A party to an agreement cannot unilaterally appoint a sole arbitrator if such methodology violates mandatory statutory provisions regarding impartiality and neutrality, even if the contract provides for such authority; the court retains the power to appoint an independent arbitrator to ensure a fair resolution of disputes.

ORDER :

Deepak Khot, J.

Present application has been filed by the applicant under section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') for appointment of an Arbitrator to resolve the dispute between the parties arising out of work order/agreement between the parties executed on 27.1.2022, annexure A/2 (page 29-35).

2. It is submitted by counsel for the applicant that some dispute in regard to non- payment of dues arising out of the same work order and the concession between the parties arose for which the communication was made by the applicant with the non-applicant and finally notice has been issued on 2.4.2024 for invoking arbitration under section 21 of the Act of 1996, annexure A/3 (page 36-41).

3. The non-applicant replied the said notice vide reply dated 29.4.2024, annexure A/5 (page 44-47). It is submitted that in the reply the non-applicant has categorically denied for appointment of Arbitrator nominated by the applicant Company. Placing reliance on clause 13 of the arbitration clause of the agreement, it is submitted that as per the clause, the rights are not conferred on the applicant to appoint sole Arbitrator. In fact, it was for the Director of the non applicant Company to appoint the sole Arbitrator and, as such, it is denied that on the invocation of section 21 notice, any Arbitrator can be appointed on the request of the applicant Company.

4. Learned counsel for the applicant has submitted that the applicant Company is not obliged to refer the matter to the Managing Director of the non applicant Company as per section 12(5) of the Act of 1996. It is further submitted that as per section 12(5) of the Act of 1996, the Legislature has now created a bar on the parties to have Arbitrator of their choice on the basis of principle of bias and such provision of law is mandatory in nature and cannot be flushed out by the parties on account of consensus agreement. It is further submitted that which is not permissible under the law cannot be done by the parties under the garb of such an agreement. It is further submitted that right is with the party to waive off such condition of appointment of sole Arbitrator of choice of the other party as prescribed under proviso to section 12(5) of the Act of 1996. It is further submitted that the applicant Company has not waived off such right, therefore, as per the law and principle laid down by the Hon. Apex Court in catena of judgments, such right cannot be extinguished merely by execution of an agreement and, therefore, in the present case, the appointment of an Arbitrator invoking the provision of section 11(6) is solicited. To buttress his contention, counsel for the applicant has relied upon the judgment of the Apex Court in the case of Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760; TRF Ltd. v. Energo Engg. Projects Ltd. , (2017) 8 SCC 377; Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), (2025) 4 SCC 641 and SBI General Insurance Co. Ltd. v. Krish Spinning , 2024 SCC OnLine SC 1754.

5. On the other hand, learned counsel for the respondent has submitted that the scheme of the law is not that once the parties have agreed to have the Arbitrator in accordance with the terms of the agreement then the party can take a somersault to say that now they are not agreed to have the Arbitrator as per the scheme of the agreement. It i