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

The Petitioner, Tata Capital Limited, 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 Term Loan Agreement dated 25.10.2024, which contained an arbitration clause (Clause 13) specifying a procedure for appointment

The Petitioner served a statutory notice under Section 21 of the Act on 13.09.2025

Despite being served through substituted means and granted additional time by the Court to appear, the Respondents failed to enter an appearance or file a reply

1. Whether a Sole Arbitrator should be appointed under Section 11(6) of the Act given the Respondents' failure to participate in the appointment process

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

The Court primarily applied Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the court's power to appoint arbitrators when the agreed procedure fails

It relied heavily on the Supreme Court’s decision in SBI General Insurance Co. Ltd. v. Krish Spinning, which integrated the seven-judge bench ruling 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 to a prima facie examination of the existence of the arbitration agreement and does not extend to issues of validity, arbitrability, or "accord and satisfaction," which are reserved for the Arbitral Tribunal under the principle of competence-competence

The Court observed that the Petitioner satisfied the statutory requirements, including the issuance of a Section 21 notice

Applying the "facilitative and procedural" standard from Krish Spinning, the Court noted that its role is limited to weeding out non-existent agreements rather than adjudicating contentious factual or legal disputes

Since an arbitration agreement existed in Clause 13 of the Term Loan Agreement and the Respondents failed to act after service of notice, the Court found no legal impediment to referring the matter to arbitration

The Court emphasized that even "ex facie meritless" claims should generally be left to the Arbitrator to ensure arbitral autonomy and minimum judicial interference

The Court held that all rights and contentions on merits remain open for the Arbitrator’s determination

The Arbitrator was directed to file a disclosure under Section 12(2) of the Act, with fees to be governed by the Fourth Schedule or as otherwise agreed

The petition was disposed of accordingly