Inelegantly drafted clauses evincing clear intent to arbitrate constitute valid arbitration agreements under Section 7.

The Petitioners filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator based on Clause 26 of a Lease Deed dated 22.02.2023.

The Petitioners served a statutory notice under Section 21 of the Act on 23.01.2026.

The Respondents opposed the petition, arguing that the clause—which provided for "approaching a mutually agreed arbitrator" but stipulated that if a dispute "continues further then the parties can move to Delhi jurisdiction"—did not constitute a valid or mandatory arbitration agreement.

The dispute is valued at approximately Rs. 7 crores.

1. Whether Clause 26 of the Lease Deed constitutes a valid and enforceable arbitration agreement under Section 7 of the Act, manifesting a clear intention to arbitrate.

2. Whether the court’s scope of scrutiny under Section 11(6) is limited to the prima facie existence of the arbitration agreement.

The court applied Section 7 of the Arbitration and Conciliation Act, 1996, regarding the definition of an arbitration agreement.

Section 11(6) regarding the court's power to appoint arbitrators.

The court relied heavily on the precedent established by the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning (2024), which drew from the seven-judge Bench decision in In re: Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899.

The court’s jurisdiction under Section 11 is "facilitative and procedural," confined strictly to a prima facie examination of the existence of the agreement, leaving questions of validity or "accord and satisfaction" to the Arbitral Tribunal under the principle of competence-competence.

The Court acknowledged that while Clause 26 was "inelegantly drafted" and lacked precision, it sufficiently reflected the parties' intent to resolve disputes through arbitration.

The Court interpreted the phrase referring to "Delhi jurisdiction" not as an alternative to arbitration, but as a provision conferring jurisdiction upon the Court to facilitate the constitution of the tribunal should the parties fail to agree on an arbitrator.

Following the "eye of the needle" and "prima facie" standards reaffirmed in Krish Spinning, the Court determined that it should not engage in a "laborious enquiry" or "contested facts" at this stage.

Since the arbitration agreement's existence was prima facie evident from the Lease Deed, and the Section 21 notice was served, the statutory requirements for reference were met.

The Court appointed Ms. Mohini Bhat, Advocate, as the Sole Arbitrator.

The arbitrator was directed to provide disclosures under Section 12(2) and fees were set in accordance with the Fourth Schedule of the Act.

All rights and contentions on merits were kept open for the arbitrator’s adjudication and the petition was disposed of accordingly.