Delhi HC Appoints Sole Arbitrator In Tata Capital Loan Dispute After Respondents Fail To Appear Despite Service

Tata Capital Ltd. filed a petition under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator

The loan-cum-hypothecation agreement contained an arbitration clause providing for resolution of disputes by a sole arbitrator

The respondents were served but neither appeared nor filed a reply

The Court considered the service records and the arbitration clause

Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 empower the Court to appoint an arbitrator in the circumstances provided by those provisions.

At the Section 11 stage, the Court’s enquiry is confined to examining the prima facie existence of an arbitration agreement

The appointed arbitrator must furnish the requisite disclosure under Section 12(2) of the Act

The Court found that the loan-cum-hypothecation agreement contained an arbitration clause and concluded that a valid and binding arbitration agreement existed between the parties

Since the respondents had been duly served but did not appear or respond, the Court considered there to be no impediment to proceeding with the appointment

Applying the limited prima facie enquiry applicable under Section 11, it appointed a sole arbitrator, leaving issues including arbitrability and jurisdiction open for determination in the arbitration

The arbitration is to be conducted under the rules and aegis of the Delhi International Arbitration Centre, with fees payable in accordance with its schedule

The arbitrator was directed to enter upon the reference within two weeks and furnish the required disclosure under Section 12(2); the parties may raise their pleas, including objections to arbitrability and jurisdiction, before the arbitrator