An Independent Sole Arbitrator Must Be Appointed Where Party Appointment Is Impermissible.

Tata Capital Limited, an NBFC, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking constitution of an arbitral tribunal.

The loan facility had been sanctioned and renewed by Tata Capital Financial Services Limited (TCFSL), which merged with the petitioner with effect from 1 January 2024.

The parties executed loan-cum-guarantee agreements and related documents, including an agreement dated 21 June 2023.

Following alleged repayment defaults, the petitioner issued a loan recall notice on 16 May 2025, demanding ₹19,46,789.44 and invoking arbitration.

The respondents neither replied nor paid the outstanding amount.

Despite service and an earlier appearance by counsel, the respondents did not appear at the hearing.

Whether the existence of an arbitration agreement in the loan-cum-guarantee agreement justified constitution of an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996.

Whether an independent sole arbitrator should be appointed to adjudicate the parties’ disputes.

Section 11 of the Arbitration and Conciliation Act, 1996 empowers the Court to appoint an arbitrator where the statutory requirements for constitution of the tribunal are met; at this stage, the Court’s inquiry into the arbitration agreement is limited, as explained in SBI General Insurance Co. Ltd. v. Krish Spinning, (2024) 12 SCC 1, and reiterated in Aslam Ismail Khan Deshmukh v. ASAP Fluids Private Limited & Anr., (2025) 1 SCC 502, and Maharashtra State Electricity Distribution Co. Ltd. & Ors. v. R Z Malpani, 2026 SCC OnLine SC 553.

The principles in Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760, TRF Limited v. Energo Engineering Projects Ltd., (2017) 8 SCC 377, Bharat Broadband Network Limited v. United Telecoms Limited, 2019 SCC OnLine SC 547, and Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd., (2026) 3 SCC 264, require appointment of an independent arbitrator where applicable.

The arbitrator must furnish the disclosures required by Section 12 of the Act.

The Court found the arbitration agreement apparent from the loan-cum-guarantee agreement dated 21 June 2023 and held that there was no impediment to constituting a tribunal.

Applying the cited authorities on independent appointments, the Court appointed a sole arbitrator rather than leaving the appointment to either party.

The Court left any objections concerning arbitrability or jurisdiction to be raised before and determined by the arbitrator, and kept the parties’ substantive claims and counterclaims open.

The arbitrator may proceed subject to furnishing the disclosures required under Section 12; the respondents may raise preliminary objections on arbitrability or jurisdiction, and all claims and counterclaims remain open for determination on their merits.

The Court expressed no opinion on the merits of the dispute.