A duly invoked arbitration clause warrants appointment of a sole arbitrator.

The petitioner advanced ₹1,50,00,000 to respondent No. 1, which acknowledged receipt through respondent No. 2.

Under a Memorandum of Understanding dated 18 September 2024, respondent No. 1 agreed to repay the loan with 9% annual interest by 25 March 2025.

Repayment was not made, including after the respondent sought a 90-day extension.

The petitioner issued a demand and then invoked the MOU’s arbitration clause by notice under Section 21 of the Arbitration and Conciliation Act, 1996.

After receiving the respondent’s reply, the petitioner sought appointment of a sole arbitrator under Section 11 of the Act.

Respondent No. 1 did not oppose appointment and requested that the parties’ contentions remain open.

1. Whether the MOU contained an arbitration agreement covering the disputes between the parties and the petitioner had validly invoked it.

2. Whether a sole arbitrator should be appointed to adjudicate those disputes.

Section 11 of the Arbitration and Conciliation Act, 1996 provides for the appointment of an arbitrator by the court in the circumstances set out in that provision.

Section 21 addresses commencement of arbitral proceedings upon receipt of a request to refer a dispute to arbitration, unless otherwise agreed by the parties.

Under Clause 10 of the MOU, disputes arising out of or in connection with the MOU, if not resolved within seven days after notice, were to be finally settled by a sole arbitrator under the Act; Bengaluru was designated as the place of arbitration and Bengaluru courts were given exclusive jurisdiction.

The Court found that Clause 10 provided for arbitration of disputes arising out of or in connection with the MOU and that the petitioner had invoked the clause by issuing a Section 21 notice.

The respondent’s non-opposition to appointment, while preserving the parties’ contentions, supported referring the disputes to arbitration.

On that basis, the Court considered appointment of a sole arbitrator necessary, leaving the merits and all claims and defences for the arbitral proceedings.

Although the petitioner had sought appointment of Hon’ble Retd. Justice Anand Byrareddy, the Court appointed Hon’ble Smt. Justice K.S. Mudagal, Former Judge of the Karnataka High Court, as sole arbitrator at the Arbitration and Conciliation Centre (Domestic & International), Bengaluru.

All claims and contentions were left open.

The parties were directed to appear before the Centre’s Director on 3 November 2026 at 11:30 a.m.; the Registry was directed to communicate the order and return original documents after retaining photocopies.