Referral Court’s jurisdiction under Section 11 is confined to prima facie examination of arbitration agreement’s existence.

The Petitioner, Indiabulls Housing Finance Ltd., filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator

The disputes arose from a Loan Agreement dated May 8, 2018, which contained an arbitration clause (Article 12) stipulating that disputes would be referred to a sole arbitrator appointed solely by the Petitioner with seat in New Delhi

The Petitioner invoked arbitration via a Section 21 notice on April 30, 2024

Despite appearing once on April 15, 2025, the Respondents failed to file a reply or appear in subsequent hearings, leading the court to proceed in their absence

1. Whether the court should exercise its jurisdiction under Section 11(6) to appoint an arbitrator given the existence of a valid arbitration agreement and the Respondents’ failure to participate

2. What is the appropriate scope of judicial scrutiny at the stage of a Section 11 application in light of recent Supreme Court precedents

Section 11 of the Arbitration and Conciliation Act, 1996, which governs the appointment of arbitrators

SBI General Insurance Co. Ltd. v. Krish Spinning (2024), which followed the seven-judge bench decision in Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re; establishing that judicial intervention under Section 11 is confined strictly to a prima facie examination of the existence of an arbitration agreement, leaving questions of "accord and satisfaction" or "ex facie frivolity" to the Arbitral Tribunal under the principle of competence-competence

The Court observed that under the current legal framework, its role is facilitative and limited to ensuring the arbitration mechanism is triggered

Applying the principles from Krish Spinning, the Court refused to embark on a laborious enquiry into the merits or contentious factual issues, noting that such matters are reserved for the Arbitral Tribunal under Section 16

In the present case, the Court found that: (i) an arbitration agreement existed per Article 12 of the Loan Documents; (ii) the Petitioner had satisfied the mandatory requirement of issuing a Section 21 notice; and (iii) the Respondents, despite being served and granted multiple opportunities, failed to contest the existence of the agreement or the dispute

Consequently, the Court determined there was no legal impediment to appointing an arbitrator to resolve the underlying claims valued at approximately Rs. 70 lakhs

The statutory requirements for invocation were met and that all rights and contentions on merits remain open for the Arbitrator’s determination

The Court directed the Arbitrator to provide disclosures under Section 12(2) and ruled that fees shall be governed by the Fourth Schedule of the Act, shared equally by the parties; Case disposed