Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 158/2025
Date of Decision: 19.05.2025
ABHISHEK GUPTA
S/O DILIP KUMAR GUPTA
R/O H. NO. 1573/GWAL TOLI, CIVIL LINES,
SIPRI BAZAR, ABBOTGANJ, JHANSI,
UTTAR PRADESH 284003. .....Petitioner
( Through: Ms. Diya Rastogi, Adv. )
versus
FIITJEE LIMITED
HAVING ITS REGISTERED OFFICE AT:
29A, KALU SARAI SARVAPRIYA VIHAR,
NEW DELHI, SOUTH DELHI-110016, INDIA.....Respondent No.1
MONICA GOEL
DIRECTOR AT FIITJEE LIMITED
HAVING ITS REGISTERED OFFICE AT:
29A, KALU SARAI SARVAPRIYA VIHAR,
NEW DELHI, SOUTH DELHI-110016, INDIA.....Respondent No.2
RUSTAM DINSHAW BATLIVALA
DIRECTOR AT FIITJEE LIMITED
HAVING ITS REGISTERED OFFICE AT:
29A, KALU SARAI SARVAPRIYA VIHAR,
NEW DELHI, SOUTH DELHI-11 0016, INDIA .....Respondent No.3
DINESH KUMAR GOEL
MANAGING DIRECTOR AT FIITJEE LIMITED
HAVING ITS REGISTERED OFFICE AT:
29A, KALU SARAI SARVAPRIYA VIHAR,
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Signed
By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:23.05.2025
16:35:19
NEW DELHI, SOUTH DELHI-110016, INDIA.....Respondent No.4
SHASHI KANT DUBEY
DIRECTOR AT FIITJEE LIMITED
HAVING ITS REGISTERED OFFICE AT:
29A, KALU SARAI SARVAPRIYA VIHAR,
NEW DELHI, SOUTH DELHI-110016, INDIA.....Respondent No.5
SADHU RAM BANSAL
DIRECTOR AT FIITJEE LIMITED
HAVING ITS REGISTERED OFFICE AT:
29A, KALU SARAI SARVAPRIYA VIHAR,
NEW DELHI, SOUTH DELHI-110016, INDIA.....Respondent No.6
RAM LUBHAYA TRIKHA
DIRECTOR AT FIITJEE LIMITED
HAVING ITS REGISTERED OFFICE AT:
29A, KALU SARAI SARVAPRIYA VIHAR,
NEW DELHI, SOUTH DELHI-110016, INDIA.....Respondent No.7
PARTHA HALDER
DIRECTOR AT FIITJEE LIMITED
HAVING ITS REGISTERED OFFICE AT:
29A, KALU SARAI SARVAPRIYA VIBAR,
NEW DELHI, SOUTH DELHI-110016, INDIA .....Respondent No.8
( Through: Mr. Mukesh M. Goyal and Ms. Khushboo
Singhal, Advs. )
CORAM:
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
J U D G E M E N T
PURUSHAINDRA KUMAR KAURAV, J. (ORAL)
1. The present petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 (AC Act) by the petitioner, seeking
appointment of an Arbitrator, to adjudicate upon the disputes that have
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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:23.05.2025
16:35:19
arisen between the parties.
2. Mr. Mukesh M. Goyal, learned counsel for the respondents, submits
that on 13.06.2024, a notice under Section 21A of the AC Act was issued
by the respondent against the petitioner as well as against one Mr. Harish
Agarwal for the appointment of an Arbitrator. He, therefore, contends that
arbitration proceedings were thereafter commenced by the appointed
Arbitrator but were subsequently terminated.
3. Mr. Goyal further submits that, if arbitration is to take place at all, it
should be between the petitioner and Mr. Harish Agarwal on one side, and
respondent no.1 on the other. He, therefore, requests that, while reserving all
rights and contentions, the Court may consider appointing an Arbitrator.
4. Mr. Goyal also submits that Mr. Harish Agarwal be directed to be
impleaded as a party before the Arbitrator.
5. The aforesaid statement is not opposed by the learned counsel for the
petitioner and she contends that the petitioner shall take necessary steps for
impleadment of Mr. Harish Agarwal as necessary party before the
Arbitrator.
6. The law with respect to the scope and standard of judicial scrutiny
under Section 11(6) of the 1996 Act has been fairly well settled. This Court
as well in the order dated 24.04.2025 in case of ARB.P. 145/2025 titled as
Pradhaan Air Express Pvt Ltd v. Air Works India Engineering Pvt Ltd has
extensively dealt with the scope of interference at the stage of Section 11.
The Court held as under:-
“9. The law with respect to the scope and standard of judicial scrutiny
under Section 11(6) of the 1996 Act has been fairly well settled. The
Supreme Court in the case of SBI General Insurance Co. Ltd. v. Krish
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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:23.05.2025
16:35:19
Spinning, while considering all earlier pronouncements including the
Constitutional Bench decision of seven judges in the case of Interplay
between Arbitration Agreements under the Arbitration & Conciliation
Act, 1996 & the Indian Stamp Act, 1899 , In re has held that scope of
inquiry at the stage of appointment of an Arbitrator is limited to the
extent of prima facie existence of the arbitration agreement and nothing
else.
10. It has unequivocally been held in paragraph no.114 in the case of
SBI General Insurance Co. Ltd that observations made in Vidya Drolia
v. Durga Trading Corpn., and adopted in NTPC Ltd. v. SPML Infra
Ltd. , that the jurisdiction of the referral court when dealing with the
issue of “accord and satisfaction” under Section 11 extends to weeding
out ex-facie non-arbitrable and frivolous disputes would not apply after
the decision of Re: Interplay . The abovenoted paragraph no.114 in the
case of SBI General Insurance Co. Ltd reads as under:-
“114. In view of the observations made by this Court in In
Re: Interplay (supra), it is clear that the scope of enquiry at
the stage of appointment of arbitrator is limited to the
scrutiny of prima facie existence of the arbitration
agreement, and nothing else. For this reason, we find it
difficult to hold that the observations made in Vidya Drolia
(supra) and adopted in NTPC v. SPML (supra) that the
jurisdiction of the referral court when dealing with the issue
of “accord and satisfaction” under Section 11 extends to
weeding out ex-facie non-arbitrable and frivolous disputes
would continue to apply despite the subsequent decision in In
Re: Interplay (supra).”
11. Ex-facie frivolity and dishonesty are the issues, which have been
held to be within the scope of the Arbitral Tribunal which is equally
capable of deciding upon the appreciation of evidence adduced by the
parties. While considering the aforesaid pronouncements of the Supreme
Court, the Supreme Court in the case of Goqii Technologies (P) Ltd. v.
Sokrati Technologies (P) Ltd., however, has held that the referral Courts
under Section 11 must not be misused by one party in order to force
other parties to the arbitration agreement to participate in a time-
consuming and costly arbitration process. Few instances have been
delineated such as, the adjudication of a non-existent and malafide claim
through arbitration. The Court, however, in order to balance the limited
scope of judicial interference of the referral Court with the interest of the
parties who might be constrained to participate in the arbitration
proceedings, has held that the Arbitral Tribunal eventually may direct
that the costs of the arbitration shall be borne by the party which the
Arbitral Tribunal finds to have abused the process of law and caused
unnecessary harassment to the other parties to the arbitration.
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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:23.05.2025
16:35:19
12. It is thus seen that the Supreme Court has deferred the adjudication
of aspects relating to frivolous, non-existent and malafide claims from
the referral stage till the arbitration proceedings eventually come to an
end. The relevant extracts of Goqii Technologies (P) Ltd. reads as
under:-
“20. As observed in Krish Spg. [SBI General Insurance Co.
Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine SC
1754 : 2024 INSC 532] , frivolity in litigation too is an aspect
which the referral court should not decide at the stage of
Section 11 as the arbitrator is equally, if not more, competent
to adjudicate the same.
21. Before we conclude, we must clarify that the limited
jurisdiction of the referral courts under Section 11 must not
be misused by parties in order to force other parties to the
arbitration agreement to participate in a time consuming and
costly arbitration process. This is possible in instances,
including but not limited to, where the claimant canvasses the
adjudication of non-existent and mala fide claims through
arbitration.
22. With a view to balance the limited scope of judicial
interference of the referral courts with the interests of the
parties who might be constrained to participate in the
arbitration proceedings, the Arbitral Tribunal may direct that
the costs of the arbitration shall be borne by the party which
the Tribunal ultimately finds to have abused the process of
law and caused unnecessary harassment to the other party to
the arbitration. Having said that, it is clarified that the
aforesaid is not to be construed as a determination of the
merits of the matter before us, which the Arbitral Tribunal
will rightfully be equipped to determine.”
13. In view of the aforesaid, the scope at the stage of Section 11
proceedings is akin to the eye of the needle test and is limited to the
extent of finding a prima facie existence of the arbitration agreement and
nothing beyond it. The jurisdictional contours of the referral Court, as
meticulously delineated under the 1996 Act and further crystallised
through a consistent line of authoritative pronouncements by the
Supreme Court, are unequivocally confined to a prima facie examination
of the existence of an arbitration agreement. These boundaries are not
merely procedural safeguards but fundamental to upholding the
autonomy of the arbitral process. Any transgression beyond this limited
judicial threshold would not only contravene the legislative intent
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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:23.05.2025
16:35:19
enshrined in Section 8 and Section 11 of the 1996 Act but also risk
undermining the sanctity and efficiency of arbitration as a preferred
mode of dispute resolution. The referral Court must, therefore, exercise
restraint and refrain from venturing into the merits of the dispute or
adjudicating issues that fall squarely within the jurisdictional domain of
the arbitral tribunal. It is thus seen that the scope of enquiry at the
referral stage is conservative in nature. A similar view has also been
expressed by the Supreme Court in the case of Ajay Madhusudan Patel
v. Jyotrindra S. Patel” .
9. In view of the aforesaid, the Court deems it appropriate to appoint a
Sole Arbitrator.
10. Accordingly, Mr. Naveen Gupta, Advocate (Mobile No.- +91
9312248478, e-mail id- ngnaveengupta@yahoo.co.in ) is appointed as the
sole Arbitrator to adjudicate the dispute between the parties.
11. The Sole Arbitrator may proceed with the arbitration proceedings,
subject to furnishing to the parties, requisite disclosures as required under
Section 12 of the Arbitration and Conciliation Act, 1996 (hereinafter
referred as “ A&C Act ”).
th
12. The Sole Arbitrator shall be entitled to fee in accordance with the IV
Schedule of the A&C Act; or as may otherwise be agreed to between the
parties and the learned Sole Arbitrator.
13. The parties shall share the arbitrator's fee and arbitral cost, equally.
14. All rights and contentions of the parties in relation to the
claims/counterclaims are kept open, to be decided by the Sole Arbitrator on
their merits, in accordance with law.
15. Needless to say, nothing in this order shall be construed as an
expression of opinion of this Court on the merits of the controversy between
the parties Let the copy of the said order be sent to the appointed Arbitrator
through the electronic mode as well.
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Signed
By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:23.05.2025
16:35:19
16. Accordingly, the instant petition stands disposed of
PURUSHAINDRA KUMAR KAURAV, J
MAY 19, 2025
aks/sph
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Signed
By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:23.05.2025
16:35:19