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2026 Supreme(Online)(Del) 6545
IN THE HIGH COURT OF DELHI AT NEW DELHI
Harish Vaidyanathan Shankar, J
M/S MONEYWISE FINANCIAL SERVICES PVT LTD – Appellant
Versus
SH PRASHANT SARUP AND ANR – Respondent
ARB.P.-100/2026
For the Appellants/Petitioners: Mehvish Khan, Aman Choudhary
Under Section 11 of the Arbitration and Conciliation Act, 1996, the referral court's role is confined to a prima facie examination of the existence of an arbitration agreement, without delving into contested factual or legal issues.
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 prima facie examination of the existence of an arbitration agreement in terms of Section 7 - The examination of validity is limited to formal validity, e.g., requirement of writing - Referral Court cannot go into contested factual or legal issues such as accord and satisfaction, which are for the Arbitral Tribunal under Section 16 - Principles reaffirmed in SBI General Insurance Co. Ltd. v. Krish Spinning, (2024) 12 SCC 1 and Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1 - (Paras 6-8).
(B) Arbitration and Conciliation Act, 1996 - Section 11(6) - Judicial intervention is facilitative and procedural, limited to giving effect to the parties’ agreed mechanism for dispute resolution when it has failed - No appeal lies against an order under Section 11, hence referral courts must avoid delving into Arbitral Tribunal’s domain (Para 7).
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 pursuant to Clause 10.1 of a Loan Agreement dated 02.11.2019. The arbitration clause provided for referral of disputes to a sole arbitrator appointed by the lender, with seat at New Delhi. The petitioner claimed compliance with Section 21 through a notice dated 07.08.2025. Service on the respondents was effected, but they did not appear or file any reply. The valuation of the subject matter was stated to be approximately 15 Lakhs.
Findings of Court:
The Court noted that service was duly effected and statutory requirements for invocation of arbitration were complied with. Relying on the authoritative pronouncement in SBI General Insurance Co. Ltd. v. Krish Spinning, the Court held that its jurisdiction under Section 11 is extremely circumscribed and confined to a prima facie examination of the existence of a valid arbitration agreement. The Court declined to examine any contentious issues, leaving them for the Arbitral Tribunal. It appointed Mr. Sandeep Pandey, Advocate, as the Sole Arbitrator, subject to disclosures under Section 12(2), with fees as per the Fourth Schedule.
Issues: The main issues were whether the referral court could examine the validity and existence of the arbitration agreement beyond a prima facie level, and whether the court should adjudicate on any disputed facts at the stage of appointment of an arbitrator.
Ratio Decidendi: The referral court’s role under Section 11(6-A) is limited to a prima facie scrutiny of the existence of the arbitration agreement, without conducting a contested or laborious enquiry. The principle of competence-competence and the objective of minimum judicial interference require that all factual and legal issues, including accord and satisfaction, be decided by the Arbitral Tribunal. The court must not go into the merits or weed out allegedly frivolous disputes at this stage.
Result: The petition was allowed, and the Sole Arbitrator was appointed. The petition and pending applications were disposed of in the above terms.
JUDGEMENT (ORAL)
1. The present Petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996, (1 Act) seeking the appointment of a Sole Arbitrator, in terms of Clause 10.1 of the Loan Agreement dated 02.11.2019.
2. The relevant Clause being Clause 10.1 of the said Agreement reads as under:
“Any disputes, differences, controversies and questions directly or indirectly arising at any time hereafter between the Parties or their respective representatives or assigns, arising out of or in connection with this Agreement (or the subject matter of the Agreement), including, without limitation any question regarding its existence, validity, interpretation, construction, performance, enforcement, rights and liabilities of the parties, or termination("Dispute.”) shall be referred to Sole arbitrator duly
appointed by the lender. The Language of the arbitration shall be English. The seat of the Arbitration shall be at New Delhi and the language of the proceedings shall be english. The Award shall be in writing and shall set out the reasons for the Arbitrator's decision. The costs and expenses of the Arbitration shall be borne equally by each Party, with each costs and expenses of the Arbitration shall be borne equally by each party, with each party paying for its own fees and costs including attorney fees, except as may be determined by the arbitral tribunal Any award by the Arbitration tribunal shall be final and binding”
3. The statutory requirement under Section 21 of the Act is stated to be compiled with by virtue of Notice dated 07.08.2025.
4. Vide Order dated 15.01.2026, the Petitioner was directed to effect service upon the Respondents. The Order dated 13.03.2026 records that service upon the Respondents stands duly complete. However, none had entered appearance on the said date, and the position continues to remain unchanged even today.
5. This Court notes that service upon the Respondents stands duly effected; however, neither any appearance has been entered nor any reply has been filed on their behalf. Further, the statutory requirements for invocation of arbitration stand complied with. In these circumstances, this Court finds no impediment in referring the disputes inter se the parties to arbitration for adjudication by a Sole Arbitrator in terms of the arbitration clause referred to hereinabove.
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-A) in 2
