The Delhi High Court, exercising its jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996, appointed a sole arbitrator to resolve a dispute arising from a personal loan that had been assigned to the petitioner, thereby affirming the prima facie existence of an arbitration agreement despite the respondent’s non-appearance.
Background & Facts
The Dispute
The petitioner, International Asset Reconstruction Company Private Limited (IARC), sought the appointment of a sole arbitrator to adjudicate a claim of Rs.9,60,466.18 arising under a personal loan agreement dated 11.09.2018 between the respondent, Ms. Rachna Mall, and Bajaj Finance Limited.
Key Facts
- 11.09.2018: Loan agreement executed; Bajaj Finance Ltd sanctioned a personal loan of Rs.7,18,000 to the respondent.
- 30.09.2024: Deed of Assignment executed by Bajaj Finance Ltd, transferring the loan account and all rights to IARC.
- Clause 10 of the loan agreement mandated arbitration before a sole arbitrator appointed by the lender, with venue at Pune, New Delhi or the borrower’s residence, and language English.
- 11.06.2025: IARC issued a notice under Section 21 of the Act invoking arbitration.
- 22.12.2025: The Court issued notice to the respondent.
- 28.01.2026: Respondent emailed stating permanent residence outside India since 2019 and requested a four-month adjournment.
- 05.05.2026: Court noted the email, observed that the four-month period had already elapsed, and listed the matter for final disposal on 21.05.2026.
- 20.05.2026: Respondent sought a three-month extension to file a reply.
- 21.05.2026: Court denied the extension, granting a final opportunity to file a reply within six weeks and directing the Registry to communicate the order within one week.
Procedural History
- 29.07.2026: Petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of a sole arbitrator.
- 22.12.2025: Court issued notice to the respondent.
- 05.05.2026: Interim order noting respondent’s email and scheduling final disposal.
- 21.05.2026: Interim order denying further extension and setting a six-week deadline for reply.
- 29.07.2026: Final order appointing the sole arbitrator.
Parties' Positions
- Petitioner (IARC): Asserted that the assignment transferred all rights under the loan agreement, that Clause 10 created a valid arbitration agreement, and that the notice under Section 21 satisfied the procedural requirement for invoking arbitration.
- Respondent (Ms. Rachna Mall): Claimed inability to appear due to residence abroad, sought adjournments, and ultimately failed to file any reply despite multiple opportunities.
Relief Sought
The petitioner sought appointment of a sole arbitrator under Section 11(6) to adjudicate the claim of Rs.9,60,466.18 and to allow the arbitration to proceed on the merits of the loan dispute.
The Legal Issue
The central question was whether the conditions prescribed under Section 11(6) of the Arbitration and Conciliation Act, 1996 were satisfied for the appointment of a sole arbitrator, given the assignment of the loan, the existence of an arbitration clause, and the respondent’s failure to appear.
Arguments Presented
For the Petitioner
- The Deed of Assignment dated 30.09.2024 transferred the lender’s rights, making IARC the proper party to invoke the arbitration clause.
- Clause 10 of the loan agreement expressly provided for arbitration before a sole arbitrator appointed by the lender, satisfying the requirement of a written arbitration agreement.
- The notice dated 11.06.2025 under Section 21 complied with the statutory pre-condition for invoking arbitration.
- The respondent’s non-appearance and repeated adjournment requests did not defeat the prima facie existence of the arbitration agreement.
For the Respondent
- The respondent argued that her permanent residence outside India since 2019 rendered the venue clause inapplicable and that she required additional time to prepare a reply.
- She sought extensions of four months and later three months, contending that the Court should grant further adjournments.
- No substantive objection to the arbitration clause or the assignment was raised.
The Court's Analysis
The Court began by reiterating that the jurisdiction under Section 11 is limited to examining the prima facie existence of an arbitration agreement, not the merits of the underlying dispute. It observed that the arbitration clause in Clause 10 was clear, unambiguous, and expressly designated a sole arbitrator appointed by the lender. The Court noted that the assignment dated 30.09.2024 transferred all rights and obligations of the original lender to IARC, thereby making IARC the appropriate party to invoke the arbitration provision.
"In the present case, Clause 10 of the loan agreement categorically and explicitly provides for arbitration for dispute resolution."
The Court further held that the respondent’s email dated 28.01.2026, indicating residence abroad and a request for a four-month adjournment, did not affect the existence of the arbitration agreement. The Court emphasized that the respondent had already been served notice on 22.12.2025 and had been given ample opportunity to appear or file a reply. The subsequent request for a three-month extension was deemed unreasonable, and the Court, in the interest of justice, granted a final six-week window for filing a reply, warning that failure to do so would result in proceeding on the material already on record.
Having found that the respondent had not raised any substantive objection to the arbitrability, the Court concluded that the conditions of Section 11(6) were satisfied. Consequently, it exercised its power to appoint a sole arbitrator. The appointment of Mr. Kartikay Sharma was made, with explicit directions that he enter reference within two weeks of the order and furnish disclosures under Section 12(2) within three weeks. The arbitration was ordered to be conducted under the rules of the Delhi International Arbitration Centre (DIAC), and the arbitrator was entitled to fees as per the DIAC schedule.
The Court clarified that its observations were limited to the appointment under Section 11(6) and that the appointed arbitrator would independently decide the merits, including any pleas on arbitrability, jurisdiction, or limitation.
The Verdict
The petition succeeded. The Delhi High Court appointed Mr. Kartikay Sharma as the learned sole arbitrator to adjudicate the claim of Rs.9,60,466.18. The arbitrator must enter reference within two weeks of the order dated 29 July 2026 and disclose any conflicts within three weeks. The arbitration will be conducted under DIAC rules, and the parties may raise all procedural and substantive pleas before the arbitrator.
What This Means For Similar Cases
Prima Facie Test Governs Section 11(6) Petitions
- Courts will limit their inquiry to the existence of a written arbitration agreement; substantive merits are for the arbitrator.
- An assignment of rights does not defeat the arbitration clause if the assignee steps into the shoes of the original lender.
Non-Appearance Does Not Bar Appointment
- Repeated adjournment requests and failure to file a reply will not prevent the Court from appointing an arbitrator once the prima facie test is met.
- Practitioners should ensure timely service of notice and be prepared to proceed even if the opposite party is absent.
Arbitration Venue and Choice of Law Remain Enforceable
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The venue clause in the arbitration agreement is upheld even when the respondent resides abroad, provided notice is properly served.
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Parties must respect the agreed language and procedural rules, here English and DIAC regulations.
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Ensure that any assignment of contractual rights is documented and cited when invoking arbitration.
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Anticipate and pre-empt objections on arbitrability by demonstrating the clear presence of an arbitration clause.
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Advise clients that courts may grant limited extensions but will not entertain indefinite delays.
