Judgment : Arindam Mukherjee, J. I. Nature of application:- This is an application by the contractor seeking Court’s intervention to the mandate of the Arbitrator under the provisions of Section 14 (1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said 1996 Act) in proceedings where an officer of the Central Public Works Department (hereinafter referred to as CPWD) is the appointing authority and has appointed an Arbitrator exercising such authority on the ground of ineligibility of the arbitrator to enter into reference and adjudicate in view of the provisions of section 12 (5) read with the Seventh Schedule of the said 1996 Act and to appoint a substitute arbitrator in its stead. II. Facts of the Case: - 1) The petitioner, M/S. Ravi Realcons Pvt. Ltd., is a Government contractor enlisted as Class-I (Civil) contractor with the Andaman Public Works Department (in short APWD). The petitioner entered into an agreement with the respondent for the work of “Construction 48 numbers Type–II Quarters (triple storied)” to be completed within twenty four months for the amount of Rs.8,47,73,577/- (hereinafter referred to as the said agreement). Incorporated in the said agreement is Clause 25 of General Conditions of Contract, 2010 which is an arbitration agreement for adjudication of any dispute through arbitration. Incorporated in the said agreement is Clause 25 of General Conditions of Contract, 2010 which is an arbitration agreement for adjudication of any dispute through arbitration. The said arbitration clause is set out hereunder for convenience:- “Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter: (i) If the contractor considers any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in-Charge on any matter in connection with or arising out of the contract or carrying out of the work, to be unacceptable, he shall promptly within 15 days request the Superintending Engineer in writing for written instruction or decision. Thereupon, the Superintending Engineer shall give his written instructions or decision within a period of one month from the receipt of the contractor’s letter. If the Superintending Engineer fails to give his instructions or decision in writing within the aforesaid period or if the contractor is dissatisfied with the instructions or decision of the Superintending Engineer, the contractor may, within 15 days of the receipt of Superintending Engineer’s decision, appeal to the Chief Engineer who shall afford an opportunity to the contractor to be heard, if the latter so desires, and to offer evidence in support of his appeal. The Chief Engineer shall give his decision within 30 days of receipt of contractor’s appeal. If the contractor is dissatisfied with this decision, the contractor shall within a period of 30 days from receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator on prescribed proforma as per Appendix XV, failing which the said decision shall be final binding and conclusive and not referable to adjudication by the arbitrator. If the contractor is dissatisfied with this decision, the contractor shall within a period of 30 days from receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator on prescribed proforma as per Appendix XV, failing which the said decision shall be final binding and conclusive and not referable to adjudication by the arbitrator. (ii) Except where the decision has become final, binding and conclusive in terms of Sub Para (i) above, disputes or difference shall be referred for adjudication through arbitration by a sole arbitrator appointed by the Chief Engineer, CPWD, in charge of the work or if there be no Chief Engineer, the Additional Director General of the concerned region of CPWD or if there be no Additional Director General, the Director General of Works, CPWD. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever, another sole arbitrator shall be appointed in the manner aforesaid. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal. It is also a term of this contract that no person, other than a person appointed by such Chief Engineer CPWD or Additional Director General or Director General of works, CPWD, as aforesaid, should act as arbitrator and if for any reason that is not possible, the matter shall not be referred to arbitration at all. It is also a term of this contract that if the contractor does not make any demand for appointment of arbitrator in respect of any claims in writing as aforesaid within 120 days of receiving the intimation from the Engineer-in-charge that the final bill is ready for payment, the claim of the contractor shall be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of these claims. The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) or any statutory modifications or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause. It is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each dispute and claim referred to him and in all cases where the total amount of the claims by any party exceeds Rs. 1,00,000/-, the arbitrator shall give reasons for the award. It is also a term of the contract that if any fees are payable to the arbitrator, these shall be paid equally by both the parties. It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties calling them to submit their statement of claims and counter statement of claims. The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The cost of the reference and of the award (including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator who may direct to any by whom and in what manner, such costs or any part thereof shall be paid and fix or settle the amount of costs to be so paid”. 2) The date of commencement of instant work as per the said agreement was 29th January, 2013 and the date of completion was scheduled on 28th January, 2015 but due to various reasons the work was ultimately completed on 28th September, 2018. The extension of time was accorded up to 28th September, 2018 without levy of compensation. In course of executing the work 8 (eight) Running Account Bills (RA Bills) and the 9th RA being the final bill was raised by the petitioner (contractor). It is the case of the petitioner that huge payments are in arrears. The extension of time was accorded up to 28th September, 2018 without levy of compensation. In course of executing the work 8 (eight) Running Account Bills (RA Bills) and the 9th RA being the final bill was raised by the petitioner (contractor). It is the case of the petitioner that huge payments are in arrears. 3) Being aggrieved by such non-payment of bills despite completion of the work, petitioner invoked the arbitration agreement and submitted a notice for appointment of arbitrator to the Chief Engineer, being the respondent no.1 herein vide a notice dated 23rd June, 2020. This letter according to the petitioner is a notice in terms of Section 21 of the 1996 Act. The petitioner in continuation of its letter dated 23rd June, 2020 wrote another letter on 30th July, 2020 annexing therewith three names who are all retired officers of CPWD after obtaining their respective consent so that one of them could be appointed as an Arbitrator to enter into the reference and adjudicate the dispute. The petitioner says that the list was furnished on advice following the guidelines laid down in the judgment reported in 2017 (8) SCC 377 [TRF Ltd. vs. Energo Engineering Project Ltd.] (in short TRF) and 2020 (20) SCC 760 [Perkins Eastman Architects DPC and Anr. Vs. HSCC (India) Ltd.] (in short Perkins). 4) The respondent no.1 without advertising to such list unilaterally appointed the sole arbitrator Shri H.S. Dogra, retired D.G (works), C.P.W.D by an Office Order No.6 dated 27th October, 2020 by invoking the arbitration agreement contained in Clause 25 of General Condition of Contract (GCC), 2010 being part of the main agreement. 5) The sole arbitrator so appointed immediately thereafter entered into reference without making any disclosure as required under the amended provisions of the 1996 Act. 6) The petitioner, thereafter, filed an application before the Sole Arbitrator on 12th November, 2020 challenging the appointment of the Sole Arbitrator and his jurisdiction following the provisions of section 13 (2) read with section 12 (3) and the Fifth Schedule of the 1996 Act. Another application dated 15th December, 2020 was again filed before the Sole Arbitrator to decide on the petitioner’s objection as to jurisdiction taken in the pleading dated 12th November, 2020. 7) The said application and the written statement raising objection as to the jurisdiction were never taken up by the learned Arbitrator. Another application dated 15th December, 2020 was again filed before the Sole Arbitrator to decide on the petitioner’s objection as to jurisdiction taken in the pleading dated 12th November, 2020. 7) The said application and the written statement raising objection as to the jurisdiction were never taken up by the learned Arbitrator. The petitioner, therefor, vide a letter dated 30 th November, 2021 challenged the eligibility of the personnel appointed as the arbitrator to act as an arbitrator as also the jurisdiction and authority of the appointing authority under the arbitration agreement by invoking the provisions of Section 12 (5) read with seventh schedule of the 1996 Act as amended by the Arbitration Amendment Act, 2015 (hereinafter referred to as 2015 Amendment Act) as well as for undue delay on the part of the Arbitrator in deciding the petitioner’s application. III. Submission of the Petitioner:- 1) The petitioner submits that the arbitrator is ineligible to act on the grounds that he was appointed after the promulgation of 2015 Amendment Act and had entered into reference on or about 18th November, 2020. Even though the eligibility to act and jurisdiction of the learned Arbitrator was challenged the same was kept outstanding even after one year. No pleadings were also invited. Furthermore, the learned Arbitrator while in service of APWD had made criminal complaints against the contractors under APWD which included the petitioner and as such likelihood of bias was apprehended by the petitioner. That apart, petitioner submits that Shri H.S Dogra was appointed as Arbitrator on two or more previous occasions by the Chief Engineer, APWD within the past three years and as such is a regular appointee giving rise to justifiable doubt as to independence or impartiality as an Arbitrator. In the present application the petitioner, therefor, has challenged the eligibility of the arbitrator as well as of the appointing authority to appoint such an arbitrator in light of the amended provisions of 2015 Act that the arbitrator has become de-jure or de-facto unable to perform his functions and have also failed to act without undue delay amounting to withdrawal from office. 2) The petitioner says that Section 12 of the 1996 Act as amended by the Amendment Act, 2015 inserted a new Fifth Schedule, which enumerates the grounds that would guide in determining whether circumstances exist that give rise to justifiable doubts as to the independence or impartiality of an arbitrator. The newly inserted sub-section (5) of Section 12 also provides as follows:- “(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.” 3) The Seventh Schedule, according to the petitioner classifies the position as to the relationship of an arbitrator with a party under three categories. This in effect declares the so called standard Arbitration Agreements or the arbitration clause inserted the said any agreement which proposes to appoint or nominate as an arbitrator, any interested party like its Director, Managing Director, Partner, Consultants, Manager, Engineer, Chief Engineer or for that matter any official/employee within the organization or the management. In view of such stipulation, the petitioner says that the appointing authority under the arbitration agreement could not have appointed the said arbitrator. The appointment therefor, is void. IV. Submission of the Respondents:- a) On behalf of the respondents it is submitted that the agreement was prior to the 2015 amendment coming into operation. At the time when the agreement was entered into, it was without there being any embargo as in Section 12 (5) or the fifth and seventh schedule was a valid and workable arbitral agreement. The arbitration clause and the appointment mechanism do not thereunder become void for the subsequent restrictions. The amendment is prospective in operation and as such the arbitration agreement with the appointment mechanism envisaged thereunder is valid. The appointing authority still retains the power to appoint under the arbitration agreement and as such has exercised such authority vested in him by appointing the present arbitrator. The appointment is valid and the Arbitrator is competent to enter into reference and adjudicate the disputes raised by the petitioner. The petitioner never objected to the arbitration agreement and as such had approached the appointing authority. The appointment is valid and the Arbitrator is competent to enter into reference and adjudicate the disputes raised by the petitioner. The petitioner never objected to the arbitration agreement and as such had approached the appointing authority. The petitioner by doing so has waived the embargo, if any. b) Subsequently taking advantage of the situation the petitioner is trying to avoid the appointment or accept the appointment made strictly as per the arbitration agreement. Moreover, the instant petition is not maintainable on the petitioner having directly approached this Court without exhausting its remedy before the learned Arbitrator. The arbitrator should be allowed to rule upon his jurisdiction and the petitioner, if is aggrieved by the same would challenge the award that may be passed under the provisions of Section 34 of the 1996 Act. V. Petitioner’s Reply:- 1) Responding to the point of maintainability raised by the respondents, the petitioner says that it had approached the arbitrator at the first instance who had kept the application pending without deciding the same. That apart and in any event when the appointing authority has become ineligible to appoint in view of the present position of law any appointment made by him is void and can be challenged directly before this Court instead of spending time before an arbitrator who is ex facie without jurisdiction and/or there being inherent lack of jurisdiction. 2) Referring to the arbitration clause which is set out hereinabove the petitioner says that the appointment of arbitrator in the instant case is hit by embargo laid down under Section 12 (5) of the Act and such arbitrator is de jure disqualified to act. VI. Analysis with reasons:- 1. After hearing the parties and considering the materials on record, the following issues arise before the Court for adjudication:- (a) Whether an arbitration agreement authorizing an employee of one of the parties to act as an arbitrator or permitting him to appoint any employee of such party which was entered into prior to the 2015 “Amendment Act” came into force, render such provision invalid and unenforceable, when such appointment takes place after the amendment coming into operation? (b) Did the appointing authority become ineligible to appoint in the instant case? If so, what will be the fate of the proceedings before the arbitrator who entered into reference after being appointed by such an appointing authority? (b) Did the appointing authority become ineligible to appoint in the instant case? If so, what will be the fate of the proceedings before the arbitrator who entered into reference after being appointed by such an appointing authority? (c) Does the arbitration agreement subsist in the instant case? If so, who will appoint the arbitrator? 2. The issue as to appointment of an arbitrator by an appointing authority being an employee of one of the parties fell for consideration for the first time in 2009 (8) SCC 520 Indian Oil Corporation Limited. Vs. Raja Transport Private Limited, which was in a situation before 2015 amendment came into operation as held in. In the said judgment it was held. “34. The fact that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality or lack of independence on his part. There can however be a justifiable apprehension about the independence or impartiality of an employee arbitrator, if such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate (as contrasted from an officer of an inferior rank in some other Department) to the officer whose decision is the subject-matter of the dispute. 35. Where however the named arbitrator though a senior officer of the Government/statutory body/government company, had nothing to do with the execution of the subject contract, there can be no justification for anyone doubting his independence or impartiality, in the absence of any specific evidence. Therefore, senior officer(s) (usually Heads of Department or equivalent) of a Government/statutory corporation/public sector undertaking, not associated with the contract, are considered to be independent and impartial and are not barred from functioning as arbitrators merely because their employer is a party to the contract. 36. The position may be different where the person named as the arbitrator is an employee of a company or body or individual other than the State and its instrumentalities. For example, if the Director of a private company (which is a party to the arbitration agreement), is named as the arbitrator, there may be a valid and reasonable apprehension of bias in view of his position and interest, and he may be unsuitable to act as an arbitrator in an arbitration involving his company. For example, if the Director of a private company (which is a party to the arbitration agreement), is named as the arbitrator, there may be a valid and reasonable apprehension of bias in view of his position and interest, and he may be unsuitable to act as an arbitrator in an arbitration involving his company. If any circumstance exists to create a reasonable apprehension about the impartiality or independence of the agreed or named arbitrator, then the court has the discretion not to appoint such a person.” 3. The judgment Raja Transport (supra) made a clear distinction as to the authority of the appointing authorities and the validity of such appointment on the basis of their status. It was considered to be an independent appointment when made by Government bodies even if the arbitrator was an employee of such body but for private entities it gave rise to a reasonable apprehension of bias or impartiality or independence of appointed arbitrator who was an employee of such private entity which would render such appointment unsuitable for fair arbitration. 4. The issue again fell for consideration after the 2015 amendment in TRF (supra). It has been held therein that any provision in an arbitration agreement naming the arbitrator if such named arbitrator is an employee of one of the parties to the arbitration agreement or allowing any officer of one of the parties to the agreement to appoint an arbitrator will be an invalid appointment. Dealing with the question of the applicability of the Amendment Act, the Hon’ble Supreme Court held that in TRF (supra) that the arbitration agreement in that case was invoked on 28th December, 2015 following GCC, 2010 but the 2015 amendment to the 1996 Act have come into force on 23rd October, 2015 and as such the appointing mechanism was governed under the 2015 Amendment. In TRF (supra), the Hon’ble Supreme Court dealt with a dispute resolution mechanism which specified that the disputes that may arise between the parties would be referred to the sole arbitration of the Managing Director of the buyer and/or his nominee. Thus, the Managing Director could not only act as an arbitrator but also had the power to nominate an arbitrator to adjudicate the disputes. The Supreme Court, relying upon Section 12 (5) of the Act read with the Fifth and Seventh Schedules held as follows:- 54 . Thus, the Managing Director could not only act as an arbitrator but also had the power to nominate an arbitrator to adjudicate the disputes. The Supreme Court, relying upon Section 12 (5) of the Act read with the Fifth and Seventh Schedules held as follows:- 54 . “In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be otherwise eligible and a respectable person. As stated earlier, we are neither concerned with the objectivity nor the individual respectability. We are only concerned with the authority or the power of the Managing Director. By our analysis, we are obligated to arrive at the conclusion that once the arbitrator has become ineligible by operation of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription contained in Section 12(5) of the Act. It is inconceivable in law that person who is statutorily ineligible can nominate a person. Needless to say, once the infrastructure collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated. Therefore, the view expressed by the High Court is not sustainable and we say so”. 5. In the light of the above discussion the first issue and the aforesaid judgment, post 2015 amendment the eligibility and procedure for appointing authority following the works contract of 2013 and GCC of 2010, the authority of the Managing Director qua appointing an arbitrator is rendered invalid and unenforceable in the instant case as it falls squarely against the provisions of Section 12(5) read with the seventh schedule post amendment. The invoking of the arbitration clause in 2020 of the 2013 agreement after 2015 amendment has been enforced, does invalidate the position of the Managing Director, an employee to appoint the sole arbitrator and thereby, any authorization or nomination of a person or party if ex-employee as arbitrator is invalid and the procedure now stands infructuous to the new amended statutory provisions. 6. 6. On the second part of the first issue and the second issue, the answer is given by the Hon’ble Supreme Court while interpreting the position post the 2015 amendment in the judgment reported in 2018 (12) SCC 471 HRD Corporation vs. Gail (India) Ltd. In Gail (supra) the Hon’ble Supreme Court has held that there lies a distinction between the disqualifications of a person to be appointed as an arbitrator and a person authorized to appoint an arbitrator under the arbitration agreement on becoming ineligible to appoint an arbitrator under the amended provisions of 1996 in view of the 2015 amendment. The person with justifiable doubt as to impartiality is disqualified to be appointed as arbitrator under the fifth schedule whereas the appointing authority is disqualified under the Seventh Schedule in a post amendment situation. An appointing authority being ineligible to appoint on having appointed an arbitrator those duties is an inherent lack of jurisdiction which leads to termination of mandate of an arbitrator so appointed under the provisions of Section 14 of the Act. In the instant case, the appointing authority post 2015 amendment gets disqualified under the seventh schedule so an appointment made by such a disqualified appointing authority leads to a void appointment and an arbitrator also becomes ineligible to act. Thus, even if the agreement had been entered into prior to the amendment but an appointment of an arbitrator has been made subsequent to the amendment. The natural follow up is that the proceedings before such an arbitrator become null and void as it is before a forum without jurisdiction. However, if the arbitrator has entered into reference prior to the amendment act coming into operation, his appointment is valid and the arbitrator is within jurisdiction to conclude the same as held in 2020 (2) SCC 464 [Union of India vs. Pradeep Vinod Consultation Company]. 7. Moving to the question of waiver of such embargo one can profitable refer to 2017 (4) SCC 665 [Voestalpine Schienen GMBH vs. Delhi Metro Rail Corporation] and Bharat Broadband Network Ltd. V. United Telecoms Led. reported in 2019 (5) SCC 755 . In Bharat Broadband (supra) the arbitration clause provided for reference of arbitration to the CMD of BBNL or his appointee. reported in 2019 (5) SCC 755 . In Bharat Broadband (supra) the arbitration clause provided for reference of arbitration to the CMD of BBNL or his appointee. After referring to the judgment in Gail (supra) the Supreme Court reiterated that if a person falls within any of the categories set out in the Seventh Schedule “he is, as a matter of law, ineligible to be appointed as an arbitrator” and that “in all Section 12 (5) cases, there is no challenge procedure to be availed of”. The Court held that such inability under the proviso to Section 12 (5) of the Amended Act can be removed by an express agreement in writing between the parties. The Hon’ble Supreme Court in paragraph 20 of Bharat Broadband (supra) drew a distinction between such waiver to be effective in case of the proviso of Section 12 (5) with deemed waiver of right to object by conduct under Section 4 of the Act. Thus, the agreement contemplated under the proviso to Section 12 (5) to waive the ineligibility must be express and clearly state that the parties agree to the appointment of such ineligible arbitrator. The mere filing of a statement of claim would not lead to the inference that there was an express agreement of such nature. The general law as to waiver has also been succinctly discussed in the judgment reported in 2021 (10) SCC 401 [Kalpraj Dharamshi & Ors. Vs. Kotak Investment Advisors Limited & Anr.]. In the said judgment it has been clarified that there has to be a conscious decision clearly expressed. Accordingly, relying on the findings in TRF, the appointment of the arbitrator was held to be non est. In Perkins(supra), the Supreme Court extended the applicability of the TRF principle and held that interested persons to a dispute, such as a Managing Director or Chief Executive Officer (CEO) would not be ineligible to act as an arbitrator but also prescribe them from appointing an arbitrator to adjudicate the dispute. Perkins (supra) further went on to hold that a court ought not to enter into a merit-based assessment of the existence of bias in the arbitrator sought to be appointed. Perkins (supra) further went on to hold that a court ought not to enter into a merit-based assessment of the existence of bias in the arbitrator sought to be appointed. As long as one of the parties to a dispute has a unilateral right to appoint an arbitrator, such a clause ought to be set aside irrespective of whether such an arbitrator is disqualified under the Fifth Schedule or the Seventh Schedule. Perkins (supra) therefore extended the ineligibility criteria to two categories i.e. ineligibility to act and ineligibility to appoint, effectively putting an end to unilateral appointment clauses in arbitration agreements. 8. Furthermore judgment reported in 2020 (14) SCC 712 Central Organisation for Railway Electrification vs. ECI-SPIC-SMO-MCML (JV), the Supreme Court upheld an arbitration clause which postulate that either party were to select their nominee arbitrators from the panel of 5 arbitrators maintained by CORE , and the nominee arbitrators so selected were to appoint the presiding arbitrator. Notably, the Supreme Court while upholding the validity of such an appointment procedure relied upon Voestalpine (supra) to observe that mere presence of retired railway officers in the panel maintained by Central Organisation for Railway Electrification (in short CORE) would not attract the proscription under the Fifth and Seventh Schedule to the Act since there was an equal counter-balancing right provided to the other party to nominate the arbitrator, there could not be any justifiable apprehension of bias. The ratio now established in the judgment reported in 2021 (17) SCC 248 Jaipur Zila DugdhUtpadakSahkari Sangh Ltd. vs. Ajay Sales & Suppliers clearly hold that the Chairman of a company is de jure ineligible to be appointed as an arbitrator as such an appointment would fall foul of Section 12(5) read with the Seventh Schedule of the Act. The Supreme Court, relying upon judgments in TRF (supra), Perkins (supra), Voestalpine (supra) and Bharat Boradband (supra) held that the object and intent of Section 12(5) read with the Seventh Schedule was to provide for neutrality of arbitrators. It further observed that in order to achieve intent, Section 12(5) lays down that “notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or subject matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator”. 9. It further observed that in order to achieve intent, Section 12(5) lays down that “notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or subject matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator”. 9. Accordingly, a party cannot insist on the appointment of an arbitrator in terms of the agreement when the appointment itself is hit by the statutory bar under Section 12(5) read with the Seventh Schedule to the Act. This Court concurs with the three Bench Supreme Court’s analysis in the TRF judgment that observed, “…by our analysis, we are obligated to arrive at the conclusion that once the arbitrator has become ineligible by operation of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription contained in Section 12(5) of the Act. It is inconceivable in law that a person who is statutorily ineligible can nominate a person. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated.” 10. It cannot be disputed that in the present case, the Central PWD Works, Andaman-Arbitral Tribunal comprising of officers of the respondent State are all ineligible to become and/or to continue as arbitrators in view of the mandate of sub-section (5) of Section 12 read with Seventh Schedule. Therefore, by operation of law and by amending Section 12 and bringing on statute sub-section (5) of Section 12 read with Seventh Schedule, the earlier Arbitral Tribunal-Central PWD Works, Andaman comprising of the sole arbitrator appointed by the Chief Engineer, CPWD in charge of the work or if there be no Chief Engineer, the Additional Director General of the concerned region of CPWD or if there be no Additional Director General, the Director General of Works, CPWD, has become de jure ineligible to act as an arbitrator or to nominate an arbitrator and the arbitrator appointed by such authority has lost its mandate and such an Arbitral Tribunal cannot be permitted to continue. That apart the arbitrator while functioning in the department had lodged FIR against the contractors including the petitioner. A reasonable doubt as to his impartiality and independence also surface in the instant case. That apart the arbitrator while functioning in the department had lodged FIR against the contractors including the petitioner. A reasonable doubt as to his impartiality and independence also surface in the instant case. A fresh arbitrator therefor, has to be appointed as per the 1996 Act. 11. An identical question came to be considered by the Supreme Court in Jaipur Zila (supra) and after considering the decisions of this Court in TRF decided the following: “ 8.3. So far as the submission on behalf of the petitioners that the agreement was prior to the insertion of sub-section (5) of Section 12 read with the Seventh Schedule to the Act and therefore the disqualification under sub-section (5) of Section 12 read with the Seventh Schedule to the Act shall not be applicable and that once an arbitrator Chairman started the arbitration proceedings thereafter the High Court is not justified in appointing an arbitrator are concerned the aforesaid has no substance and cannot be accepted in view of the decision of this Court in TRF Ltd. v. Energo Engg. Projects Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] ; Bharat Broadband Network Ltd. v. United Telecoms Ltd. [Bharat Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755 : (2019) 3 SCC (Civ) 1] ; Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd. [Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665 : (2017) 2 SCC (Civ) 607] In the aforesaid decisions this Court had an occasion to consider in detail the object and purpose of insertion of sub-section (5) of Section 12 read with the Seventh Schedule to the Act. 9. In Voestalpine Schienen GmbH [Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665 : (2017) 2 SCC (Civ) 607] it is observed and held by this Court that the main purpose for amending the provision was to provide for “neutrality of arbitrators”. It is further observed that in order to achieve this, sub- section (5) of Section 12 lays down that 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, he shall be ineligible to be appointed as an arbitrator. It is further observed that in such an eventuality i.e. when the arbitration clause finds foul with the amended provisions [Sub-section (5) of Section 12 read with the Seventh Schedule] the appointment of an arbitrator would be beyond pale of the arbitration agreement, empowering the Court to appoint such arbitrator as may be permissible. It is further observed that, that would be the effect of non obstante clause contained in sub-section (5) of Section 12 and the other party cannot insist on appointment of the arbitrator in terms of the arbitration agreement. 10. It is further observed and held by this Court in Voestalpine Schienen GmbH [Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665 : (2017) 2 SCC (Civ) 607] that independence and impartiality of the arbitrator are the hallmarks of any arbitration proceedings. Rule against bias is one of the fundamental principles of natural justice which apply to all judicial and quasi-judicial proceedings. It is further observed that it is for this reason that notwithstanding the fact that relationship between the parties, to the arbitration and the arbitrators themselves are contractual in nature and the source of an arbitrator's appointment is deduced from the agreement entered into between the parties, notwithstanding the same non- independence and non-impartiality of such arbitrator would render him ineligible to conduct the arbitration. It is further observed that the genesis behind this rationale is that even when an arbitrator is appointed in terms of contract and by the parties to the contract, he is independent of the parties.” 12. Keeping in mind the recommendation of the Law Commission, in line with which spirit, the Section 12 of the 1996 Act has been amended by the Amendment Act, 2015, it is manifest that the main purpose for amending the provision was to provide for neutrality of arbitrators. In order to achieve this object, sub-section (5) of Section 12 lays down that 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, he shall be ineligible to be appointed as an arbitrator or empowered to appoint an arbitrator. In such an eventuality i.e., when the arbitration clause finds foul with the amended provisions extracted above, the appointment of an arbitrator would be beyond pale of the arbitration agreement, empowering the court to appoint an arbitrator(s) as may be permissible. That would be the effect of non obstante clause contained in sub-section (5) of Section 12 and the other party cannot, therefor, insist on appointment of the arbitrator in terms of arbitration agreement’. 13. In Bharat Broadband (supra), it is observed that sub-section (5) of Section 12 read with Seventh Schedule made it clear that if the arbitrator falls in any one of the categories specified in the Seventh Schedule, he becomes “ineligible” to act as an arbitrator. It is further observed that once he becomes “ineligible”, it is clear that he then become de jure unable to perform his functions inasmuch as in law, he is regarded as “ineligible” in view of the provisions of Section 14 (1) (a) of the Act. It was further observed in the said decision that where a person becomes ineligible to be appointed as an arbitrator there is no question of challenge to such arbitrator before the arbitral tribunal under Section 13 of the Act as there is inherent lack of jurisdiction of the tribunal. In such a case where the provisions of Section 14(1)(a) of the Act gets attracted in view of the amendment to Section 12 of the Act an application is maintainable before the High Court without exhausting the remedy to challenge the competence of the Arbitral Tribunal under Section 16 of the Act. This is more so because section 16 objection relates to Section 4 of the Act which can be waived but ineligibility under Section 12(5) relates to inherent lack of jurisdiction as held by the Hon’ble Supreme Court in Jaipur Zila (supra) wherein the submission that as the contractor having participated in the arbitration proceedings before the arbitrator has waived the objection had been negated. 14. An arbitration clause similar to the case in hand lastly fell for consideration of the Hon’ble Supreme Court in Lombardi Engineering Limited vs. Uttarakhand Jal Vidyut Nigam Limited reported in 2024 (4) SCC 341 . 14. An arbitration clause similar to the case in hand lastly fell for consideration of the Hon’ble Supreme Court in Lombardi Engineering Limited vs. Uttarakhand Jal Vidyut Nigam Limited reported in 2024 (4) SCC 341 . In the said judgment an issue was framed in paragraph 24.4 thereof which reads as follows:- “(iv) whether the arbitration Clause 55 of the contract empowering the Principal Secretary / Secretary (Irrigation), State of Uttarkhand to appoint an arbitrator of his choice is in conflict with the decision of this Court in Perkins Eastman?” The Hon’ble Supreme Court examined the issue from various angles which includes (i) Neutrality of Arbitrations (ii) Unconscionability in arbitration agreement. Referring to Voestalpine (supra) the Hon’ble Supreme Court in that decision has clarified the persons to be treated as incompetent to perform the role of an arbitrator. The Supreme Court also held that the stipulation empowering the Principal Secretary/Secretary (Irrigation), State of Uttarkhand to be unconscionable. At the end in paragraph 101 (page 418 of SCC) the Hon’ble Supreme Court has held “In view of the aforesaid discussion, we have reached to the conclusion that we should ignore the two conditions contained in Clause 55 of the GCC, one relating to 7% deposit of the total amount claimed and the second one relating to the stipulation empowering the Principal Secretary (Irrigation), Government of Uttarakhand to appoint a sole arbitrator and proceed to appoint an independent arbitrator”. 15. In the instant case the learned Arbitrator was directly involved with APWD and the appointing authority had become de-jure ineligible to appoint as held in Glock Asia-Pacific Limited vs. Union of India reported in 2023 (8) SCC 226 which considered all the previous judgments operating in the field. That apart and in any event the arbitration clause so far it allows the Chief Engineer CPWD, in charge of the work or if there is no Chief Engineer, the Additional Director General of the concerned region of CPWD or if there be no Additional Director General, the Director General Works, CPWD to appoint arbitrator should be ignored. This answers the last issue framed above by holding that the Arbitration agreement to remain valid by ignoring the appointing procedure. 16. This answers the last issue framed above by holding that the Arbitration agreement to remain valid by ignoring the appointing procedure. 16. Although, the judgments of the Hon’ble Supreme Court are mostly rendered in the context of International Arbitration but the ratio laid down as held by this Court and several other High Courts apply to domestic arbitration like the one in hand. At the same time though this is an application under Section 14 (1) of the 1996 Act and not an application under Section 11 (6) of the 1996 Act apart from the mandate of the arbitrator H.S. Dogra being terminated a substitute arbitrator is also appointed in view of the delegation of power under Section 11 (6) of the 1996 Act to this bench and in view of the provisions of Section 15 of the 1996 Act as there exists no rule applicable to the appointment of the arbitrator being replaced. Any step taken by the learned Arbitrator pursuant to his appointment is null and void. The arbitration proceedings shall commence afresh before the appointed arbitrator. 17. In the facts and circumstances as aforesaid Mr. Sahidullah Munshi, a former Judge of this Court is appointed as a Sole Arbitrator. The Learned Arbitrator shall be free to fix his fees in the light of paragraph 128 of the judgment reported in 2024 (4) SCC 481 [ONGC Ltd. vs. Afcons Gunanusa JV]. The arbitration proceedings shall be held in accordance with the provisions of Arbitration and Conciliation Act, 1996. Inasmuch as the main application is being disposed of, all other connected applications thereto are also disposed of. Urgent photostat certified copy of this judgment and order, if applied for, be supplied to the parties on priority basis after compliance with all necessary formalities.