee in accordance with the IVth Schedule of the A&C Act; or as may otherwise be agreed to between the parties and the learned Sole Arbitrator. 13. The parties shall share the …
Questions about Section 12
What have the courts held on Section 12 of the Arbitration and Conciliation Act?
Perkins Eastman Architects DPC v. HSCC (India) Ltd. (26 Nov 2019) is the leading judgment on this section among those set out below: s.12(5) ineligibility infects the power to nominate, not only the power to act as arbitrator. Another 8 judgments on this section are set out below, all of them from the Supreme Court. They run from 2019 to 2023.
How do I find court cases under Section 12 of the Arbitration and Conciliation Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Arbitration Act 12, section 12 Arbitration Act, section 12 of the Arbitration and Conciliation Act. People searching for it also type arbitration act 12 5 and arbitration act 1996 section 12. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 9 reported judgments on this section are set out on this page, beginning with Perkins Eastman Architects DPC v. HSCC (India) Ltd. (26 Nov 2019).
What should I read with Section 12 of the Arbitration and Conciliation Act, and has it changed?
3 other provisions in this corpus refer back to it.
When did Section 12 of the Arbitration and Conciliation Act come into force?
Section 12 of the Arbitration and Conciliation Act, cited as Arbitration Act 12, came into force on 22 Aug 1996, having been enacted on 16 Aug 1996. It is in force as at the date shown on this page.
Other sections of this Act
- 8. Power to refer parties to arbitration where there is an arbitration agreement1029 words
- 11. Appointment of arbitrators1027 words
- 34. Application for setting aside arbitral awards861 words
- 2. Definitions732 words
- 29A. Time limit for arbitral award635 words
- 57. Conditions for enforcement of foreign awards519 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.