Unilateral appointment clauses are invalid, and Section 11 scrutiny is limited to the existence of an arbitration agreement.

The Petitioner filed an application under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator to resolve disputes arising from a Lease Deed Agreement dated 11.05.2017

Clause 11.1 of the Agreement provided for arbitration by the Executive Director (ED) of MTNL or his nominee

The Petitioner issued a Section 21 notice on 18.01.2024

The Respondent objected to the maintainability of the petition, arguing that the Section 21 notice was invalid because it was addressed generally to MTNL rather than specifically to the ED as required by the clause

Whether a Section 21 notice addressed to the corporation instead of a specific officer named in the arbitration clause is fatal to the appointment of an arbitrator

Whether the court should appoint an independent arbitrator in light of the legal prohibition against unilateral appointments

The court applied Section 11 of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators

It relied on the landmark Supreme Court decision in Perkins Eastman Architects DPC v. HSCC (India) Ltd., which established that the unilateral appointment of an arbitrator by an interested party is legally impermissible

Furthermore, the court followed the principles laid down by the Three-Judge Bench in SBI General Insurance Co. Ltd. v. Krish Spinning, which clarified that judicial scrutiny under Section 11 is confined solely to a prima facie examination of the existence of the arbitration agreement

The Court rejected the Respondent’s technical objection regarding the addressee of the Section 21 notice.

It reasoned that since the Perkins Eastman judgment prohibits unilateral appointments, the specific part of Clause 11.1 empowering the ED to act as or nominate an arbitrator is now legally inoperable

Therefore, addressing the notice to MTNL generally was sufficient.

Applying the Krish Spinning standard, the Court noted that its role is facilitative and limited to verifying the existence of the arbitration agreement to avoid "deadlock"

The Court found that a valid agreement existed and that the parties were ad idem (in agreement) that the arbitration should proceed under the aegis of the Delhi International Arbitration Centre (DIAC)

The arbitration will be conducted under the rules of the DIAC, and the arbitrator must provide disclosures under Section 12(2) of the Act

The Court clarified that all rights and contentions on the merits of the dispute remain open for the arbitrator's adjudication