Del HC | Can a party unilaterally appoint an Arbitrator of their choice? Read on

Delhi High Court: Suresh Kumar Kait, J., reiterated that no party could be permitted to unilaterally appoint an Arbitrator, as the same would defeat the purpose of unbiased adjudication of the dispute between the parties.

Crux of the petitions is to seek the appointment of Arbitrators for adjudication of disputes between the parties.

According to the petitioner firm, a license agreement along with a supplementary agreement was entered between the petitioner and respondent of shops in question, which was renewable every five years at the option of the petitioner.

Petitioner submitted that after the change of name of petitioner/firm from M/S Virender Kumar & Co. to M/S Sital Dass Sons, an additional space adjacent to shop in the same shopping arcade was granted by the respondent to M/S Sital Dass Sons vide supplementary agreement and the terms of the original license agreement were to be read with the other agreement. M/S Sital Dass Sons through its partners informed the respondent that they shall be operating under two different names.

According to the petitioners in the petitions, on the ground that the internal fittings of shopping arcade were nearly 40 years old and were in urgent need of repair and it was no longer financially profitable to continue with shopping arcade, respondent vide a notice revoked the license in respect of the shops.

Petitioners contended that they were in exclusive possession of shops in question and the said notice did not mention any violation of the terms and conditions of the license/lease agreement by petitioners. Further submitted that petitioners had the right to carry on business at the hours suited to them and the license/lease could not have been terminated at the will of respondent.

It had been also brought to the notice of this Court that against illegal eviction of petitioners, they had preferred a civil suit CS(Comm)) 237/2020 before this Court for declaration and permanent injunction against the respondents, which was disposed of vide order dated 21.07.2020 as not maintainable in view of Arbitration clause between the parties.

Bench stated that the arbitration agreement between the parties and invocation of arbitration was not disputed by the respondents. Hence the said petitions deserved to be allowed.

However, contention of petitioners to appoint Arbitrator of their choice was rejected, as no party could be permitted to unilaterally appoint an Arbitrator, as the same would defeat the purpose of unbiased adjudication of dispute between the parties.

Court relied on the decision of the Supreme Court in Perkins Eastman Architects DPS v. HSCC (India) Ltd., 2019 SCC OnLine SC 1517 wherein it had been categorically stated that “in cases where one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator.”

The above-stated decision was followed by the Coordinate Benches of this Court in Proddatur Cable Tv Digi Services v. Siti Cable Network Limited 2020 SCC OnLine Del 350 and VSK Technologies Private Ltd. v. Delhi Jal Board, 2021 SCC OnLine Del 3525 in unequivocal terms.

Concurring the above decisions, present petition was allowed.

Hence, the High Court appointed the sole arbitrator to adjudicate the dispute between the parties.

Adding to the above, Court stated that the fee of the arbitrator shall be governed by the fourth schedule of the Arbitration and Conciliation Act, 1996 and the Arbitrator shall ensure compliance with Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration. [Sital Dass Jewellers v. Asian Hotels (North) Ltd., 2021 SCC OnLine Del 3914, decided on 6-08-2021]


Advocates before the Court:

For the Petitioners: Mr P.K. Agrawal, Mr Rishabh Tomar & Ms Sukriti Sinha, Advocates

For the Respondent: Mr Sidhant Kumar & Ms Manyaa Chandok, Advocates

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