Section 11 enquiry is confined to prima facie existence of a valid arbitration agreement.

Aditya Birla Capital Limited sanctioned a loan facility of ₹5 crores to Respondent No. 1, with Respondents Nos. 2 and 3 as co-borrowers, under a Facility Agreement dated 30 March 2023.

The facility was secured by an equitable mortgage over property bearing No. 1138, Block J, Ansal’s Palam Vihar, Gurugram.

The respondents allegedly defaulted in repayment and demolished the mortgaged structure without the lender’s consent.

Despite a foreclosure arrangement and extension granted in proceedings before the Debt Recovery Tribunal, the outstanding dues remained unpaid.

The loan account was classified as a non-performing asset and was thereafter assigned to the petitioner under an Assignment Agreement dated 30 June 2025.

The petitioner invoked the arbitration clause contained in Clause 22 of the Facility Agreement and served a notice under Section 21 of the Arbitration and Conciliation Act, 1996, dated 24 January 2026.

It consequently filed the present petition under Section 11(6) of the Act seeking appointment of an arbitrator.

During the proceedings, the parties agreed to reference their disputes to arbitration.

1. Whether a valid arbitration agreement existed between the parties so as to attract the Court’s jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996.

2. Whether, in view of the existence of the arbitration agreement and the parties’ agreement to arbitrate, a sole arbitrator ought to be appointed by the Court.

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, under which the Court’s examination at the referral stage is confined to determining the prima facie existence of an arbitration agreement.

It relied on SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754, for this limited-scope principle.

The Court also gave effect to the arbitration agreement contained in Clause 22 of the Facility Agreement, which provided for arbitration of disputes arising out of or relating to the agreement.

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

The Court found that there was no dispute regarding the existence of a valid arbitration clause between the parties.

Since the threshold inquiry under Section 11 was limited to the prima facie existence of an arbitration agreement, and the parties were ad idem regarding reference of their disputes to arbitration, no impediment remained to the appointment of a sole arbitrator.

The Court therefore appointed Mr. Harish Pandey, Advocate, as the sole arbitrator.

It preserved the parties’ liberty to raise objections concerning arbitrability and jurisdiction before the arbitral tribunal, thereby leaving those issues for determination in accordance with law.

The arbitrator was directed to enter upon the reference within two weeks and furnish the requisite Section 12(2) disclosures within two weeks of entering the 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 parties were permitted to raise all pleas, including objections to arbitrability and jurisdiction, before the arbitrator.

The Court clarified that its observations were confined to the Section 11 proceedings and would not affect the arbitrator’s independent adjudication on merits.

Consequently, the previously fixed date of 31 August 2026 was cancelled.