Unilateral appointment of an arbitrator is contrary to Section 12(5) of the Arbitration and Conciliation Act, necessitating mutual agreement for such appointment.

ORDER (ORAL)

1. This is a petition under Section 11(6) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act"), for appointment of an arbitrator.

2. Disputes arose, between the petitioners and the respondent, relating to a loan agreement dated 31st July, 2019.

3. On 11th July, 2020, the respondent issued a notice to the petitioners, under Section 21 of the 1996 Act, invoking arbitration and proposing to appoint Mr. Puneet Bhatnagar, an advocate, as the arbitrator to arbitrate on the dispute.

4. Mr. Puneet Bhatnagar informed the petitioners, vide letter dated 14th October, 2020, that he had accepted the appointment, and called on the petitioners to file its counter claim.

5. The petitioners, thereafter, informed Mr. Puneet Bhatnagar that it had not been served with the letter nominating him as the arbitrator or his letter accepting his nomination. Besides, it was pointed out that the arbitrator could not be unilaterally appointed by either party.

6. The arbitration clause in the loan agreement between the parties reads thus:

"In case of any dispute arising out of or in relation to the Facility Documents, the parties shall settle the dispute through arbitration under the Indian Arbitration and Conciliation Act, 1996 (as amended or restated from time to time). The arbitration proceedings shall be referred to a sole arbitrator appointed by the Lender. The seat of arbitration proceedings shall be New Delhi, India. All proceedings shall be in English. The award of the arbitrator shall be final and binding on the Parties and the expenses of the arbitration shall be borne in such manner as the arbitrator may determine."

7. The aforesaid arbitration clause, contends the petitioner, is contrary to Section 12(5) of the 1996 Act and read with the Seventh Schedule thereto as well as the judgment of the Supreme Court in Perkins Eastman Architects DPC v. HSCC (India) Ltd 2019 SCC Online SC 1517.

8. Clearly, in view of Section 12(5) of the 1996 Act and the judgment of the Supreme Court in Perkins Eastman (supra), the arbitrator could not have been unilaterally appointed by the respondent.

9. Mr. Shailendra Bhatnagar, learned counsel for the respondent, has no objection to this Court appointing an arbitrator to arbitrate on the dispute between the parties.

10. Accordingly, this Court appoints Mr. Pawanjit Singh Bindra (Mobile No.9811054970 & Email ID: pawanbindra@hotmail.com) as the arbitrator to arbitrate on the aforesaid dispute.

11. The parties are directed to contact the learned arbitrator within 48 hours of receipt of a copy of this order, from the Registry of this Court.

12. The arbitrator would be entitled to charge fees as per the Fourth Schedule of the 1996 Act.

13. The arbitrator would also furnish the requisite disclosure under Section 12(2) of the 1996 Act within a week of entering on the reference.

14. With the aforesaid observations, this petition stands disposed of.