Puerto Life Sciences Pvt. Ltd. vs Mr. Engineers Industries

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
%
Judgment pronounced on: 16.10.2026
# CNR No. DLHC010267192026
ARB.P. 1010/2026
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PUERTO LIFE SCIENCES PVT. LTD. .....Petitioner
Through: Mr. Preetam Singh, Mr. Utkarsh,
Advs.
versus
MR. ENGINEERS INDUSTRIES .....Respondent
Through: Mr. Dilpreet Singh Gandhi, Adv.

CORAM:

HON'BLE MR. JUSTICE SACHIN DATTA
JUDGMENT

1. The present petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 (hereinafter ‘A&C Act’) seeking
appointment of a Sole Arbitrator to adjudicate the disputes between the
parties, arising out of and in connection with the Agreement for Purchase of
Machinery made effective from 26.08.2023 (hereinafter ‘the Agreement’)
along with Purchase Order No. PLS/MIS/23-24/846 dated 26.08.2023 and
Purchase Order No. PLS/MIS/23-24/735 dated 15.02.2024.
2. The petitioner is a company incorporated on 04.10.2018 under the
Companies Act, 2013, having its registered office at Saini Enclave, Delhi,
and is engaged in the manufacture of Small Volume Parenterals (‘SVP’) and
Large Volume Parenterals (‘LVP’) . The respondent is a sole proprietorship
concern, engaged in the business of manufacture and supply of machinery.
3. On 26.08.2023, the petitioner issued Purchase Order No.

ARB. P. 1010/2026 Page 1 of 7

Signature Not Verified
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:16.10.2026
21:35:28

PLS/MIS/23-24/846 for the supply of a Double Station FFS Respule/SVP
Machine (80 cavities), for a total consideration of Rs. 3,52,82,000/- (i.e., Rs.
2,99,00,000/- together with GST of Rs. 53,82,000/-). The parties also
entered into the Agreement, made effective from 26.08.2023, which abides
by the aforesaid quotation and contains an arbitration clause at Clause 17
thereof.
4. Subsequently, the respondent having informed the petitioner that a
fresh set of moulds and a de-flesher would be required for manufacture of 2
ml respules, the petitioner issued Purchase Order No. PLS/MIS/23-24/735
dated 15.02.2024 for supply of a 2 ml Mould and De-flesher Assembly.
5. It is the case of the petitioner that it has paid a sum of Rs.
2,93,50,000/- to the respondent, comprising advances aggregating to Rs.
2,56,15,000/- paid in tranches as on 20.02.2024, and a further sum of Rs.
37,35,000/- paid on 28.08.2024. It is stated that although the machine was to
be delivered in January 2024, the same was supplied belatedly under
invoices dated 28.08.2024 and was received on 29.08.2024; that certain
components were found to have been damaged in transit while others were
found missing, which was notified to the respondent by e-mail on
29.08.2024; that installation commenced at the petitioner’s factory in
December 2024; and that the Site Acceptance Test was completed only on
22.04.2025.
6. It is further the case of the petitioner that the machine has failed to
achieve the assured output of approximately 4,00,000 respules per day and
has delivered an output of only about 1,50,000 respules per day, with a
rejection rate of about 30%. The petitioner states that it took up the aforesaid
grievances with the respondent on several occasions, inter alia , vide

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Signature Not Verified
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:16.10.2026
21:35:28

communications dated 27.02.2025, 20.03.2025, 26.12.2025, 15.01.2026 and
23.02.2026, calling upon the respondent to take back the machine and the
moulds at its own cost and to refund the entire consideration paid, along
with interest and damages. It is also the petitioner’s case that the respondent,
vide its e-mail dated 26.02.2025, expressed its willingness to take back the
machine and sought time to process the return, but that no concrete steps
were taken in that behalf.
7. The disputes between the parties having remained unresolved, the
petitioner issued a notice dated 19.03.2026 under Section 21 of the A&C
Act invoking arbitration in terms of Clause 17 of the Agreement, and calling
upon the respondent to propose the name of an independent and impartial
Sole Arbitrator for appointment by mutual agreement. The said notice was
transmitted to the respondent by e-mail on 26.03.2026 and was received by
it by speed post on 28.03.2026.
8. The respondent responded vide its e-mail dated 31.03.2026,
whereupon the petitioner reiterated its invocation vide e-mail dated
01.04.2026. Thereafter, the respondent, through its counsel, issued a reply
dated 19.04.2026 controverting the claims of the petitioner, and asserting,
inter alia , that the machine stood accepted upon completion of the Factory
Acceptance Test and the Site Acceptance Test; that no written grievance was
raised during the warranty period; that the delays, if any, were occasioned
by the petitioner’s own payment defaults and post-contractual design
changes; and that a sum of approximately Rs. 83,00,000/- has been
wrongfully withheld by the petitioner. While taking the stand that the
invocation of arbitration was premature, the respondent also reserved liberty
to raise counter-claims.

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Signature Not Verified
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:16.10.2026
21:35:28

9. Since no consensus could be arrived at between the parties as regards
the appointment of a Sole Arbitrator pursuant to the notice under Section 21
of the A&C Act, the present petition came to be filed in May 2026.
10. Clause 17 of the Agreement, which embodies the arbitration
agreement between the parties, reads as under:
“ 17. Arbitration
17.1 In case of any dispute arising upon or in relation or in
connection with this Agreement between the Buyer and the Seller,
which has not been settled amicably, any Party can refer the dispute
for arbitration under the Arbitration and Conciliation Act, 1996 (‘the
1996 Act’).
17.2 The arbitration proceedings shall be conducted by the sole
arbitrator who shall be appointed by agreement of the Parties. If the
Buyer or the Seller does not agree on the appointment of a sole
arbitrator within thirty days of the respondent’s receipt of a notice of
arbitration, then, at the request of one of the Parties, the arbitrator
shall be appointed in accordance with the 1996 Act and the Rules
made thereunder.
17.3 The seat and venue of arbitration shall be Delhi. The language of
the arbitration proceedings and that of all documents and
communications between the Parties shall be English. The arbitration
award shall be final and binding on the parties. ”
11. Clause 6 of the terms and conditions contained in the aforesaid
Purchase Orders dated 26.08.2023 and 15.02.2024 likewise provides as
under:
“ In case of any disputes / differences arising in respect of this P.O.
shall be subject to jurisdiction of Delhi & place of arbitration at New
Delhi. Selection of arbitrator will be Puerto prerogative. ”
12. Pertinently, the existence of the arbitration agreement between the
parties is not in dispute. In its reply dated 19.04.2026, the respondent has
itself stated that “ disputes (if any) may be resolved through arbitration in
accordance with the Agreement ”, and that “ any arbitration must include our
client’s counter-claims ”. The seat of arbitration having been designated as

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Signature Not Verified
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:16.10.2026
21:35:28

Delhi in terms of Clause 17.3 of the Agreement, this Court is possessed of
the requisite jurisdiction to entertain the present petition.
13. The scope of enquiry at the stage of Section 11 of the A&C Act is a
limited one. In terms of Section 11(6A) of the A&C Act, as expounded by a
seven-Judge Bench of the Supreme Court in In Re: Interplay between
Arbitration Agreements under the Arbitration and Conciliation Act, 1996
and the Indian Stamp Act, 1899 , (2024) 6 SCC 1, and as reiterated in S BI
General Insurance Co. Ltd. v. Krish Spinning , (2024) 4 SCC 695, the
referral court is required only to satisfy itself as to the prima facie existence
of an arbitration agreement; all other issues, including the maintainability
and merits of the claims and of the defences raised thereto, are to be left for
adjudication by the arbitral tribunal, which is competent to rule upon its own
jurisdiction in terms of Section 16 of the A&C Act.
14. As regards the plea taken in the reply dated 19.04.2026, that the

invocation of arbitration is premature inasmuch as the disputes were not
crystallised through reconciliation and the technical issues were not jointly
assessed, suffice it to observe that Clause 17.1 of the Agreement does not
postulate any mandatory pre-arbitral procedure, and contemplates only that
the dispute has not been settled amicably. The record discloses a sustained
exchange of communications between the parties from February 2025
culminating in no resolution of disputes. In any event, the said plea isone
which remains available to be urged before the arbitral tribunal.
15. The disputes relating to the 2 ml Mould and De-flesher Assembly
supplied under the Purchase Order dated 15.02.2024 are, prima facie ,
closely connected with and in pursuance of the supply, installation and
performance of the machine supplied under the Agreement. The said moulds

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Signature Not Verified
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:16.10.2026
21:35:28

were procured for use with the very same machine, were supplied under
invoices of even date, and form part of the petitioner’s claim for return and
refund; the counter-claims proposed by the respondent likewise include the
costs stated to have been incurred towards mould redesign. The notice dated
19.03.2026 also adverts to the said Purchase Order and seeks reference of
the disputes concerning the return of the “ Machine and Molds ”. Both
stipulations provide for arbitration at Delhi. In the circumstances, it is
appropriate that the said disputes be adjudicated in a composite arbitral
proceeding, so as to obviate multiplicity of proceedings and the possibility
of conflicting findings. Any objection as regards the scope of the reference
shall, however, remain open to be raised before, and decided by, the learned
Sole Arbitrator.
16. Insofar as Clause 6 of the Purchase Orders stipulates that the

“ selection of arbitrator will be Puerto prerogative ”, it is well settled that a
party having an interest in the outcome of the dispute cannot be conferred
with the unilateral power to appoint a sole arbitrator; (see TRF Ltd. v.
Energo Engineering Projects Ltd . , (2017) 8 SCC 377 and Perkins Eastman
Architects DPC v. HSCC (India) Ltd. , (2020) 20 SCC 760, as also the
judgment of the Constitution Bench in Central Organisation for Railway
Electrification v. ECI SPIC SMO MCML (JV) , (2025) 4 SCC 641, holding
that a unilateral appointment mechanism is contrary to the principle of equal
treatment of parties. In any event, the petitioner has not sought to invoke the
said stipulation, and has prayed for the appointment of an independent Sole
Arbitrator by this Court, which accords with Clause 17.2 of the Agreement.
17. In the aforesaid circumstances, the existence of the arbitration
agreement being undisputed, arbitration having been duly invoked in terms

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Signature Not Verified
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:16.10.2026
21:35:28

thereof, and no consensus having been arrived at between the parties as
regards the appointment of a Sole Arbitrator, it is incumbent upon this Court
to Appoint an Arbitrator.
18. Accordingly, Ms. Gayatri Verma, Advocate (Mobile No. +91
9971786665), is appointed as the Sole Arbitrator to adjudicate the disputes
between the parties arising out of and in connection with the Agreement
made effective from 26.08.2023, read with the Purchase Orders dated
26.08.2023 and 15.02.2024.
19. The learned Sole Arbitrator may proceed with the arbitration
proceedings, subject to furnishing the requisite disclosure as mandated under
Section 12 of the A&C Act, and in the event there is any impediment to the
appointment on that count, the parties are given liberty to file an appropriate
application in this Court.
20. ⁠It is agreed between the parties that the arbitration shall take place

under the aegis of and as per the rules of Delhi International Arbitration
Centre (DIAC).
21. ⁠All rights and contentions of the parties in relation to the
claims/counterclaims are kept open, to be decided by the learned Arbitrator
on merits, in accordance with law.
22. ⁠Needless to say, nothing in this order shall be construed as an
expression of opinion of this court on the merits of the contentions of the
parties.
23. ⁠ ⁠The present petition st ands disposed of in the above terms.

SACHIN DATTA, J
nbh
OCTOBER 16, 2026/

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Signature Not Verified
Digitally Signed
By:ABHISHEK THAKUR
Signing Date:16.10.2026
21:35:28