Court Appoints Sole Arbitrator Pursuant to Undisputed Arbitration Clause Despite Unilateral Termination of Agreement.

The petitioner, a Delhi-based partnership firm engaged in the supply, installation, testing and commissioning of fire alarm systems, fire suppression systems and public address/voice alarm systems, entered into an Agreement dated 06.12.2025 with the respondent, whereby it was engaged as Vendor/Business Associate for execution of works at the project site of Indian Potash Limited situated at Rohana Kalan, Muzaffarnagar, Uttar Pradesh.

The Agreement contained Clause 13, an arbitration clause providing for reference of disputes to a Sole Arbitrator, with the venue of arbitration at New Delhi, English as the language of arbitration, and Indian law as the governing law.

The petitioner alleged that despite due performance of its contractual obligations, an amount of Rs.29,25,790/- remained outstanding and payable by the respondent.

The respondent terminated the Agreement by e-mail dated 23.04.2026; the petitioner invoked arbitration by issuing a notice dated 29.04.2026 under Section 21 of the A Act; the respondent, vide reply dated 04.05.2026, declined to concur with the petitioner's proposed arbitrator but, significantly, did not dispute the existence or validity of the arbitration agreement.

1. Whether a Sole Arbitrator is liable to be appointed by the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 to adjudicate disputes arising out of the Agreement dated 06.12.2025, consequent upon the respondent's failure to concur with the petitioner's proposed arbitrator.

2. Whether the existence and validity of the arbitration agreement between the parties stood established so as to warrant reference of the disputes, including the petitioner's outstanding payment claim, to arbitration.

The Court primarily applied Section 11(6) of the Arbitration and Conciliation Act, 1996, which empowers the High Court to appoint an arbitrator where the parties fail to reach consensus on the appointment pursuant to an arbitration agreement.

The Court further invoked Section 12 of the A Act, mandating that the appointed arbitrator furnish requisite disclosures as to independence and impartiality.

Underlying the order is the settled principle of minimal judicial intervention at the referral stage, whereby the referral court examines only the existence of the arbitration agreement and reserves all merits for the arbitral tribunal.

The Court's reasoning turned on the undisputed existence of the arbitration agreement. It recorded that the respondent, in its reply dated 04.05.2026 to the Section 21 invocation notice, had not disputed the existence or validity of the arbitration agreement, and accordingly found that there was "no controversy as regards the existence of the arbitration clause" and that the disputes between the parties were required to be adjudicated by way of arbitration.

The respondent's refusal to concur with the petitioner's proposed arbitrator satisfied the precondition for the Court's exercise of appointing power under Section 11(6).

Exercising judicial restraint consistent with the limited scope of a Section 11 reference, the Court expressly kept open all rights and contentions regarding claims and counter-claims for adjudication by the arbitrator on merits, and clarified that nothing in the order amounted to an expression of opinion on the merits.

It was directed, upon joint prayer, that the arbitration shall take place under the aegis of and under the rules of the Delhi International Arbitration Centre (DIAC); all rights and contentions of the parties in relation to claims/counter-claims were kept open to be decided by the learned Arbitrator on their merits; petition stood disposed of in these terms.