Full Judgment Text
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 12.02.2026
+ ARB.P. 802/2025
SURESH BATHEJA .....Petitioner
Through: Mr. A.M. Nair, Advocate.
versus
RAMESH CHAND BATHEJA .....Respondent
Through: Ms. Navneet Kaur, Advocate.
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
% JUDGEMENT (ORAL)
HARISH VAIDYANATHAN SHANKAR, J.
1. The present petition has been filed under Section 11 of the
Arbitration and Conciliation Act, 1996 [“ Act ”], seeking the
appointment of an Arbitrator in terms of the dated
Compromise Deed
21.12.2017 [“ Agreement ”] on the ground that certain disputes have
arisen inter se the parties in accordance with Clause 11 of the
Agreement. Clause 11 of the Agreement reads as follows:
“ 11. That, in case of any dispute/differences between the parties
hereto and the relation to this compromise agreement, the same
shall be referred to the sole arbitration of Advocate Sh. Rajeev
Kapoor office :-X-1/101-107, WHS., Naraina New Delhi -28 and
Advocate Sh. Arun Garg Delhi, whose decision award shall be
final and binding on the party(s).”
2. The material on record indicates that pursuant to the disputes
that arose between the parties, a Notice under Section 21 of the Act
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By:HARVINDER KAUR
BHATIA
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dated 08.08.2024 was issued by the Petitioner.
3. Thereafter, vide Order dated 23.05.2025, this Court issued
notice to the Respondent. Subsequently, by Order dated 19.08.2025,
on the request of the parties, the matter was referred to the Delhi High
Court Mediation and Conciliation Centre for exploring the possibility
of settlement between the parties.
4. On 19.01.2026, this Court, taking note of the fact that the
matter had been pending for settlement since 29.08.2025, granted a
last opportunity to the parties to arrive at an amicable resolution, with
a clear caveat that, in the event of failure to do so, an arbitrator would
be appointed.
5. Before adverting to the submissions, this Court is cognizant of
the scope of interference at the stage of a Petition under Section 11 of
the Act. The law with respect to the scope and standard of judicial
scrutiny under Section 11(6) of the Act has been fairly well settled. A
Coordinate bench of this Court, in Pradhaan Air Express Pvt Ltd v.
Air Works India Engineering Pvt Ltd [2025 SCC OnLine Del 3022] ,
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
1
Co. Ltd. v. Krish 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 &
2
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
3
in Vidya Drolia v. Durga Trading Corpn . , and adopted in NTPC
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BHATIA
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4
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)
5
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.
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 INSC
532], frivolity in litigation too is an aspect which the
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BHATIA
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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 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 .”
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By:HARVINDER KAUR
BHATIA
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6. It is observed that there is no consensus between the parties
with regard to settlement of the dispute through mediation. However,
notwithstanding their respective positions in that regard, both parties
are ad idem that the disputes in the present matter be referred to
arbitration, by a learned Arbitrator as named by the Court.
7. The value of the dispute/claims is stated to be approximately
Rs. 2,00,00,000/-.
8. Accordingly, this Court requests Hon’ble Ms. Justice (Retd.)
Sunita Gupta, former Judge of this Court (email: & Mobile
No.9910384628) to enter upon the reference and adjudicate the
disputes between the parties.
9. The Registry is directed to send a copy of this order to the
learned Arbitrator through all permissible modes, including through e-
mail.
10. The learned sole Arbitrator may proceed with the arbitration
proceedings, subject to furnishing to the parties the requisite
disclosures as required under Section 12(2) of the Act.
11. The learned sole Arbitrator shall be entitled to a fee in
accordance with the Fourth Schedule of the Act or as may otherwise
be agreed to between the parties and the learned sole Arbitrator.
12. The parties shall share the learned sole Arbitrator’s fee and
arbitral costs equally.
13. All rights and contentions of the parties in relation to the
claims/counter-claims are kept open, to be decided by the learned
Arbitrator on their merits, in accordance with law.
14. Needless to say, nothing in this order shall be construed as an
expression of opinion of this Court on the merits of the controversy
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Digitally Signed
By:HARVINDER KAUR
BHATIA
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between the parties.
15. Accordingly, the present Petition, along with all pending
Application(s), if any, are disposed of in the aforesaid terms.
HARISH VAIDYANATHAN SHANKAR, J
FEBRUARY 12, 2026/ v/kr
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
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