Delhi High Court – Orders
M/S Perfect Educare vs Aakash Educational Services Limited on 20 April, 2026
$~8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 2014/2025
M/S PERFECT EDUCARE .....Petitioner
Through: Ms. Mansi Jain & Ms. Katyani
Malhotra, Advs.
versus
AAKASH EDUCATIONAL SERVICES LIMITED .....Respondent
Through: Mr. Pranav Proothi, Ms. Mansi
Chatpalliwar & Mr. Aditya Singh,
Advs.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
ORDER
% 20.04.2026
1. The present petition is filed under Section 11 of the Arbitration and
Conciliation Act, 1996 (for short „the Act‟) for appointment of an arbitrator.
2. The brief facts are that the petitioner, a sole proprietorship firm,
executed a Business Transfer Agreement (for short „BTA‟) with the
respondent on 27.04.2021 and the payment was to be made in three parts;
rupees forty crores upfront on the completion date; rupees fifty crores after
twelve months of completion and five crores after twenty four months of
completion.
3. Clause 18.11 of the BTA provided for dispute resolution through
arbitration which is reproduced below and the name of the arbitrator is as
mentioned therein.
“18.11 Governing Law and Dispute Resolution
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(a) The validity, construction and performance of this
Agreement, and any action arising out of or relating to this
Agreement, shall be governed by the Laws of India. Subject
to the provisions of Clause 18.11(b) below, the courts of New
Delhi, India shall have exclusive jurisdiction in respect of all
matters relating to or arising out of this Agreement.
(b) Arbitration of Disputes
(i) The Parties agree to negotiate in good faith to
resolve any dispute, controversy or claim arising
out of, relating to or in connection with this
Agreement, including any question regarding its
existence, validity, interpretation, breach or
termination (a “Dispute”).
(ii) In the absence of any settlement of Disputes
under Clause 18.11(b) (i) any and all Disputes
arising out of or in connection with this
Agreement or its performance shall be submitted
to arbitration at the request of any of the Parties
upon written notice to that effect to the other
Parties, as the case may be, and such arbitration
shall be conducted in accordance with the Indian
Arbitration and Conciliation Act, 1996, as
amended (the “Arbitration Act“) by a sole
arbitrator who shall be Mr. J.C. Chaudhry. If for
any reason, Mr. J.C. Chaudhry is unable to act
as the sole arbitrator, then the sole arbitrator
shall be appointed by mutual consent of the
Purchaser and the Seller.
(iii) The venue and seat of arbitration shall be New
Delhi, India, and any award shall be treated as
an award made at the seat of arbitration. By
agreeing to arbitration under the Arbitration Act
in accordance with this Clause 18.11(b), theThis is a digitally signed order.
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Parties undertake to abide by and carry out the
award promptly.
(iv) The proceedings of arbitration shall be in the
English language.
(v) The arbitration award shall be substantiated in
writing. The sole arbitrator shall also decide on
the costs of the arbitration proceedings.
(vi) The arbitration award shall be final and binding
on the Parties subject to applicable Law in force
and the award shall be enforceable in any court
of competent jurisdiction in India.
(vii) During the pendency of any arbitration
proceedings, the Parties shall continue to
perform such of their obligations that are not the
subject matter of the Dispute under this
Agreement.
(vii) The Parties shall cooperate in good faith to
expedite, to the maximum extent practicable, the
conduct of any arbitral proceedings commenced
pursuant to this Agreement.”
4. There was a dispute between the parties with regard to non-adherence
to the schedule of payments and the petitioner is seeking interest on the
delayed payment. A notice dated 13.09.2025 under Section 21 of the Act
was served upon the respondent and thereafter the present petition was filed.
5. Learned counsel for the respondent contends that the entire payment
has been made and there is no amount due. Consequently, there is no arbitral
dispute surviving as on date. It is further submitted that there is no clause in
the agreement regarding payment for delayed payment. The contention is
that there is second addendum to the agreement and the petitioner shall not
be entitled to any interest.
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6. The law is well settled at the stage of Section 11 of the Act, this court
has to prima facie satisfy existence of an arbitration clause and an arbitral
dispute. The language of clause 18.11 is widely worded and covers the
disputes arising out of or relating to the agreement. There is an existence of
arbitration clause and the merits of the claims made are to be determined by
the arbitrator in the proceedings. Prima facie, there is a dispute between the
parties arising out of the non-adherence to the schedule of the payments.
After the amendment of Section 12(5) of the Act, there cannot be unilateral
appointment of the arbitrator by one of the parties and such a clause is
severable as held by the decision of the Supreme Court in Hindustan
Construction Company Ltd. V. Bihar Rajya Pul Nirman Nigam
Limited and Others 2025 SCC OnLine SC 2578 the same is reproduced is
below:-
“12.9. …It is also a term of this contract that no person
other than a person appointed by such Managing
Director or administrative head of the Nigam as
aforesaid should act as arbitrator and if for any reason
that is not possible, the matter shall not be referred to
arbitrator at all. …”
“12.12. Accordingly, the portion of Clause 25 that
vests exclusive appointment power in one party and
forecloses arbitration in default of such appointment
must be severed as void and unenforceable. However,
the substantive agreement to arbitrate survives by
virtue of the doctrine of severability.
12.14. The present contract, being a public-private
contract, must withstand not only conventional
contractual scrutiny but also constitutional scrutiny. As
held in CORE II, arbitral appointments in public
contracts must satisfy the requirements of fairness,
equality, and non-arbitrariness under Article 14.
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12.15. The sub-clause in Clause 25 which provides that
“if for any reason the matter shall not be referred to
arbitration” is vague, uncertain, and arbitrary. The
expression “for any reason” confers an unguided and
absolute veto, particularly objectionable in a public
contract. Such a clause fails the test of manifest
arbitrariness and violates Section 18 of the Act, which
mandates equal treatment of parties.
12.16. In light of the above discussion, the following
propositions emerge:
(i) The parties’ conduct clearly demonstrates their
intention to arbitrate, satisfying the requirement of
Section 7(4)(c);
(ii) Clause 25, in its substantive form, constitutes a
valid arbitration agreement;
(iii) The unilateral and exclusionary appointment
mechanism is void and severable; and
(iv) This Court is empowered under Section 11(6) to
cure the defect and appoint an independent arbitrator.
12.17. Accordingly, it is held that a valid and
subsisting arbitration agreement exists between the
parties. Clause 25, when read in its entirety and
construed in accordance with the doctrine of
severability, satisfies the statutory requirements of an
arbitration clause under Section 7 of the Act. The
contrary finding of the High Court is unsustainable in
law and is liable to be set aside.”
7. Accordingly, the petition is allowed by appointing Ms. Varuna
Bhandari Gugnani, Advocate (Mobile No.9810400605) as the sole arbitrator
for adjudication of the disputes which have arisen between the parties.
8. The fees of the learned Arbitrator will be governed by Schedule IV of
the Act. Before entering upon reference, the learned Arbitrator will comply
with Section 12 of the Act.
9. It is made clear that since this Court has not expressed any opinion on
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the merits of the rival claims of the parties, it will be open for the parties to
file their respective claims/counter claims before the learned Arbitrator
which will be considered in accordance with law.
10. A copy of this order be forwarded to the learned Arbitrator for
information.
AVNEESH JHINGAN, J
APRIL 20, 2026
Ch
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