Under Section 11(6), failure to mutually appoint an arbitrator within reasonable time permits court appointment.

The petitioner and Respondents Nos. 1 and 2, members of the same family, were partners in M/s Aero Enterprises, holding 50%, 25% and 25% shares respectively.

Properties of the partnership firm had been furnished as collateral security for credit facilities availed by another family-held entity, Ratna Sagar Private Limited.

Disputes arose concerning the management of the firm, including the petitioner’s alleged denial of access to financial records.

In September 2025 and again in 2026, Respondent No. 1 sought alteration or release of the existing security arrangement from Punjab National Bank, which the petitioner opposed.

The petitioner filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”), seeking protection of the collateral security.

The Court referred the parties to mediation, but the proceedings held on 30 July, 10 August and 13 August 2026 failed.

On 13 August 2026, the petitioner proposed mutual appointment of a sole arbitrator under Clause 14 of the Partnership Deed; no consensus was reached.

The petitioner formally invoked arbitration under Section 21 on 16 August 2026, but the parties could not agree on the arbitrator’s name.

The petitioner thereafter sought appointment of an independent sole arbitrator under Section 11(6) of the Act. The respondents opposed the petition as premature, contending that they had not been given sufficient time to act after receipt of the Section 21 notice.

Whether the petition under Section 11(6) of the Act was premature, or whether the respondents had failed to act within a reasonable time under the agreed appointment procedure?

Whether Clause 14 of the Partnership Deed constituted a valid and sufficiently broad arbitration agreement covering the disputes between the parties?

Whether the petitioner’s Section 9 proceedings should, after constitution of the arbitral tribunal, be treated as an application under Section 17 of the Act?

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, under which the Court may appoint an arbitrator where a party fails to act as required by the agreed appointment procedure; unlike Sections 11(4) and 11(5), Section 11(6) prescribes no fixed 30-day period.

At the Section 11 stage, the referral court is ordinarily confined to examining the prima facie existence of an arbitration agreement, leaving issues such as arbitrability, limitation, accord and satisfaction, and other jurisdictional objections to the arbitral tribunal under Section 16: Maharashtra State Electricity Distribution Company Ltd. v. R.Z. Malpani, 2026 INSC 342, relying on SBI General Insurance Co. Ltd. v. Krishi Spinning, 2024 SCC OnLine SC 1754.

Where the agreement prescribes no time limit, failure to act within a reasonable time may trigger Section 11(6): Indian Oil Corpn. Ltd. v. Raja Transport (P) Ltd., (2009) 8 SCC 520.

A Section 21 notice principally fixes the commencement date of arbitration for limitation purposes, while providing an opportunity to respond or object to the proposed arbitrator is incidental: Adavya Projects Pvt. Ltd. v. Vishal Structurals Pvt. Ltd., 2025 INSC 507.

Upon constitution of the arbitral tribunal, interim reliefs should ordinarily be considered by the tribunal under Section 17 rather than by the Court under Section 9.

Clause 14 provided for reference of disputes or differences between the partners, including disputes concerning interpretation of the Partnership Deed or “any other matter,” to a sole arbitrator to be appointed mutually by the partners. The Court therefore found a prima facie valid and wide arbitration agreement.

Although the Section 21 notice was issued only on 16 August 2026, the Court held that the respondents’ conduct had to be assessed in the context of the earlier Section 9 proceedings, failed mediation, and the petitioner’s prior proposal on 13 August 2026 for mutual appointment of an arbitrator.

Since Clause 14 required mutual agreement and no arbitrator had been appointed, the relevant question was whether the agreed procedure had resulted in constitution of the tribunal, not whether the respondents had expressly communicated a refusal.

The respondents had taken no positive step toward reaching an agreed appointment or sought further time. Permitting them to rely on their own inaction would defeat the object of Section 11(6).

In the circumstances, the Court concluded that a reasonable time had elapsed and that there had been a “failure to act” under Section 11(6).

As the tribunal was constituted, the pending interim-relief claims were directed to be considered under Section 17.

Hon’ble Mr. Justice (Retd.) Ravindra Bhatt, former Judge of the Supreme Court, was appointed as the sole arbitrator to adjudicate the disputes.

He was directed to enter upon the reference within two weeks and furnish the disclosures required under Section 12(2) within three weeks thereafter.

The arbitration was directed to be conducted under the rules and aegis of the Delhi International Arbitration Centre.

The Section 9 petition was disposed of by treating it as an application under Section 17 of the Act.

The learned sole arbitrator was directed to consider the petitioner’s interim-relief application upon entering the reference, and the parties were directed to approach the arbitrator within two weeks.