Arbitration clause in principal agreement survives despite subsequent settlement agreements lacking arbitration clauses unless novation is ex-facie certain.

The Petitioner (Benetton) and Respondent entered into a Distribution Agreement (DA) on 01.08.2014, which contained an arbitration clause (Clause 10(j)) designating New Delhi as the seat.

Following the Respondent's failure to clear dues, the parties executed three successive Settlement Agreements (SA I, II, and III) between 2016 and 2020 to restructure payment schedules.

When the Respondent defaulted on the final SA, the Petitioner invoked arbitration under the original DA.

The Respondent opposed the petition, contending that the SAs—which contained exclusive jurisdiction clauses for civil courts and lacked arbitration clauses—superseded and "novated" the DA, thereby extinguishing the arbitration agreement.

Whether a valid arbitration agreement exists between the parties in light of subsequent settlement agreements.

Whether the court, at the Section 11 stage, can adjudicate the issue of contract novation and supersession.

The court primarily applied Section 11(6) and 11(6A) of the Arbitration and Conciliation Act, 1996, which limits judicial scrutiny at the referral stage to the "prima facie" existence of an arbitration agreement.

It relied on the doctrine of *Kompetenz-Kompetenz* as affirmed in *Interplay Between Arbitration Agreements, In re*.

and *SBI General Insurance Co. Ltd. v. Krish Spinning*.

Furthermore, it applied the precedent from *Sanjiv Prakash v. Seema Kukreja*, establishing that whether a contract is novated by a subsequent agreement is a complex question of fact and law that must be decided by the Arbitrator, not the referral court.

The court reasoned that its jurisdiction under Section 11 is confined to a "first look" test to verify if an arbitration agreement exists.

It observed that the original DA undisputedly contains an arbitration clause satisfying Section 7 of the Act.

The court rejected the Respondent’s argument that the SAs extinguished the DA, noting that the SAs were primarily for restructuring payment obligations and their effect on the DA (novation) is a contested issue.

Following *Sanjiv Prakash*, the court held that detailed inquiries into the "unequivocal intention" of parties to novate a contract involve a "mini-trial" which would usurp the Arbitral Tribunal's jurisdiction.

Even the presence of exclusive jurisdiction clauses for civil courts in the SAs was deemed a matter for the Arbitrator to interpret alongside the original arbitration agreement.

The petition was allowed, and the Court appointed Mr. Varun Kumar Chopra as the Sole Arbitrator.

The court directed that all contentions regarding the arbitrability of claims, the merit of the disputes, and whether the SAs superseded the DA remain open for adjudication by the Arbitrator.