Facts: The State of Maharashtra (Appellant) entered into a Build-Operate-Transfer (BOT) agreement with Morya Infrastructure Pvt. Ltd. (Respondent) for road development. Following disputes over road maintenance and the stoppage of toll collection, the Respondent sought arbitration. Although the contract contemplated a panel of three arbitrators, the Respondent moved the High Court under Section 11(6) of the Arbitration and Conciliation Act after the Appellant failed to respond to the arbitration notice. During these proceedings, the Appellant's representative (Executive Engineer) expressed consent for a sole arbitrator, Mr. C. D. Fakir. The Arbitrator eventually passed an award of Rs. 596.60 lakhs in favor of the Respondent. The Appellant challenged the award, primarily arguing that the tribunal's constitution was improper and that the Arbitrator was disqualified under the Fifth and Seventh Schedules of the Act due to his former employment with the State and involvement in the project's sanctioning.
Procedural Posture: The Appellant first challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, before the Commercial Court, District Beed. After the Commercial Court dismissed that application, the Appellant filed this appeal under Section 13 of the Commercial Courts Act, 2015, read with Section 37 of the Arbitration Act.
Issue: (i) Whether the Appellant waived its right to object to the constitution of a sole arbitrator instead of a three-member panel; and (ii) whether the disqualification provisions introduced by the 2015 Amendment Act (Schedules V and VII) apply to arbitral proceedings commenced prior to the amendment.
Holding: The Court held that: (i) the Appellant is deemed to have waived its right to object to the tribunal's composition by participating in the proceedings without timely protest; and (ii) the 2015 Amendment Act is not applicable as the arbitration commenced before 23/10/2015.
Reasoning: The Court reasoned that under Section 16(2) of the Act, any objection to the jurisdiction or constitution of the tribunal must be raised no later than the submission of the statement of defence. Since the Appellant filed its written statement and counter-claim and only objected during the fifth meeting, the right to object was waived under Section 4. Regarding disqualification, the Court relied on Section 26 of the 2015 Amendment and Supreme Court precedents to conclude that since the notice invoking arbitration was received in 2014, the proceedings commenced under Section 21 prior to the amendment. Consequently, the stricter ineligibility criteria of Schedules V and VII do not apply retrospectively to this case.