Referral Court Scrutiny Under Section 11 Confined to Prima Facie Existence of Arbitration Agreement

The Petitioner, Moneywise Financial Services Pvt. Ltd., filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator.

The dispute arose from a Loan Agreement dated 31.03.2024, which contained an arbitration clause (Clause 8.2) providing for the settlement of disputes in Delhi.

The Petitioner invoked the arbitration clause via a Section 21 notice dated 07.06.2025.

Despite being served through email and courier as evidenced by an affidavit of service dated 10.03.2026, the Respondents failed to appear before the court.

1. Whether the Court should appoint a Sole Arbitrator given the existence of an arbitration agreement and the failure of the parties to reach a mutual consent?

2. What is the scope and standard of judicial scrutiny under Section 11(6) of the Arbitration and Conciliation Act, 1996, following recent Supreme Court precedents?

Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the judicial appointment of arbitrators.

Principles established by the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning (2024), which affirmed the seven-judge bench ruling in In re: Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899.

Judicial interference under Section 11 is confined strictly to a prima facie examination of the existence of an arbitration agreement and its formal validity, such as the requirement of being in writing, while leaving contested factual or legal issues—including "accord and satisfaction"—to the Arbitral Tribunal under the principle of competence-competence.

The Court observed that under the current legal framework, its role is facilitative and procedural rather than adjudicatory.

It found that the Loan Agreement contained a valid arbitration clause and that the Petitioner had satisfied the statutory requirement of serving a Section 21 notice.

Applying the "minimal judicial interference" standard from Krish Spinning, the Court noted that it must avoid a "laborious enquiry" into the merits of the dispute or issues of frivolity, as such matters are within the exclusive domain of the Arbitral Tribunal.

Since the Petitioner proved service upon the Respondents and the Respondents failed to appear or contest the existence of the agreement, the Court determined there was no impediment to appointing an arbitrator.

The Court allowed the petition and appointed Dr. M.P. Singh, Advocate, as the Sole Arbitrator to adjudicate the disputes valued at approximately Rs. 37 Lakhs.

The arbitrator was directed to provide disclosures under Section 12(2), and the parties were ordered to share costs and fees equally in accordance with the Fourth Schedule.