Scope of Judicial Review Under Section 11 Limited to Prima Facie Scrutiny of Arbitration Agreement Existence

The Petitioner, a financial services company, filed this 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 29.02.2024, which contained an arbitration clause (Clause 8.2) designating Delhi as the seat

The Petitioner invoked arbitration 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 under Section 11(6) of the Act given the existence of an arbitration agreement and the failure of the parties to mutually appoint one

2. What is the permissible scope and standard of judicial scrutiny by a Referral Court at the Section 11 stage

The court primarily applied Section 11(6) and Section 11(6-A) of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators

It relied heavily on the precedent set by the Supreme Court in 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

These precedents establish that judicial intervention under Section 11 is confined strictly to a prima facie examination of the existence of the arbitration agreement, leaving all other issues—including "accord and satisfaction" or frivolousness—to the Arbitral Tribunal under the principle of competence-competence

The Court observed that its role is facilitative and procedural, intended to give effect to the parties' mutual intention to arbitrate when the appointment mechanism fails

Applying the "eye of the needle" standard from Krish Spinning, the Court limited its enquiry to the formal existence of the agreement in writing

The Court 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

Since the Respondents did not appear to contest the existence of the agreement, the Court determined there was no legal impediment to the appointment, noting that all substantive contentions on merits remain open for the Arbitrator to decide

The Court allowed the petition and appointed Mr. Pramod Saigal, Advocate, as the Sole Arbitrator to adjudicate the disputes valued at approximately Rs. 25 Lakhs

The Arbitrator was directed to provide disclosures under Section 12(2), and the parties were ordered to share fees and costs equally as per the Fourth Schedule of the Act