Admitted arbitration agreement warrants appointment, leaving jurisdictional objections for determination by the arbitral tribunal.

The petitioner filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“A&C Act”) seeking appointment of a sole arbitrator.

The disputes arose out of a Master Service Agreement dated 20 September 2024 concerning the respondent’s “Invoice Trading Application,” which facilitated invoice discounting and contained an arbitration clause providing for adjudication by a mutually appointed sole arbitrator, with proceedings in New Delhi.

According to the petitioner, despite an assurance and payment plan dated 30 May 2025, the respondent failed to enable withdrawal of the petitioner’s funds.

The respondent allegedly issued a security cheque for ₹3,60,609, but neither released the funds nor honoured the security arrangement.

The petitioner invoked arbitration by legal notice dated 30 January 2026, but the respondent did not respond.

The respondent did not dispute the existence of the arbitration agreement but objected to the petitioner’s reliance on the Master Services Agreement, contending that the disputes fell under a separate Purchaser Services Agreement providing for arbitration in Hyderabad.

Whether the existence of a valid arbitration agreement was established so as to justify appointment of an arbitrator under Section 11(6) of the A&C Act?

Whether New Delhi constituted the designated seat of arbitration under the arbitration clause in the Master Services Agreement?

Whether the respondent’s objection that the disputes were governed by the Purchaser Services Agreement, and therefore subject to arbitration in Hyderabad, could prevent appointment of an arbitrator at the Section 11 stage?

The Court applied Section 11(6) of the A&C Act concerning appointment of an arbitrator where the agreed appointment mechanism has failed.

It relied on BGS SGS SOMA JV v. NHPC Ltd., (2020) 4 SCC 234, for the principle that the place designated for arbitral proceedings may constitute the juridical seat of arbitration.

The Court further relied on TRF Ltd. v. Energo Engineering Projects Ltd., (2017) 8 SCC 377, Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760, and Bharat Broadband Network Ltd. v. United Telecoms Ltd., 2019 SCC OnLine SC 547, concerning independence and ineligibility in the constitution of arbitral tribunals.

It also referred to SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 INSC 532, and Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, 2023 SCC OnLine SC 1666, in concluding that there was no impediment to constituting the tribunal where the arbitration agreement was admitted.

The arbitrator was directed to furnish disclosures under Section 12 of the A&C Act.

The Court found that the existence of the arbitration clause in the Master Services Agreement was admitted by the parties, satisfying the threshold for exercise of jurisdiction under Section 11(6).

Since the agreement stipulated that the arbitral proceedings would be held in New Delhi, the Court treated New Delhi as the designated seat in accordance with BGS SGS SOMA.

The respondent’s contention that the disputes were governed instead by the Purchaser Services Agreement raised a jurisdictional issue, but the Court held that such an objection could be examined by the arbitral tribunal and did not prevent its constitution at the appointment stage.

The parties also agreed that the arbitrator would determine the jurisdictional objections at the outset.

The arbitration was directed to proceed under the aegis of, and in accordance with, the rules of the Delhi International Arbitration Centre (DIAC).

The arbitrator was to decide the respondent’s jurisdictional objections at the outset, before considering the disputes on merits.

The appointment was subject to the arbitrator furnishing the disclosures required under Section 12 of the A&C Act; the parties were given liberty to approach the Court if any impediment arose.

All claims, counterclaims, rights and contentions were left open for determination by the arbitrator, and the petition was disposed of accordingly.