TaxTMI 
TaxTMI 
2025 (5) TMI 1843
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....No. 1 entered into a Distribution Agreement on 01.07.2009 for distribution of stationery products of the Petitioner. The Distribution Agreement contained an arbitration clause 20, which is extracted hereunder, for ready reference:- "20. ARBITRATION AND JURISDICTION The parties will use their best effort to settle any disputes concerning the interpretation of application of this agreement amicably through negotiation. In case of failure to settle the dispute amicably within a period of 30 days the same shall be referred for arbitration to a sole arbitrator. The parties hereto shall mutually appoint the sole arbitrator and if the parties could not mutually agree on the name of the arbitrator, then within a period of 15 days of the notice....
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....he parties to appoint an Arbitrator. In furtherance thereto, Respondents sent a letter dated 27.06.2022 proposing the name of the Arbitrator. Petitioner did not respond to the letter, however, instead of taking recourse to the procedure under Section 11 (6) of the 1996 Act and approaching the referral Court for appointment, Respondents unilaterally appointed a Sole Arbitrator. 5. It is stated that on 15.07.2022, the Arbitrator entered upon reference and vide order dated 24.09.2022 forfeited the right of the Petitioner to file Statement of Defence, which was in the teeth of Section 14 of IBC. Petitioner sent a letter dated 10.10.2022 to the Arbitrator through the Resolution Professional, as soon as it gained knowledge of the arbitral procee....
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....20 provides that the Arbitrator would be appointed by mutual consent of the parties and in case of failure to do so, Arbitrator would be appointed by the Managing Director of Respondent No. 1, which cannot be sustained, as appointment by the Managing Director would clearly be a unilateral appointment and against the principles of party autonomy, impartiality and independence of the Arbitrator. Reliance is placed on the judgment of this Court in Proddatur Cable TV Digi Services (supra), wherein it was held that unilateral appointment would tantamount to de jure inability of the Sole Arbitrator under Section 14 (1) (a) of the 1996 Act. 8. Without prejudice to the said submission, it is also argued that the arbitral proceedings are even other....
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....oceeding in respect of the extinguished claims, not part of the Resolution Plan. It is urged that a bare perusal of Clauses 4.7.1 and 4.7.3 of the Resolution Plan indicates that Respondent No. 1 failed to file its claims during the CIRP process and therefore, the alleged liability of the Petitioner arising in relation to the period prior to 31.03.2023 and purported dues for the period prior to 17.01.2020 are deemed to be extinguished and in this light, Respondents cannot even resort to fresh arbitration proceedings for agitating these claims. 10. Learned counsel for the Respondents, on instructions, fairly concedes that in light of the settled law, appointment of the present Sole Arbitrator cannot be sustained, being unilateral. However, h....