The scope of a referral court under Section 11(6A) of the Arbitration and Conciliation Act, 1996, is strictly limited to the prima facie examination of the existence of an arbitration agreement, leaving deeper jurisdictional or validity issues to be decided by the arbitral tribunal under Section 16.

Order

1. Heard counsel for both parties and perused the respective pleadings and material placed on record.

2. Instant arbitration application under Sections 11(5) & (6) of the Arbitration and Conciliation Act, 1996 (for shot “the A&C Act,1996) has been filed by the applicant seeking appointment of an arbitrator in order to adjudicate/ settle the dispute between parties, arising out of Franchise Agreement dated 26.11.2021. In the Franchise Agreement, Clause 19(b) is an arbitration agreement executed between parties, which is being reproduced hereunder:-

“b) All disputes relating in any way to this Agreement shall be resolved exclusively through arbitration conducted in English Language in accordance with the Arbitration and Conciliation Act, 1996 as then in effect. The Parties shall nominate and appoint 1 (one) arbitrator each within forty-five (45) days from the notification of intention of proceeding with arbitration failing which the arbitrator shall be appointed by the Jaipur Bench of Rajasthan High Court. The two (2) appointed arbitrators shall elect the presiding arbitrator. The arbitration hearing shall be held as soon as practicable in Jaipur, Rajasthan, India.”

3. It appears that a Franchise Agreement dated 26.11.2021 was executed between the parties and the applicant was allowed to carry business of distribution of fresh Atta under the trade name of “Jaipur Chakki” by the respondent, however, soon after one month of execution of the agreement, dispute in respect of non-payment of the agreed amount by the respondent cropped up. The applicant issued legal notice dated 07.01.2023, which was replied by the respondent on 03.03.2023.

4. It also appears that in order to resolve the dispute amicably, in terms of Clause 19(a) of the Franchise Agreement, both parties appointed their respective senior executives and meeting between the senior executives was held on 10.06.2023, but no fruitful result came out. Hence, in such eventuality, the applicant issued a legal notice dated 27.06.2023, raising a demand to refer the dispute to the Arbitral Tribunal and for constitution of Arbitral Tribunal in terms of Clause 19(b) of the agreement.

5. It appears that the notice was not responded by the respondent, hence, instant arbitration application has been filed on 29.08.2023.

6. On behalf of the respondent, in the reply to the arbitration application, the execution of Franchise Agreement and existence of arbitration clause therein has not been disputed but counsel for the respondent contends that on account of non-compliance of the terms and conditions by the applicant, the Franchise Agreement had been terminated on 28.11.2023 by serving a legal notice. Counsel for the respondent submits that the respondent is agreeable to settle the dispute in respect of payment of Rs.8 lakhs as also the damages as a consequence of termination of agreement in terms of Clause 17, hence, there is no need for appointment of an Arbitral Tribunal and the dispute may be resolved amicably between the parties.

7. Having adverted to the rival contentions of counsel for both the parties, prima facie, it appears before this Court that a dispute certainly has arisen between the parties and the attempt to resolve the dispute through senior executives has failed, hence, such dispute requires to be adjudicated/ resolved by the Arbitrator. It is undisputed that an arbitration agreement in Clause 19(b) contained in the Franchise Agreement, as ext