Facts
The Petitioners and Respondents are partners in Tsuku Hospitality LLP, governed by an LLP Agreement dated 12.01.2024 and a Supplementary LLP Agreement dated 16.09.2025
Source reference: p. 1-2Under the Supplementary Agreement, Respondent Nos. 1 and 2 assumed management control and committed to infusing ₹50,00,000 into the venture
Source reference: p. 2, para. 4-5Disputes arose regarding the failure to infuse the full capital amount, exclusion of the Petitioners from management, and alleged financial mismanagement/diversion of funds
Source reference: p. 2-3, para. 6In May 2026, the Respondents invoked arbitration under Section 21 of the Arbitration and Conciliation Act (A&C Act), and the Petitioners sought interim relief under Section 9 before a Commercial Court
Source reference: p. 3, para. 8-9As the parties could not reach a consensus on the appointment of a Sole Arbitrator, the Petitioners approached the High Court under Section 11(5) and 11(6)
Source reference: p. 3, para. 10Issues
1. Whether a Sole Arbitrator should be appointed by the Court under Section 11 of the A&C Act given the lack of consensus between the parties following the Section 21 notice
Source reference: p. 3-4, para. 10-12Law Applied
Section 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996, which empowers the Court to appoint an arbitrator when the parties fail to agree on a procedure or a person
Source reference: p. 1, 3Section 21 regarding the commencement of arbitral proceedings upon notice
Source reference: p. 3Section 12 regarding the mandatory disclosure requirements for arbitrators to ensure independence and impartiality
Source reference: p. 4, para. 16Reasoning
The Court observed that the existence of a valid arbitration clause in the LLP Agreement and Supplementary Agreement was undisputed by both parties
Source reference: p. 4, para. 12It noted that the disputes—specifically regarding capital infusion, management control, and financial records—clearly arose out of and in connection with the said Agreements
Source reference: p. 2-3, para. 3, 6Despite the Respondents invoking arbitration via a Section 21 notice and the filing of the present petition, the parties reached a stalemate regarding any specific name for the arbitrator
Source reference: p. 3, para. 10During the hearing, both parties consented to the appointment of an independent Sole Arbitrator by the Court to resolve the deadlock
Source reference: p. 4, para. 13-14Holding
The Court answered the issue in the affirmative, appointing Ms. Shubha Yadav, Advocate, as the Sole Arbitrator to adjudicate the disputes
The Court directed that the arbitration take place under the aegis of the Delhi International Arbitration Centre (DIAC)
Source reference: p. 5, para. 17The Respondents were granted liberty to raise preliminary objections regarding jurisdiction or arbitrability before the Arbitrator
Source reference: p. 4, para. 15The petition was disposed of with all rights and contentions on merits left open for the Arbitral Tribunal
Source reference: p. 5, para. 18-20Original Court PDF
Mr Pranay Bahl & Ors.vsMr Jawahar Sehgal & Ors.
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