The court held that an arbitration clause allowing sole appointment by one party is unenforceable under Section 12(5) of the Arbitration Act, ensuring impartial arbitrator selection.

JUDGMENT

(Video-Conferencing)

1. This petition, under Section 11 (6) of the Arbitration & Conciliation Act, 1996, calls upon this court to appoint a sole arbitrator, to arbitrate the disputes between the parties.

2. The dispute, as set out in the petition and without prejudice to the respondent's rights to contest all or any of the allegations against it, maybe summarized thus.

3. On 20th August, 2019, a Management Service Agreement was executed between the petitioner and the respondent, whereunder the respondent was to run and manage the banquet hall of the petitioner. The petitioner was entitled to a monthly management fee of Rs.16,51,000/-, with effect from 1st September 2019.

4. Monthly management fee was paid, by the respondent to the petitioner till March, 2020 but was not paid for the period April to June, 2020.

5. Vide e-mail dated 20th June 2020, the petitioner called upon the respondent to pay the arrears of management fee as on 30th June, 2020.

6. The respondent, vide reply e-mail dated 2nd July 2020, pleaded force majeure and sought to invoke the clause, to that effect, contained in the Management Service Agreement.

7. On that ground, the respondent also sought to revoke the Management Service Agreement which, according to the petitioner, was impermissible, as the agreement contemplated a 41/2 year lock-in period, which would expire only on 28th February, 2024. The petitioner, accordingly, responded to the e-mail dated 2nd July, 2020 of the respondent, vide reply e-mail dated 10th July, 2020.

8. Attempts at amicable resolution of the disputes failed.

9. Eventually, it is alleged that the respondent cancelled the Management Service Agreement and stopped rendering services thereunder, to the petitioner, with effect from 22nd September, 2020.

10. The petitioner alleges that an amount of Rs.5 lakhs was paid by the respondent to the petitioner, with an undertaking to pay the balance amount shortly thereafter.

11. It is also averred that, on 22nd September 2020, the respondent handed over peaceful possession of the premises to the petitioner, except for one DJ set and certain chaat counters.

12. The petitioner alleges that, in respect of goods, utensils and articles provided to the respondent, which were not available in the premises on the date when the premises were handed over to the petitioner, the respondent is liable to pay an amount of Rs.3,26,962/- to the petitioner. This amount, according to the petition, is acknowledged by the respondent.

13. The petition further alleges that, in sum, the respondent agreed to pay Rs.4,79,911/- to the petitioner, along with applicable Goods and Services Tax (GST) of Rs.45,00,000/-. The respondent, however, did not pay the amounts which it undertook to pay to the petitioner and had not deposited the requisite GST.

14. Premised on the above facts, the petition alleges that the respondent is bound to pay an amount of Rs.26,39,211/- to the petitioner.

15. The petitioner issued a legal notice to the respondent on 12th October 2020, calling on the respondent to pay the aforesaid amount of Rs.26,39,211/-.

16. In a response dated 4th November, 2020, the respondent has denied its liability.

17. In these circumstances, the petition averts that arbitrable disputes have arisen between the petitioner and the respondent. Ms. Mayanka Dhawan, learned counsel for the respondent, does not dispute this proposition, though she submits that the allegations against the respondent are incorrect and that the respondent does not owe any amount to the petitioner.

18. The Management Service Agreement contemplates resolution of