Scope of Section 11 Jurisdiction Is Confined to Prima Facie Examination of Arbitration Agreement’s Existence

The Petitioner, Bizloan Private Limited, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator

The dispute arose from a Facility Agreement dated 30.12.2023, which contained an arbitration clause (Clause 20) providing for seat and jurisdiction in Delhi

The Petitioner invoked arbitration via a Section 21 notice dated 03.12.2025

Despite being served notice by the Court, the Respondents failed to appear or file a reply

The dispute is valued at approximately Rs. 15 Lakhs

1. Whether a sole arbitrator should be appointed under Section 11 of the Act given the Respondents' failure to participate in the proceedings and the existence of a prima facie arbitration agreement

2. What is the permissible scope of judicial scrutiny by a Referral Court at the stage of Section 11(6) of the Act

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators

The Court relied heavily on the precedent set by the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning (2024), which interpreted the effect of the seven-judge bench decision in Interplay Between Arbitration Agreements under Arbitration Act, 1996 Stamp Act, 1899, In re

These precedents establish that the Referral Court’s mandate is strictly confined to a "prima facie" examination of the existence of an arbitration agreement under Section 7, leaving questions of "accord and satisfaction" or "ex facie meritless" claims to the Arbitral Tribunal under the principle of competence-competence

The Court observed that the statutory requirements for invoking arbitration, including the Section 21 notice, were satisfied

Following the "facilitative" role defined in Krish Spinning, the Court determined that its inquiry must be limited to the existence of the agreement and should not embark upon a laborious or contested inquiry into factual/legal merits

Since the Facility Agreement contained an express arbitration clause (Clause 20) and the Respondents chose not to contest the petition despite service, the Court found no legal impediment to referring the matter to arbitration

The Court emphasized that by appointing an arbitrator, it upholds the parties' original contractual intent while preserving the Tribunal’s right to rule on its own jurisdiction and the merits of the claims under Section 16

The Court held that all rights and contentions of the parties remain open for the arbitrator's decision and directed the arbitrator to file a disclosure under Section 12(2) within one week

The arbitrator's fee is to be governed by the Fourth Schedule of the Act

The petition was disposed of with a clarification that the order does not constitute an opinion on the merits of the case