Section 11 courts need only prima facie satisfaction of a valid arbitration agreement to appoint an arbitrator.

Tata Capital Limited filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator in disputes arising under a Channel Finance Agreement.

The Agreement contained an arbitration clause providing for reference of disputes to a sole arbitrator and appointment by the competent court if the parties failed to mutually agree on an arbitrator.

Notice was served on Respondent No. 1 through the address reflected in the tracking details, while Respondent No. 2, the personal guarantor of Respondent No. 1, was served through WhatsApp and shared the same address and telephone number.

Despite service and opportunity, the respondents neither appeared nor filed a reply.

Whether the respondents were duly served and, having failed to appear or file a reply, the Court could proceed with the Section 11(6) petition in their absence.

Whether a valid and binding arbitration agreement existed between the parties so as to justify appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Whether the Court should appoint a sole arbitrator to adjudicate the disputes arising under the Channel Finance Agreement.

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, under which the Court may appoint an arbitrator where the parties fail to follow the agreed appointment procedure.

The Court reiterated that, at the Section 11 stage, judicial enquiry is confined to examining the prima facie existence of an arbitration agreement, relying on SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754.

Clause 17 of the Channel Finance Agreement required disputes between the obligors and the lender to be referred to a sole arbitrator and authorised appointment by the competent court if mutual agreement was not reached within the stipulated period.

The appointed arbitrator was required to furnish disclosures under Section 12(2) of the Act.

The Court found that the respondents had been duly served: Respondent No. 1 was served at an address established through tracking details, and Respondent No. 2 was also deemed served because he was the personal guarantor, shared the same address and telephone number, and had received service through WhatsApp.

Their failure to appear or file a reply, despite sufficient service and opportunity, permitted the Court to proceed ex parte with consideration of the appointment request.

On examining Clause 17, the Court found a prima facie valid and binding arbitration agreement covering disputes arising from the Facility and related documents.

Since the contractual mechanism for mutual appointment had not resulted in appointment of an arbitrator, the Court found no impediment to exercising jurisdiction under Section 11(6).

He was directed to enter upon the reference within two weeks and furnish the disclosures required under Section 12(2) within two weeks of entering reference.

The arbitration was directed to be conducted under the rules and aegis of the Delhi International Arbitration Centre, with fees payable according to the DIAC Schedule of Fees.

The respondents remained free to raise all pleas, including objections concerning arbitrability and jurisdiction, before the arbitrator.

The Court clarified that its observations were confined to the Section 11 proceedings and would not influence adjudication on the merits.

The petition was disposed of accordingly.