Court’s Section 11 Jurisdiction is Confined to Prima Facie Examination of Arbitration Agreement’s Existence

The Petitioner filed a petition under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator

The parties had executed a Unit Franchise Agreement on 19.10.2023, which contained an arbitration clause (Article 31) designating the Franchisor as the authority to name the arbitrator and Article 32 vesting jurisdiction in Delhi courts

A Section 21 notice was issued on 02.02.2026, to which the Respondent replied on 02.03.2026

The Respondent opposed the petition solely on the grounds that the disputed amounts were incorrect, though they admitted to the existence of the agreement

1. Whether the Court should appoint an arbitrator under Section 11 when the existence of the arbitration agreement is admitted but the quantum of the claim is disputed

2. What is the standard and scope of judicial scrutiny permitted to a Referral Court under Section 11(6-A) of the Act

The Court applied Section 11 of the Arbitration and Conciliation Act, 1996, noting that under sub-section (6-A), judicial intervention is confined strictly to the examination of the existence of the arbitration agreement

The Court relied heavily on the precedent of SBI General Insurance Co. Ltd. v. Krish Spg. (2024), which incorporated the seven-judge bench ruling in Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re

These authorities establish that the "Referral Court" must only perform a prima facie scrutiny to weed out non-existent agreements, leaving all other issues—including "accord and satisfaction" and the veracity of claims—to the Arbitral Tribunal under the principle of competence-competence

The Court observed that the Respondent candidly conceded the existence of the franchise agreement containing the arbitration clause

Following the mandate in Krish Spg., the Court held that since the arbitration agreement's existence was not in doubt, the Court’s role was purely facilitative and procedural

The Respondent’s objection regarding the "reconciliation of amounts" was deemed a matter for the Arbitral Tribunal to decide under Section 16 of the Act, as Referral Courts are prohibited from conducting "laborious enquiries" into contested facts at the Section 11 stage

The Court emphasized that judicial non-interference is the "highest pedestal" of modern arbitration, and frivolous or meritless claims should be evaluated by the Arbitrator through evidence rather than by the Court at the nascent stage

Both parties eventually reached a consensus (ad idem) to refer the matter to an arbitrator under the aegis of the DIAC

The Court appointed Mr. Nawab Singh Jaglan, Advocate, as the Sole Arbitrator to adjudicate the disputes under the rules of the Delhi International Arbitration Centre (DIAC)

The Court clarified that it made no comments on the merits of the claims or the specific amounts due, leaving all rights and contentions open for the Arbitrator’s determination

The petition was disposed of with directions for the Arbitrator to provide statutory disclosures under Section 12(2)