After Mangaluru Society Demanded Tenant Vacate, Karnataka HC Appoints Arbitrator Over Proposed 10-Year Lease, Leaves MOU’s Validity Open

The petitioner partnership firm and the respondent society executed a Memorandum of Understanding (MOU) dated 27 April 2025 concerning a proposed ten-year lease of the respondent’s premises. The MOU contained an arbitration clause providing for a mutually appointed sole arbitrator, with Mangaluru as the seat and venue.

An interim 11-month lease was later executed, and the petitioner was put in possession. After the respondent’s new office bearers disputed the MOU and called on the petitioner to vacate, the petitioner issued a notice invoking arbitration under Section 21 of the Arbitration and Conciliation Act, 1996. The respondent denied the MOU’s enforceability and the signatory’s authority. The petitioner then applied under Sections 11(5) and 11(6) for appointment of an arbitrator.

Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 provide for court appointment of an arbitrator where the agreed appointment procedure does not result in an appointment; Section 21 concerns commencement of arbitral proceedings upon receipt of a request to refer the dispute to arbitration.

The Court held that, in exercising its appointment jurisdiction, it would not adjudicate disputed questions concerning the MOU’s registration or the signatory’s authority, leaving those matters for the arbitrator.

The respondent’s reliance on Section 17 of the Registration Act, 1908 and the cited decisions was recorded, but the Court did not decide their applicability or merits.

The Court found that the MOU contained an arbitration clause, that disputes had arisen between the parties, and that the petitioner had invoked the clause by issuing a Section 21 notice.

The respondent’s objections—that the MOU was unregistered and that its signatory lacked authority—raised disputed matters that the Court considered inappropriate to determine in the Section 11 proceeding. Those objections, along with the parties’ other claims and contentions, were therefore left for consideration by the arbitrator.

All claims and contentions were left open; the Registry was directed to communicate the order to the arbitrator and return original documents after retaining photocopies.