Back
2026 Supreme(Online)(Del) 6508
IN THE HIGH COURT OF DELHI AT NEW DELHI
RAMESH – Appellant
Versus
INDIAN OIL CORPORATION LTD. – Respondent
ARB.P.-2039/2025
Under Section 11(6-A) of the Arbitration and Conciliation Act, 1996, the Referral Court’s role is limited to a prima facie examination of the existence of an arbitration agreement, leaving all other disputed issues to the Arbitral Tribunal.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11 - Appointment of Sole Arbitrator - Scope of judicial scrutiny under Section 11(6-A) is confined to a prima facie examination of the existence of a valid arbitration agreement and nothing beyond - Reliance on SBI General Insurance Co. Ltd. v. Krish Spinning, (2024) 12 SCC 1, which clarified that the Referral Court cannot delve into questions of accord and satisfaction, ex facie frivolity, or other contested factual/legal issues, as those fall within the exclusive domain of the Arbitral Tribunal. (Paras 6-7)
(B) Arbitration clause - Compliance with statutory notice under Section 21 of the Act - Requirement of issuing a legal notice invoking arbitration clause duly satisfied by Petitioner vide Legal Notice dated 13.03.2024. (Para 3)
(C) No objection by Respondent to reference of disputes to arbitration - Respondent’s counsel submitted no objection to disputes being referred to arbitration by a Sole Arbitrator in terms of the Arbitration Clause. (Para 4)
Facts of the case:
The Petitioner filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of a Sole Arbitrator for adjudication of disputes arising out of a work contract dated 03.12.2021. The General Conditions of Contract contained an Arbitration Clause (Clause 9). The Petitioner issued a Section 21 notice on 13.03.2024 invoking arbitration. The aggregate value of Petitioner’s claims was approximately ₹3 lakhs and Respondent’s counter-claims were approximately ₹6 lakhs. The Respondent had no objection to the appointment.
Findings of Court:
The Court held that the scope of its jurisdiction under Section 11 of the Act is extremely circumscribed, limited to a prima facie examination of the existence of a valid arbitration agreement. Following the law laid down in Krish Spinning, the Court noted that all other contentions are matters for the Arbitral Tribunal. Since the contract contained a valid arbitration clause, the Section 21 notice was complied with, and the Respondent had no objection, the Court found no impediment in appointing a Sole Arbitrator. The Court appointed Mr. Adarsh Kumar Pandey, Advocate, as the Sole Arbitrator, subject to disclosures under Section 12(2) of the Act, with fees as per the Fourth Schedule. All rights and contentions of the parties were kept open. (Paras 8-15)
Issues: The main issue was whether the Court should appoint an arbitrator under Section 11 given the existence of an arbitration clause and compliance with procedural requirements, and the scope of judicial scrutiny at the referral stage.
Ratio Decidendi: The Referral Court, under Section 11(6-A), is confined to a prima facie examination of the existence of an arbitration agreement. It cannot conduct a contested or laborious enquiry into issues such as accord and satisfaction, ex facie frivolity, or other disputed facts, which are reserved for the Arbitral Tribunal under the competence-competence principle. The court’s role is facilitative and procedural to give effect to the parties’ agreed dispute resolution mechanism. (Paras 6-8)
Result: The petition was disposed of with the appointment of a Sole Arbitrator. (Para 17)
JUDGEMENT (ORAL)
1. The present Petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 [“Act”], seeking the appointment of a Sole Arbitrator for adjudication of disputes inter se the parties arising out of work contract dated 03.12.2021 [“Contract”].
2. The material on record reflects that the General Conditions of Contract [“GCC”] stipulates a dispute resolution mechanism, which contemplates reference of disputes thereunder, inter se the parties, to Arbitration. The relevant stipulation is contained in the Clause 9 of the GCC [“Arbitration Clause”]. The relevant portion of the same reads as follows: -
“9.0.0.0 ARBITRATION
9.0.1.0 Subject to the provisions of Clauses 6.7.1.0, 6.7.2.0
and 9.0.2.0 hereof, any dispute arising out of a Notified Claim of the Contractor included in the Final Bill of the Contractor in accordance with the provisions of Clause 6.6.3.0 hereof, and any dispute arising out of any claim(s) of the Owner against the Contractor shall be referred to the arbitration of a Sole Arbitrator selected in accordance with the provisions of Clause 9.0.1.1 hereof. It is specifically agreed that the Owner may prefer its claim(s) against the Contractor as counter claim(s), if a Notified Claim of the contractor has been referred to arbitration. The Contractor shall not, however, be entitled to raise as a set off defence or counter claim any claim which is not a Notified Claim included in the Contractor’s Final Bill in accordance with the provisions of Clause 6.6.3.0 hereof.”
3. The material on record further reflects that the statutory requirement of issuing a Legal Notice under Section 21 of the Act, invoking the aforesaid Arbitration clause, stands duly complied by the Petitioner vide Legal Notice dated 13.03.2024 [“Section 21 Notice”].
4. Learned counsel appearing on behalf of the Respondent, on instructions, submits that he has no objection to the disputes inter se the parties raised herein being referred to arbitration by a Sole Arbitrator in terms of the said Arbitration Clause.
5. Learned counsel for the Petitioner submits that the aggregate value of the Petitioner’s claims is approximately ₹3 lakhs, while the learned counsel for the Respondent submits that counter-claims of the Respondent are approximately ₹6 lakhs, thereby bringing the aggregate of the disputes to approximately ₹10 lakhs.
6. At this juncture, it is apposite to note that the legal position governing the scope and standard of judicial scrutiny under Section 11(6) of the Act is no longer res integra. A three-Judge Bench of the Hon’ble Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning, (2024) 12 SCC 1, after taking into consideration the authoritative pronouncement of the seven-Judge Bench in Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1, comprehensively delineated the contours of judicial intervention at the stage of Section 11 of the Act. The excerpt of Krish Spg (supra) reads as under:-
“ (c) Judicial interference under the 1996 Act
110. The parties have been conferred with the power to decide and agree on the procedure to be adopted for appointing arbitrators. In cases where the agreed upon procedure fails, the courts have been vested with the power to appoint arbitrators upon the request of a party, to resolve the deadlock between the parties in appointing the arbitrators.
111. Section 11 of the 1996 Act is provided to give effect to the mutual intention of the parties to settle their disputes by arbitration in situations where the parties fail to appoint an arbitrator(s). The parameters of judicial review laid down for Section 8 differ from those prescribed for Section 11. The view taken in SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618 and affirmed in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 that Sections 8 and 11, respectively, of the 1996 Act are complementary in nature was legislatively overruled by the introduction of Section 11(6
