The Delhi High Court has observed that the absence of a fixed statutory period under Section 11(6) of the Arbitration & Conciliation Act does not mean that a party may, in every case, approach the Court immediately upon issuing a Section 21 notice. The High Court held that the reasonable time for appointment of an Arbitrator cannot be determined by mechanically counting the number of days elapsed after the formal notice under Section 21 is sent.

The High Court was considering a Petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an independent Sole Arbitrator for adjudication of disputes that had arisen between the parties in relation to a Partnership Deed.

The Single Bench of Justice Om Prakash Shukla held, “At the same time, the absence of a fixed statutory period under Section 11(6) does not mean that a party may, in every case, approach the Court immediately upon issuing a Section 21 notice. The opposite party must ordinarily be afforded a reasonable opportunity to act under the agreed appointment procedure.”

“In view of this court, what constitutes a reasonable time must necessarily depend upon the facts and circumstances of each case. It cannot be determined by mechanically counting the number of days elapsed after the formal notice under Section 21 is sent. Where the parties had already been engaged in disputes, court proceedings, mediation and discussion concerning appointment of an Arbitrator, those circumstances must legitimately be taken into account while considering whether the agreed appointment procedure has failed”, it added.

Advocate Saurav Agrawal represented the Petitioner while Advocate Gaurav Gupta represented the Respondent.

Factual Background

The Petitioner and the Respondents belonging to the same family are partners in M/s Aero Enterprises wherein the Petitioner holds 50% shares, while Respondents hold 25% each. The Partnership Firm forms part of a group of family-held businesses. As part of the financial arrangements amongst the family businesses, properties belonging to the Partnership Firm were furnished as collateral security for credit facilities availed by Ratna Sagar Private Limited, another family-held entity. The said security arrangement was stated to have been subsisting since 2013. Disputes subsequently arose between the parties in relation to the affairs and management of the partnership firm. As per the Petitioner, he was denied access to the financial records of the Partnership Firm by the Respondents.

The controversy continued into 2026 when, according to the Petitioner, the Respondents unilaterally approached PNB seeking release of the properties of the Partnership Firm from the existing security arrangement. In view of the continuing disputes and the perceived threat to the existing security arrangements, the Petitioner approached the Court under Section 9. The High Court referred the parties to mediation. The Respondents did not agree to the proposal and, no consensus could be reached regarding the appointment of an Arbitrator.

Reasoning

On a perusal of Clause 14, the Bench noted that the arbitration agreement was couched in wide terms and encompassed any dispute or difference arising between the partners during the subsistence of the partnership or thereafter, including disputes concerning the interpretation of the Partnership Deed or “any other matter”. “The existence of a valid arbitration agreement between the parties is, in any event, not disputed. The requirement of establishing the prima facie existence of an arbitration agreement for the exercise of jurisdiction under Section 11 of the Act is, therefore, satisfied”, it stated.

Taking note of the fact that the petition was filed under Section 11(6) of the Act, the Bench explained that unlike Sections 11(4) and 11(5), which contemplate a period of 30 days, Section 11(6) prescribes no fixed statutory period. The relevant requirement is that, under the appointment procedure agreed upon by the parties, a party has “failed to act as required under that procedure”.

The Bench also stated, “Clause 14 requires a mutually agreed appointment and the relevant enquiry is not whether an express refusal was committed, but whether the agreed procedure resulted in the constitution of the Arbitral Tribunal. Admittedly, it did not, as Respondents never agreed with the Petitioner on any name.”

The Bench was of the view that permitting the Respondents to resist the petition solely on the ground that no express refusal had been communicated would elevate form over substance. The Bench thus concluded that a reasonable time had elapsed for the Respondents to act in accordance with the agreed appointment procedure and that there was a “failure to act” within the meaning of Section 11(6) of the Act. “The objection that the present petition is premature is, therefore, rejected”, it added.

The Bench thus disposed of the Petition by appointing Justice (Retd.) Ravindra Bhatt, Supreme Court as the Sole Arbitrator to adjudicate the disputes that have arisen between the parties.

Cause Title: Sugat Jain v. Amit Jain & Anr. (Neutral Citation: 2026:DHC:7161)

Appearance

Petitioner: Advocates Saurav Agrawal, Omar Ahmed, Manisha Singh, Harshit Malik, Sulekha Agrawal, Anusha Sinha, Rahul Chatwal, Aarya Bhat, Tuhin Dey, Aadarsh Mittal, Divyanshu Rana

Respondent: Advocates Gaurav Gupta, Shivangi Gupta, Vallabhi Rastogi

Click here to read/download Order


Delhi High CourtJustice Om Prakash Shukla

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.