ARB.P. 1469/2026 $~43 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision: 21st September, 2026 # CNR No. DLHC010384352026 + ARB.P. 1469/2026 RAMA GUPTA .....Petitioner Through: Mr. Pranzal Jha and Ms. Akshara Popli, Advocates. versus SPLENDOR BUILDWELL PRIVATE LIMITED .....Respondent Through: Mr. Sarthak Gupta, Advocate. CORAM: HON'BLE MS. JUSTICE JYOTI SINGH JUDGEMENT JYOTI SINGH, J. (ORAL) 1. This petition is filed on behalf of Petitioner under Section 11(6) of the Arbitration and Conciliation Act, 1996 (‘1996 Act’) seeking appointment of Sole Arbitrator. 2. As pleaded in the petition, the disputes which are subject matter of this petition arise out of Memorandum of Understanding (‘MoU’) dated 31.05.2012 executed between the Petitioner and the Respondent under which Petitioner invested Rs. 30 lakhs towards provisional allotment of commercial unit admeasuring 1000 sq. ft. in Respondent’s IT Park project, ‘SpectrumOne’, Sector-58, Gurugram, Haryana. Respondent undertook to pay assured returns at Rs. 60/- per sq. ft. per month till project completion and thereafter, assured rental income in accordance with Clauses 5 and 14 of Digitally Signed By:KAMAL KUMAR Signing Date:28.09.2026 16:51:03 Signature Not Verified ARB.P. 1469/2026 the MoU, which provides a specific termination mechanism under Clause 27 as also an Arbitration Agreement under Clause 41. 3. It is averred that in furtherance of MoU, Respondent regularly paid assured returns from June, 2012 till April, 2018, but abruptly discontinued payment from May, 2018, without reason or justification and did not resume the payments despite several notices and personal meetings. Instead of fulfilling the contractual obligations, Respondent raised unreasonable monetary demands vide letter dated 30.03.2021, invoking Clause 40 of MoU and the Banning of Unregulated Deposit Schemes Act, 2019 and ultimately cancelled the MoU vide letter dated 11.03.2026 along with the allotment on the basis of an alleged notice dated 23.12.2024, which was never received by the Petitioner. Through legal notice-cum-reply dated 15.04.2026, Petitioner disputed the demand and contested the illegal action and invoked Arbitration Clause 41 as also Clause 27, however, Respondent failed to appoint or concur with the appointment of an Arbitrator under the Arbitration Clause and hence, this petition was filed. 4. Learned counsel for the Petitioner submits that parties had agreed to refer their disputes arising out of MoU dated 31.05.2012 to arbitration and thus, there can be no impediment in appointing the Arbitrator albeit the Arbitrator cannot be appointed by Chairman-cum-Managing Director of the Respondent in terms of Clause 41, as that would be a unilateral appointment in the teeth of the judgments of the Supreme Court in Perkins Eastman Architects DPC and Another v. HSCC (India) Limited, (2020) 20 SCC 760 and Central Organisation for Railway Electrification v. ECI-SPIC-SMO- MCML (JV) a Joint Venture Company, 2024 SCC OnLine SC 3219. In light of this, it is urged that a Sole Arbitrator be appointed by this Court. Digitally Signed By:KAMAL KUMAR Signing Date:28.09.2026 16:51:03 Signature Not Verified ARB.P. 1469/2026 5. Learned counsel for the Respondent, on instructions, does not dispute that MoU dated 31.05.2012 contains Arbitration Clause 41 envisaging reference of disputes or differences arising between the parties in respect of the MoU to arbitration to be conducted by a Sole Arbitrator. He, however, submits that parties have agreed that the Arbitrator will be appointed by the Chairman-cum-Managing Director of the Respondent and therefore, Petitioner cannot insist on following a different path for appointment. 6. It is no longer res integra that the scope of examination in a petition under Section 11(6) of 1996 Act is confined to a prima facie enquiry of existence of Arbitration Agreement. In SBI General Insurance Company Limited v. Krish Spinning, (2024) 12 SCC 1, the Supreme Court delineated the contours of judicial intervention at the stage of Section 11 of 1996 Act, observing that the scope of examination is confined to existence of Arbitration Agreement and the scrutiny does not include a contested or laborious enquiry, which is to be left to the Arbitral Tribunal and that this approach serves twofold purposes: (a) allows the Referral Court to weed out non-existent arbitration agreements; and (b) protects the jurisdictional competence of the Arbitral Tribunal to rule on the issue of existence under Section 16, in depth. 7. The contest in the present petition by the Respondent is with regard to the Appointing Authority of the Sole Arbitrator as stipulated in Clause 41 of the MoU. For ready reference, Clause 41 is extracted hereunder:- “41. That in case of any dispute or difference between the parties in respect of this MoU the same shall be referred for arbitration to be conducted by the Sole Arbitrator. to he appointed by the Chairman cum Managing Director of the Developer. The arbitration proceedings shall be conducted in accordance with the provisions of Arbitration and Conciliation Act, 1996. The language of arbitration shall be English and seat of arbitral proceedings shall be New Delhi.” Digitally Signed By:KAMAL KUMAR Signing Date:28.09.2026 16:51:03 Signature Not Verified ARB.P. 1469/2026 8. The moot question that arises for consideration is whether the procedure envisaged in Clause 41 of MoU dated 31.05.2012, wherein the Chairman-cum-Managing Director of the Respondent is empowered to appoint a Sole Arbitrator is tenable in law and in my view, this question need not detain the Court as it stands settled in plethora of judgments. In Perkins (supra), the Supreme Court held that even where the Managing Director of a party to the Arbitration Agreement does not himself act as an Arbitrator but is authorised to appoint any other person of his choice or discretion, considering that he will have an interest in the outcome of the dispute, he would be disentitled to make the appointment. The Supreme Court emphasised on: (a) party autonomy; and (b) likelihood of bias of the appointing authority having interest in the outcome or result of the dispute and relevant passage is as follows:- “20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377: (2017) 4 SCC (Civ) 72] where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] , all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make Digitally Signed By:KAMAL KUMAR Signing Date:28.09.2026 16:51:03 Signature Not Verified ARB.P. 1469/2026 appointment of an arbitrator.” 9. The Supreme Court referred to the judgment in TRF Limited v. Energo Engineering Projects Limited, (2017) 8 SCC 377, where the Managing Director himself was a named Arbitrator and found him to be ineligible/incompetent on account of interest he would have in the outcome of the dispute, observing that similar invalidity would apply, where the ineligible person appoints another Arbitrator. This principle was reaffirmed by the Supreme Court in Bharat Broadband Network Limited v. United Telecoms Limited, (2019) 5 SCC 755. In Proddatur Cable TV Digi Services v. Siti Cable Network Limited, 2020 SCC OnLine Del 350, this Court held that the unilateral appointment of the arbitrator by one party to the contract does not meet the test of impartiality and independence under Section 12(5) of 1996 Act, relying on the judgment in Perkins (supra). 10. In a recent decision in Mahavir Prasad Gupta and Sons v. Government of NCT of Delhi, in ARB.P. 716/2026, decided on 11.08.2026, Court was considering a petition under Section 11 (5) and (6) of 1996 Act, wherein Arbitration Clause 25 of GCC contemplated appointment of Arbitrator by Chief Engineer, CPWD. Court appointed the Sole Arbitrator holding that official of a party to the dispute can neither be appointed as an Arbitrator nor appoint an Arbitrator and this portion of Clause 25 permitting the Chief Engineer to appoint the Arbitrator is void albeit it will not dent the substantive agreement between the parties to refer the disputes to arbitration. Court relied on the judgment of the Supreme Court in Hindustan Construction Company Limited v. Bihar Rajya Pul Nirman Nigam Limited and Others, 2025 SCC OnLine SC 2578, where the Supreme Court held that the portion of the arbitration clause which vests exclusive Digitally Signed By:KAMAL KUMAR Signing Date:28.09.2026 16:51:03 Signature Not Verified ARB.P. 1469/2026 appointment power in one party must be severed as void and unenforceable. Therefore, it is now authoritatively settled that unilateral appointment of Arbitrators by parties interested in the outcome of the dispute is an anathema to 1996 Act and in such cases, it is incumbent on the Court to appoint an independent and impartial Arbitrator, when approached for appointment under Section 11 (6) of 1996 Act. 11. There can be no quarrel that appointment of Arbitrators by parties to the dispute will certainly lead to a possibility of bias and as held by the Supreme Court in CORE (supra), the party appointing the Arbitrator will have control and will be in a dominating position to chart the course of action of the arbitration proceedings to the prejudice of the other party. Unilateral appointment clause is therefore inherently exclusionary and violates the principles of equal treatment of parties and procedural equality. The whole objective of taking recourse to arbitration as an alternate dispute resolution mechanism is impartial resolution of disputes between the parties and unilateral appointment clauses are in the teeth of this objective. In light of the wealth of judicial precedents on this subject, Clause 41 of MoU dated 31.05.2012, to the extent it empowers the Respondent to appoint the Sole Arbitrator is void and unenforceable albeit to the extent the clause is an expression of the intent of the parties to arbitrate, it will remain enforceable and valid. 12. Accordingly, this petition is allowed, appointing Ms. Samridhi Vats, Advocate (Mobile No. 8929270522) as the Sole Arbitrator to adjudicate the disputes between the parties. Arbitral proceedings will be held under the aegis of Delhi International Arbitration Centre (‘DIAC’). Fee of the Arbitrator is fixed as per fee schedule under DIAC (Administrative Costs & Digitally Signed By:KAMAL KUMAR Signing Date:28.09.2026 16:51:03 ARB.P. 1469/2026 Arbitrators’ Fees) Rules, 2018. 13. Learned Arbitrator shall give disclosure under Section 12 of the 1996 Act before entering upon reference. 14. It is made clear that this Court has not expressed any opinion on the merits of the case and all rights and contentions of the respective parties are left open. 15. It is left open to the Respondent to prefer a counter claim, if any, before the learned Arbitrator. 16. Petition is disposed of in the aforesaid terms. JYOTI SINGH, J SEPTEMBER 21, 2026/AK By:KAMAL KUMAR Signing Date:28.09.2026 16:51:03