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

The petitioner filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking appointment of a sole arbitrator to adjudicate disputes arising from the Loan Agreement dated 29 February 2016.

The Loan Agreement contained an arbitration clause providing for reference of disputes to a sole arbitrator and stipulating that the arbitration would be conducted under the Act.

Service upon the respondents was treated as sufficient, and a proxy counsel had appeared on their behalf on an earlier date.

The respondents thereafter repeatedly failed to appear or participate in the proceedings.

The petitioner stated that approximately Rs. 59,72,3709/- was claimed under the transaction.

Whether a valid arbitration agreement prima facie existed between the parties so as to attract the jurisdiction of the Court under Section 11(6) of the Act.

Whether, in view of the respondents’ failure to participate in the proceedings, a sole arbitrator ought to be appointed to adjudicate the disputes arising from the Loan Agreement.

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, under which the Court may appoint an arbitrator where the agreed appointment procedure has failed or requires judicial intervention.

The Court reiterated that, at the Section 11 stage, the enquiry is confined to examining 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 parties’ contractual arbitration clause, which provided for reference to a sole arbitrator, application of the Act, and arbitration at the seat specified in the Schedule.

The Loan Agreement expressly contained an arbitration clause covering disputes arising from the agreement and providing for appointment of a sole arbitrator.

Since the existence of that clause was undisputed, the Court found a prima facie arbitration agreement between the parties, satisfying the limited jurisdictional enquiry under Section 11(6).

The respondents had been sufficiently served but repeatedly remained absent and did not contest the petition or the arbitration agreement.

Consequently, there was no impediment to referring the disputes to arbitration and appointing a sole arbitrator.

The arbitrator was directed to enter upon the reference within three weeks and furnish the requisite disclosures under Section 12(2) of the Act within three 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 left 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 affect the arbitrator’s independent determination of the claims and counterclaims on merits.

The petition was accordingly disposed of.