One Arbitrator, 4,155 Cases: What the Delhi High Court’s Ruling in Shikha Ghosh v. Axis Bank Means for Unilateral Appointments

The number that stopped the Court: 4,155

On 30 September 2026 a Division Bench of the Delhi High Court, in Shikha Ghosh v. Axis Bank Ltd., declared an arbitral award unenforceable against a borrower. The bank had conceded that awards passed by unilaterally appointed arbitrators are void from the start, and that settled the award. What drew attention was what the Court asked next. In an affidavit the Court had called for, the bank disclosed that one sole arbitrator had conducted 4,155 arbitrations for it over four to five years. The Court called this the “most shocking aspect” of the affidavit.^[1]

The ruling looks procedural, but it raises a larger question: if a lender appoints the arbitrator, and appoints the same person again and again, can the process feel neutral to the borrower? This case study sets out what the Court decided, what it directed, what the law says, and what borrowers, lenders and regulators should take from it. The matter was part-heard and listed again on 17 November 2026, so the position is as of 5 November 2026.^[1]

The case in brief

The loan and the award. The bank disbursed a loan of Rs 16,66,795 in January 2019. It says the borrower did not repay, and it began arbitration by communicating with her on 18 January 2023 (she disputes receiving that communication). The sole arbitrator accepted the reference on 6 February 2023 and, by an order of 16 May 2023, proceeded ex parte. The award is dated 26 May 2023. The borrower says she knew nothing of the proceedings and received the award on 2 June 2023.^[1]

The appeal. Her petition under Section 34 of the Arbitration and Conciliation Act, 1996 was dismissed by the Commercial Court, Tis Hazari, on 30 January 2025 as time-barred. She appealed to the High Court. The appeal was taken up on 7 April 2025 and referred to the Delhi High Court Mediation and Conciliation Centre on 5 August 2025, but mediation did not succeed.^[1]

The Court’s questions. On 3 September 2026 the Court directed the bank to file an affidavit on four points: whether there was proof that the borrower had been served in the arbitration; whether the arbitrator was connected to the bank; how many arbitrations he had handled for the bank; and whether he had given the declarations required by the Sixth and Seventh Schedules.^[1]

What the affidavit revealed

No proof of service. The Court found there was no proof that the borrower had been served, other than what the arbitrator himself recorded in the award.^[1]

Fees through the bank’s lawyer. The bank said the arbitrator had no relationship with it of the kind listed in the Seventh Schedule. On being questioned in Court, the bank’s official said the arbitrator was paid his fees through the bank’s lawyer.^[1]

The numbers. The bank’s records showed 4,155 arbitrations conducted by this one arbitrator over four to five years, with no appointment of his subsisting at the time of the affidavit. The bank’s senior counsel told the Court that settlements had been reached in almost 65 per cent of the awards, about 2,700 cases, and that in about 1,264 cases no execution petition had been filed and no fresh arbitral appointment made. On instructions, counsel said no unilateral appointment had been made since 2023, and that 76,000 awards in all had been passed by such sole arbitrators across India in matters concerning the bank. The Court recorded that unilateral appointments had continued up to 2023.^{[1, 2, 3]}

The law behind the concession

Two tiers in the Act. The Arbitration and Conciliation (Amendment) Act, 2015, in force from 23 October 2015, rewrote Section 12. The Fifth Schedule lists circumstances that give rise to justifiable doubts about an arbitrator’s independence or impartiality, and the Seventh Schedule lists relationships that make a person ineligible to be an arbitrator at all under Section 12(5), whatever the parties agreed beforehand. The proviso to Section 12(5) allows parties to waive ineligibility only after the dispute has arisen, and only by an express agreement in writing.^{[4, 1, 5]}

The Court pointed to two Fifth Schedule entries in particular: that the arbitrator has, within the past three years, been appointed as arbitrator on two or more occasions by one of the parties or an affiliate, and that he serves or has served in the past three years in another arbitration on a related issue involving a party or an affiliate. It observed that the scale of conflict the Schedule contemplated was “far lower” than what had been uncovered here.^[1]

The Supreme Court’s line of cases. In TRF Ltd. v. Energo Engineering Projects Ltd. (2017) the Supreme Court held that a person who is ineligible under Section 12(5) cannot nominate another person as arbitrator: “It is inconceivable in law that person who is statutorily ineligible can nominate a person.” In Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2020) it applied that reasoning to a clause letting one party appoint the sole arbitrator, observing that a person with an interest in the dispute or its outcome should not unilaterally appoint a sole arbitrator.^[5]

A Constitution Bench confirmed this line on 8 November 2024 in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV). It held that the principle of equal treatment of parties applies at the stage of appointing arbitrators, that a clause allowing one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts about independence and impartiality, and that the express-waiver proviso to Section 12(5) also covers waiving a bias objection against a unilaterally appointed arbitrator once disputes have arisen. It applied its new rule on three-member tribunals only to appointments made after the judgment. It stated that TRF and Perkins, which concerned sole arbitrators, had “held the field for years”.^[5]

The bank’s concession in Shikha Ghosh rested on Perkins Eastman and CORE. Its senior counsel accepted that awards made where the bank had unilaterally appointed the arbitrator are void ab initio, given the settled principle that neutrality is necessary at every stage of arbitration.^[1]

What the Court held and directed

The declaration. Since the bank’s stand was that the award was void ab initio, the Court declared the award of 26 May 2023 unenforceable against the borrower, and the appeal succeeded. The bank is free to take steps afresh to recover the loan “in accordance with law, if so permissible”.^{[1, 2]} The order does not decide whether the Section 34 petition was filed in time. The outcome rests on the concession.

The Court’s observations. The Court said the clear impression was that this was “nothing but the tip of an iceberg”. Arbitrators appointed in thousands of matters without proper declarations “cannot be said to be independent and impartial”. Even under the unamended Section 12(1), one arbitrator handling thousands of arbitrations for the same party would give rise to justifiable doubts, and repeated appointments of the same arbitrator in thousands of cases “goes against the core of Neutrality which is at the soul of any arbitral process”. The bank, it said, “is answerable as to how this situation could be permitted” and must take remedial measures.^[1]

The order does not examine the merits of the award or record a finding about the arbitrator’s conduct in any individual case. Its concern is structural, and a count of appointments does not by itself show that any particular award was wrong.^[1]

A double blow for the bank. The Court noted that banks are custodians of public money and cannot use remedies contrary to law to recover loans, and that defaulting borrowers cannot be allowed to go scot-free. But it said the route the bank had chosen, in complete lack of adherence to statutory provisions, was a double blow: awards from unilateral appointments are void and unenforceable, and the bank cannot enforce them or recover the money. It said a solution would need to be devised “at an institutional level in a centralised manner” by the bank, failing which substantial public money would go unrecovered and a significant number of awards would be void and unenforceable.^[1]

Directions. The bank must file a fresh affidavit by 16 November 2026 giving the reasons why thousands of arbitrations were given to the same arbitrator, and setting out its future course of action on awards passed by unilaterally appointed arbitrators, including enforcement and steps to recover the loans. The Reserve Bank of India, which was represented in Court, was told that as sector regulator it shall caution all banks, so that other banks and financial institutions can consider remedial measures on unilateral appointments and guidance can be issued. The RBI must also file its affidavit by 16 November 2026. The matter was listed for 17 November 2026 and is part-heard.^{[1, 2, 6]}

Three groups with a stake

Borrowers. Many loan agreements carry arbitration clauses that individuals sign without negotiation. If the lender chooses the arbitrator, and chooses the same one again and again, the borrower faces someone whose steady work comes from the other side. The arbitrator may be entirely honest, but the arrangement is built in a way that erodes trust. The borrower’s case also shows the practical risk: an ex parte award, a disputed notice and a petition dismissed as time-barred can leave a borrower without a remedy unless the appointment itself is attacked.

Banks. Void awards cannot simply be enforced, and the Court has said so in terms. Matters settled in the shadow of a defective process may be open to question. Matters left without execution or fresh appointment are in limbo, and the bank itself has told the Court that around 76,000 awards of this kind were passed across India. The longer such defects sit, the more expensive they are to untangle.

Regulators. Once a pattern shows up at this scale, it stops being only a courtroom issue. The Court’s direction to the RBI shows it sees a supervisory dimension: how regulated lenders use dispute-resolution clauses is a question about conduct, not only contract law.

What follows in practice

For borrowers. Read the arbitration clause and the appointment letter. If the lender chose the sole arbitrator, that is a ground to challenge the award and any enforcement of it, and the ground does not depend on proving actual bias. Keep a dated record of when and how you received any notice or the award, because the time for a Section 34 petition runs for three months from receipt of the award, extendable by up to 30 days where there is sufficient cause.^[4] Waiver of an ineligibility objection is valid only if it is express, in writing and made after the dispute has arisen, so do not sign anything that waives it without advice.^{[4, 5]}

For lenders. Audit how arbitrators have been appointed and how often the same names recur, and stop unilateral appointments. Plan for awards already passed by unilaterally appointed arbitrators: the Court has asked the bank what it intends to do about enforcement and recovery, and similar questions may be put to other lenders. Consider a clean route for recovery, whether a fresh reference by agreement, institutional arbitration or the ordinary remedies available in law.

For drafters. Provide for appointment by an independent arbitral institution or by the parties jointly, or at least for each side to nominate an arbitrator of its choice, since CORE treats equal participation in appointment as the safeguard. See our related article on enforcing foreign arbitral awards in India for how the Supreme Court treats the finality of awards at the enforcement stage, and our arbitration and ADR practice for advice on appointments, challenges and enforcement. This article is general information, not legal advice.

Why a structural fix matters more than a new law

The statute is clear and the Supreme Court has been clear. In our view the gap is in practice, which suggests the remedy is structural rather than legislative. The most obvious option is wider use of institutional arbitration, where an independent body rather than a party appoints the arbitrator. That would remove the unilateral choice at the source and spread appointments across a panel. Regulators can also ask sharper questions of financial institutions: how arbitrators are selected, how concentrated appointments are, and whether borrowers are told their rights. The Court’s own remarks about an institutional, centralised solution point the same way.^[1]

Frequently asked questions

Can a lender appoint the sole arbitrator under the arbitration clause? No. Following TRF (2017), Perkins Eastman (2020) and the Constitution Bench in CORE (2024), a party with an interest in the dispute cannot unilaterally appoint a sole arbitrator, unless the parties validly waive the objection, in writing, after the dispute has arisen.

What did the Delhi High Court decide in Shikha Ghosh v. Axis Bank? On 30 September 2026 it declared the award of 26 May 2023 unenforceable against the borrower, on the bank’s concession that awards from unilaterally appointed arbitrators are void ab initio. It also directed affidavits from the bank and the RBI and listed the matter for 17 November 2026.

Does the order mean the arbitrator acted dishonestly? The order does not say so. It records the number of appointments, observes that appointments on this scale undermine neutrality, and asks the bank to explain. It does not examine the merits of the award or the arbitrator’s conduct in individual cases.

Are all awards by unilaterally appointed arbitrators void? The bank conceded that awards made on its unilateral appointments are void ab initio, and the Court acted on that. For sole arbitrators, the Supreme Court’s rule has applied since TRF and Perkins Eastman; the prospective direction in CORE applies only to three-member tribunals. Whether and how past awards can be enforced is what the Court has asked the bank to explain.

What can a borrower do about an award by a bank-appointed arbitrator? Check who appointed the arbitrator and when the award was received, and seek advice quickly, because the limitation for a Section 34 petition is short.

Conclusion

Arbitration was meant to relieve India’s overburdened courts, and it only works if both sides believe the person deciding is independent. Neutrality in the Act is a design requirement, not a slogan. Shikha Ghosh shows how easily that requirement can be hollowed out when contract practice quietly outpaces the principle. The Court’s questions to the bank and the RBI are still pending, and the full picture will emerge only after the hearing of 17 November 2026.