“No Dispute” Is No Defence: P&H High Court Crushes Unilateral Arbitrator Clause, Appoints Independent Tribunal

Case Name: M/s Priya Construction v. Commissioner, Municipal Corporation, Faridabad & Ors.

Date of Judgment: 18 March 2026

Citation: ARB-26-2026 along with connected matters

Bench: Justice Jasgurpreet Singh Puri

Held: The High Court held that at the stage of appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, the Court is only required to examine the prima facie existence of an arbitration agreement and its valid invocation. Issues relating to existence of disputes or merits are to be decided by the arbitral tribunal. Unilateral appointment clauses, even from a government-approved panel, are impermissible in law.

Summary: The applicant, M/s Priya Construction, filed multiple petitions under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator in disputes arising out of sanitation service contracts with the Municipal Corporation, Faridabad.

The contracts contained an arbitration clause (Clause 25) which provided for appointment of a sole arbitrator by the Engineer-in-Chief from a government-approved panel. The applicant invoked arbitration by issuing notices under Section 21 of the Act; however, no arbitrator was appointed by the respondents.

The respondents did not dispute the existence of the agreement or the arbitration clause, but opposed the petitions on the ground that no dispute existed since the applicant had allegedly failed to commence work.

The Court rejected this objection, holding that such issues fall outside the limited scope of examination under Section 11. Relying on recent Supreme Court precedents, the Court reiterated that the referral court must only examine whether an arbitration agreement exists and has been invoked.

The Court further recognized that unilateral appointment clauses especially those allowing one party to appoint an arbitrator from its own panel are legally impermissible following the 2015 amendment and binding precedents.

Decision: The High Court allowed all five petitions and appointed an independent sole arbitrator, namely Mr. Vinod Jain (Retd. District & Sessions Judge), to adjudicate the disputes between the parties. Although separate arbitral proceedings were directed for each work order, the same arbitrator was appointed for all matters considering the identical nature of contracts and parties involved.

The Court clarified that objections regarding existence or arbitrability of disputes must be adjudicated by the arbitral tribunal under Section 16, reaffirming the doctrine of competence-competence. It also directed compliance with statutory requirements, including disclosure under Section 12, fee as per the Fourth Schedule, and completion within the time prescribed under Section 29-A of the Act.