The scope of inquiry under Section 11 of the Arbitration and Conciliation Act, 1996 is confined to a prima facie examination of the existence of an arbitration agreement; a referral court must avoid conducting a mini-trial regarding the merits, validity, or termination of the underlying contract.

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JASGURPREET SINGH PURI, J. (Oral)

1. Reply filed by the respondents is taken on record.

2. The present petition has been filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) for appointment of a Sole Arbitrator.

3. Learned Senior Counsel appearing on behalf of the petitioner submitted that there is a collaboration agreement between the petitioner and the respondents. The petitioner is the builder and the respondents are the landowners and the collaboration agreement has been attached with the present petition as Annexure P-1 dated 04.01.2024. He submitted that in the aforesaid agreement, there is an arbitration clause i.e Clause 42, which provides that if the dispute is not resolved through mutual discussions and amicably, then the matter will be finally settled through arbitration by a Sole Arbitrator to be appointed on a consensual basis by the parties. He further submitted that the petitioner tried its level best to settle the dispute amicably and in this regard, he referred to Annexure P-4, which is a notice issued by the petitioner dated 05.08.2025 for discussion and amicable settlement but the same failed. It was thereafter that vide Annexure P-9 dated 18.09.2025, a notice was issued to the respondents invoking the aforesaid arbitration clause and the name of an Arbitrator was also proposed and in response to the said notice invoking the aforesaid arbitration clause, a reply was received from the respondents vide Annexure P-10, wherein the respondents have denied the appointment of an Arbitrator on the ground that the agreement has been terminated and therefore, no Arbitrator can be appointed. Learned Senior Counsel submitted that it was because of this failure of the mechanism for appointment of an Arbitrator that the present petition has been filed under Section 11 of the Act for appointment of an independent Sole Arbitrator by this Court.

3. On the other hand, Mr. Shubail Farook, Advocate appearing on behalf of the respondents submitted that so far as the agreement (Annexure P-1) which contains the arbitration clause is concerned, there is no dispute with regard to the same. He further submitted that the notice issued by the petitioner vide Annexure P-9 invoking the arbitration clause and the reply given by the respondents thereof are also not in dispute. He submitted however the objection of the respondents is that the agreement itself has been terminated and the petitioner, who is a developer, had itself violated the terms and conditions of the contract. He also submitted that once the petitioner has violated the terms and conditions, then it could not have filed the present petition under Section 11 of the Act. He further submitted that as per Clause 20 of the agreement, it has been provided that in case the owners or their nominee or legal heirs cancel or back out from the agreement, then in that event, the developer without prejudice to its other rights will be entitled to get the agreement enforced through courts of law and therefore, the present petition under Section 11 of the Act is not maintainable.

4. I have heard the learned counsel for the parties.

5. The agreement between the parties, which is in the nature of collaboration agreement (Annexure P-1) is not in dispute. The invocation of the arbitration clause, which is contained in the aforesaid collaboration is also not in dispute. However, two-fold objections were raised by the learned counsel for the r