Back
2026 Supreme(Online)(Del) 6586
IN THE HIGH COURT OF DELHI AT NEW DELHI
Harish Vaidyanathan Shankar, J
INDIABULLS HOUSING FINANCE LTD. – Appellant
Versus
BHAVANA R VIRA ALIAS BHAVANA RAJESH VIRA AND ORS. – Respondent
ARB.P.-948/2024
For the Appellants/Petitioners: Rishabh Gupta
For the Respondents: None
Under Section 11(6-A) of the Arbitration and Conciliation Act, 1996, the referral court's inquiry is limited to prima facie existence of an arbitration agreement; it cannot examine merits, accord and satisfaction, or frivolity.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11, Section 11(6-A), Section 21, Section 12(2), Fourth Schedule - Appointment of Sole Arbitrator - Scope of judicial scrutiny under Section 11(6-A) is confined to prima facie examination of existence of a valid arbitration agreement; referral court cannot examine merits of disputes, accord and satisfaction, or frivolity - Such issues are within exclusive domain of Arbitral Tribunal under Section 16. (Paras 6-8)
(B) Arbitration and Conciliation Act, 1996 - Section 11(6-A) - The scope of enquiry is limited to formal validity of arbitration agreement under Section 7; contested factual or legal issues are not to be adjudicated at this stage. (Para 6, quoting Krish Spg. paras 113-114, 119-121)
(C) Arbitration and Conciliation Act, 1996 - Section 21 - Statutory requirement of notice of invocation of arbitration must be complied with before seeking appointment under Section 11. (Para 3)
Facts of the case:
Petitioner (a housing finance company) and respondents entered into a Loan Agreement dated 08.05.2018 containing an arbitration clause (Article 12). Disputes arose; petitioner issued a legal notice dated 30.04.2024 invoking arbitration. Respondents were served but failed to file a reply or appear after 14.08.2025 despite multiple opportunities. Petitioner filed a petition under Section 11 of the Act seeking appointment of a sole arbitrator. The underlying claim value was approximately Rs. 70 lakhs.
Findings of Court:
The court, relying on SBI General Insurance Co. Ltd. v. Krish Spinning (2024) 12 SCC 1, held that its jurisdiction under Section 11(6-A) is limited to a prima facie examination of the existence of an arbitration agreement. All other contentious issues, including accord and satisfaction, are for the Arbitral Tribunal. Since a valid arbitration clause existed and the Section 21 notice was complied with, the court appointed a sole arbitrator to adjudicate the disputes.
Issues: The main issue was whether the court should appoint an arbitrator under Section 11 despite the respondents' non-appearance and any potential defenses regarding the merits of the claim.
Ratio Decidendi: The referral court must confine itself to a prima facie scrutiny of the existence of a valid arbitration agreement. It cannot delve into the merits, accord and satisfaction, or ex facie frivolity, as those are matters for the Arbitral Tribunal under the principle of competence-competence and minimal judicial interference. (Paras 6-8) Result : Petition disposed of; sole arbitrator appointed to adjudicate disputes between the parties. (Para 19)
JUDGEMENT (ORAL)
1. The present Petition, under Section 11 of the Arbitration and Conciliation Act, 1996, (The Act) seeks the appointment of a Sole Arbitrator for the purpose of adjudication of disputes inter se the parties arising out of the Loan Agreement dated 08.05.2018., Agreement.
2. The Agreement contemplates adjudication of disputes, arising thereof, by way of Arbitration. The relevant stipulation is contained in Article 12 of the Agreement, Arbitration clause, which reads as follows:
“ARTICLE 12: ARBITRATION
12.1 This Loan Documents is/shall be governed by Indian laws and the courts at New Delhi shall have exclusive jurisdiction relating to any matter/issue under or pursuant to the Loan Documents.
Notwithstanding anything to the contrary, if any dispute/disagreement/differences ("Dispute") arise between the Parties (including any Borrower(s)) during the subsistence of the Loan Documents and/or thereafter, in connection with, inter alia, the validity, interpretation, implementation and/or alleged breach of any provision of the Loan Documents, jurisdiction or existence/appointment of the arbitrator or of any nature whatsoever, then, the Dispute shall be referred to a sole arbitrator who shall be appointed by IHFL only. In any circumstance, the appointment of the sole arbitrator by IHF L shall be and shall always be deemed to be the sole means for securing the appointment/nomination of the sole arbitrator, without recourse to any other alternative mode of appointment of the sole arbitrator. The place of the arbitration shall be New Delhi or such other place as may be notified by IHFL and the arbitration proceedings shall be governed by the Arbitration & Conciliation Act, 1996 (or any statutory re- enactment thereof, for the time being in force) and shall be in the English language. The award shall be binding on the Parties subject to the applicable laws in force and the award shall be enforceable in any competent court of law.”
3. The material on record also reflects that the statutory requirement under Section 21 of the Act for invocation of the aforestated Arbitration clause, stands duly complied with by the Petitioner vide Legal Notice dated 30.04.2024, Section 21 Notice.
4. Learned counsel for the Petitioner submits that the Respondents have been duly served, and the same is apparent, since the material on record suggests that the counsel on behalf of the Respondents had also entered their appearance on 15.04.2025. Further, vide Order dated 21.05.2025, a last and final opportunity was granted to the Respondents to file a reply to the present Petition.
5. However, as is apparent, no reply has been forthcoming and no one has been appearing on behalf of the Respondents since 14.08.2025.
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
