Accord and satisfaction disputes fall within the arbitral tribunal’s domain, not Section 11 review.

The petitioner was associated with the respondent and its predecessor from December 2012 to October 2020 and received 2,30,500 employee stock options under the respondent’s ESOP Plan, 2015, which contained an arbitration clause (Clause 22).

He claimed that ₹35,03,35,120, with interest, remained due as cash compensation.

After demanding payment and invoking arbitration, the petitioner received the respondent’s objection that all dues had been settled, including through encashment of a cheque dated 22 August 2024.

The petitioner applied under Section 11(5) of the Arbitration and Conciliation Act, 1996, for appointment of a sole arbitrator; the respondent opposed the application on the ground of accord and satisfaction.

Whether the respondent’s plea of accord and satisfaction or full and final settlement could prevent reference of the dispute to arbitration at the Section 11 stage.

Whether, given the undisputed existence of the arbitration clause, a sole arbitrator should be appointed to adjudicate the parties’ disputes.

Section 11(6-A) of the Arbitration and Conciliation Act, 1996 limits the referral court’s inquiry to the prima facie existence of an arbitration agreement; contested questions concerning accord and satisfaction are ordinarily for the arbitral tribunal under the principle of kompetenz-kompetenz, reflected in Section 16.

In SBI General Insurance Co. Ltd. v. Krish Spinning (2024), the Supreme Court held that a dispute about full and final settlement does not extinguish the arbitration agreement unless the parties expressly agree to do so, and that the settlement dispute may itself be referred to arbitration.

The Court also relied on Arabian Exports Pvt. Ltd. v. National Insurance Co. Ltd. (2025), which reaffirmed that disputes about alleged economic duress and settlement are for the arbitral tribunal.

The respondent did not dispute the existence of Clause 22, so the statutory threshold for referral was met.

Its contention that the petitioner had accepted full and final payment concerned the effect or validity of the alleged settlement, not the existence of the arbitration agreement.

Applying Krish Spinning and Arabian Exports, the Court held that this issue must be left to the arbitral tribunal rather than determined by the referral court.

The respondent may raise its accord-and-satisfaction objection before the tribunal, which will decide it in accordance with law; the Court expressed no view on the merits and left the parties’ rights and contentions open.