Court Intervention In Arbitrator Appointment Required Only If Institution Fails: Bombay High Court
The Bombay High Court has held that court intervention for the appointment of arbitrators is required only when an arbitral institution fails to discharge its designated functions in appointing an arbitrator.
A single-judge bench of Justice Sandeep V Marne held that once parties agree to resolve disputes through an arbitral institution, the appointment procedure prescribed by that institution must be followed.
“In case of an institutional arbitration, application for appointment of Arbitrator under Section 11(6) needs to be made only when the institute fails to perform its functions. In a case where the arbitration institute proceeds ahead by appointing the arbitrators and conducts arbitral proceedings, it is not necessary to approach the Court under Section 11(6) merely because one of the parties refuses to concur in appointment of arbitrator by the institute.”, the court observed.
The case before the court was about a dispute between Jalaram Fabrics and Nisarg Textiles Pvt. Ltd. over payments for fabrics supplied in 2019.
Nisarg said that several invoices had not been cleared and, in November 2021, claimed that a substantial amount was still due. Jalaram did not agree. It said the supply was defective and disputed the demand.
Each invoice had an arbitration clause that sent disputes to the Bharat Merchants' Chamber. Relying on that clause, Nisarg took the matter to arbitration in 2022. Notices were sent to Jalaram, asking it to choose an arbitrator from the chamber's panel.
Jalaram responded to the claim but did not name an arbitrator. Since there was no nomination from its side, the chamber appointed one for it and moved ahead with the proceedings. Jalaram did not participate after that.
The tribunal eventually passed an award directing Jalaram to pay the principal amount along with interest and costs.
Jalaram then approached the High Court, saying the award could not stand because the arbitrators were appointed without its consent and alleging procedural lapses.
The High Court disagreed. It held that the appointments were made by the arbitral institution and not by Nisarg. Rejecting the challenge, the court said, "In my view, no valid ground of challenge is made out by the Petitioner to the impugned Award. The Award, to my mind, appears to be unexceptionable. The Arbitration Petition accordingly deserves to be dismissed.”
The petition was, accordingly, dismissed.
Case Title: Jalaram Fabrics v. Nisarg Textiles Pvt Ltd
Citation: 2026 LLBiz HC (BOM) 12
Case Number: Arbitration Petition No. 267 of 2024 with Interim Application (L) No. 35308 of 2022
For Petitioner: Advocates Shubhro Dey, Apoorv Srivastava and Tanvir Kazi
For Respondent: Advocates Dhruva Gandhi, Lalit V. Jain and Gayatri Devendra