Sole Arbitrator Appointed Under Section 11(6) Upon Respondent’s Failure to Act on Arbitration Invocation Notice

The applicant, a company manufacturing and selling shrimp feed, entered into a Dealership Agreement with the respondent on July 15, 2021.

Clause "Q" of the agreement provided for the resolution of disputes via arbitration in accordance with the Arbitration and Conciliation Act, 1996, with the venue at Rajnandgaon, Chhattisgarh.

A dispute arose regarding outstanding payments; the applicant alleged that after adjusting security deposits and credits, a principal amount of Rs. 18,15,924/- remained unpaid against six invoices.

On April 1, 2025, the applicant issued a notice invoking arbitration and proposed a sole arbitrator, which was served on the respondent on April 7, 2025.

Upon the respondent’s failure to respond or concur with the appointment within the statutory 30-day period, the applicant moved the High Court under Section 11(6) of the Arbitration and Conciliation Act.

Despite fresh notice from the court, the respondent failed to appear.

1. Whether the applicant is entitled to the appointment of a Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, following the respondent's failure to respond to the invocation notice.

2. Whether the High Court of Chhattisgarh has the jurisdiction to entertain the application based on the seat/venue of arbitration and the cause of action.

The court primarily applied Section 11(6) of the Arbitration and Conciliation Act, 1996, which empowers the Chief Justice or their designate to appoint an arbitrator when a party fails to act as required under an agreed appointment procedure.

The court also adhered to the principle that the existence of a valid arbitration agreement and the service of a notice under Section 21 are prerequisites for the commencement of arbitral proceedings and the exercise of jurisdiction under Section 11.

The court observed that a valid arbitration agreement existed between the parties under Clause "Q" of the Dealership Agreement, which designated Rajnandgaon, Chhattisgarh, as the venue, thereby vesting jurisdiction in the High Court of Chhattisgarh.

It was noted that the applicant had fulfilled the procedural requirement of invoking arbitration via a formal notice served on April 7, 2025.

Since the respondent failed to nominate an arbitrator or respond within the 30-day statutory period, the right to participate in the appointment process was forfeited.

The court further verified that the claim was not barred by limitation, as the arbitral proceedings commenced upon the receipt of the invocation notice in April 2025.

Given the respondent’s non-appearance despite service of court notice, the court accepted the applicant’s suggestion for a neutral arbitrator to resolve the pending commercial dispute.

The arbitration request was allowed, and Mr. Prabhat Shastri, a retired District Judge, was appointed as the Sole Arbitrator to adjudicate the disputes.

The court directed the Registry to communicate the order to the arbitrator and ruled that the arbitrator's remuneration shall be settled by mutual consent of the parties.