At the Section 11 stage, judicial scrutiny is confined to the prima facie existence of a valid arbitration agreement.

M/S Tata Capital Ltd. filed a petition under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator for disputes arising from a Loan Agreement dated 27 November 2024.

The Petitioner alleged that the Respondent had defaulted on his payment obligations and claimed approximately ₹18,27,575.

The parties were stated to be ad idem that the dispute could be referred to arbitration.

Clause 9 of the Loan Agreement contained a broad arbitration clause providing for resolution by a sole arbitrator appointed through specified arbitral institutions or institutions designated under the Act.

Whether a valid arbitration agreement prima facie existed between the parties so as to justify intervention under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996.

Whether a sole arbitrator ought to be appointed to adjudicate the disputes arising from the Loan Agreement dated 27 November 2024.

The Court applied Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996, which empower the Court to appoint an arbitrator where the agreed appointment procedure has not resulted in an appointment.

The Court reiterated that, at the stage of exercising jurisdiction under Section 11, the enquiry is confined to examining the prima facie existence of a valid arbitration agreement.

It further applied the arbitration agreement contained in Clause 9 of the Loan Agreement, which referred disputes concerning the facility, the parties’ rights and liabilities, and alleged breaches to arbitration by a sole arbitrator.

The Court also directed that the arbitration would be conducted under the rules and aegis of the Delhi International Arbitration Centre and subject to the arbitrator’s disclosures under Section 12(2) of the Act.

The Court found that there was no dispute regarding the existence of a valid arbitration clause in the Loan Agreement.

Since the parties agreed that the matter could be referred to arbitration and Clause 9 expressly contemplated adjudication by a sole arbitrator, the limited prima facie threshold under Section 11 was satisfied.

Consequently, the Court found no impediment to appointing a sole arbitrator, while expressly preserving the parties’ right to raise objections concerning arbitrability and jurisdiction before the arbitrator.

The Court also clarified that its observations were confined to disposal of the Section 11 petition and would not influence the merits of the arbitral adjudication.

She was directed to enter upon the reference within three weeks and furnish the disclosures required under Section 12(2) of the Act.

The arbitration was directed to be conducted under the rules and aegis of the Delhi International Arbitration Centre, with fees payable in accordance with the DIAC Schedule of Fees.

The parties remained free to raise all objections, including those relating to jurisdiction and arbitrability, before the arbitrator.

The petition and pending application were accordingly disposed of.