Referral Court's scope under Section 11 is limited to prima facie examination of arbitration agreement's existence.

The Petitioner, M/S Shiv Radio Service LLP, filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator based on Clause 22 of a Distributorship Agreement dated 12.04.2018.

The Petitioner invoked the arbitration clause via a statutory notice under Section 21 of the Act on 17.11.2024.

The Respondents contested the petition primarily on the grounds that the claims were ex facie barred by limitation, though they expressed willingness to refer the matter to arbitration while reserving the right to raise legal objections before the tribunal.

1. Whether the Court, while exercising jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, should adjudicate on the issue of limitation or confine itself to the examination of the existence of the arbitration agreement.

2. Whether a Sole Arbitrator should be appointed to resolve the disputes between the parties.

The Court applied Section 11(6) and 11(6-A) of the Arbitration and Conciliation Act, 1996, which limits judicial intervention to the examination of the existence of an arbitration agreement.

It heavily relied on the precedent set by the three-judge bench of the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning (2024), which derived principles from the seven-judge bench in Interplay Between Arbitration Agreements... Stamp Act, 1899, In re.

These precedents establish that the "Referral Court" must follow a "minimal judicial interference" approach, leaving issues of "accord and satisfaction," "limitation," or "ex facie meritless" claims to the Arbitral Tribunal under the principle of competence-competence.

The Court reasoned that the standard of scrutiny under Section 11 is strictly confined to the prima facie existence of the arbitration agreement and does not permit a "contested or laborious enquiry".

Justice Shankar observed that tests previously used to weed out "frivolous" or "meritless" disputes—such as the "eye of the needle" test—are no longer in conformity with modern arbitration principles that prioritize arbitral autonomy.

The Court emphasized that the Arbitral Tribunal is better equipped to appreciate evidence regarding limitation and "accord and satisfaction" after full pleadings are filed.

Since a valid agreement (Clause 22) and the Section 21 notice were established, the Court found the statutory requirements for referral were satisfied.

The Court held that all objections, including those related to limitation and arbitrability, are kept open for adjudication by the Arbitrator.

The Arbitrator was directed to file a disclosure under Section 12(2) and was entitled to fees as per the Fourth Schedule of the Act.

The petition was disposed of with a clarification that the Court expressed no opinion on the merits of the underlying controversy.