Agreement on Seat Overrides Initial Territorial Objections to Facilitate Appointment of Independent Sole Arbitrator

The Petitioner, a hospital management services company, entered into a Memorandum of Agreement on 04.03.2019 with the Respondent, the proprietor of Rajeshwar Hospital in Patna, Bihar

The Petitioner rendered management and billing services, for which it alleged the Respondent failed to pay outstanding dues amounting to ₹13,74,742.18

The Petitioner terminated the agreement on 14.03.2023 and subsequently invoked arbitration via a legal notice dated 11.04.2025

The Respondent contested the petition, raising a preliminary objection regarding territorial jurisdiction, arguing that the seat of arbitration was Patna rather than Delhi

Eventually, both parties reached a consensus to appoint an arbitrator through the Court

1. Whether the Delhi High Court has the territorial jurisdiction to entertain the petition and appoint an arbitrator when the arbitration clause references both "Patna/New Delhi"

2. Whether an independent sole arbitrator should be appointed to adjudicate the disputes arising from the Agreement

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators

It relied on SBI General Insurance Co. Ltd. v. Krish Spinning and In re Interplay Between Arbitration Agreements to establish that once the existence of an arbitration agreement is evident, the court must constitute a tribunal

Furthermore, it applied the principles from Perkins Eastman Architects DPC v. HSCC (India) Ltd. and TRF Limited v. Energo Engineering Projects Ltd., which mandate the appointment of an independent arbitrator to ensure neutrality

The Court addressed the jurisdictional conflict by noting the Petitioner’s argument that the Agreement was executed in Delhi and the clause’s reference to "New Delhi" manifested an intent to vest jurisdiction there

This conflict was resolved because both parties eventually agreed during the hearing that New Delhi would be treated as the "seat" of arbitration for these proceedings, while requesting that the "venue" for physical hearings be Patna to accommodate the Respondent

Since the existence of the arbitration clause was undisputed, the Court found no legal impediment to exercising its powers under Section 11

Consistent with the Perkins Eastman doctrine, the Court emphasized the necessity of appointing a neutral third party rather than allowing a party-controlled appointment

The petition was allowed, and Ms. Prity Sharma, Advocate, was appointed as the Sole Arbitrator

The Court directed that while the seat remains New Delhi, the Arbitrator should endeavour to hold physical hearings in Patna. The Arbitrator's fee was fixed as per the IVth Schedule of the A&C Act, and all rights regarding jurisdiction and the merits of the claims were left open for the tribunal's determination