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

The petitioner, Tata Capital Limited, a financial services company, sanctioned a business loan of ₹20,30,289 to the respondent, proprietor of GRS Traders, under a Loan Agreement dated 26 February 2023.

The respondent allegedly defaulted in payment of EMIs from 5 January 2026. The petitioner issued a Loan Recall Notice dated 28 May 2026 demanding payment of ₹2,37,839.

Upon non-payment, the petitioner invoked the arbitration clause in the Loan Agreement by notice dated 3 July 2026.

The respondent was duly served but did not appear before the Court.

The petitioner consequently filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator.

Whether the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 was maintainable on the basis of the arbitration agreement contained in the Loan Agreement?

Whether the disputes between the parties should be referred to arbitration and a sole arbitrator appointed?

Whether the Delhi International Arbitration Centre should appoint the sole arbitrator instead of enforcing the contractual mechanism providing for appointment by the lender?

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

The governing principle is that the scope of examination at the Section 11 stage is confined to determining the prima facie existence of an arbitration agreement.

The Court also directed that the appointed arbitrator furnish the disclosures required under Section 12(2) of the Act and clarified that objections relating to arbitrability and jurisdiction may be raised before the arbitral tribunal.

The Loan Agreement contained a broad arbitration clause covering disputes concerning the facility, the validity and implementation of the loan documents, the parties’ rights and liabilities, and alleged breaches.

Since the existence of the arbitration agreement was not disputed and the respondent, despite sufficient service, did not appear to contest the petition, the Court found no impediment to referring the disputes to arbitration.

Rather than permitting the lender itself to appoint the arbitrator under the contractual clause, the Court directed the Delhi International Arbitration Centre to appoint a sole arbitrator, thereby ensuring appointment through an institutional mechanism.

The Court expressly left all questions concerning arbitrability, jurisdiction, and the merits of the parties’ claims open for determination by the arbitral tribunal.

The arbitrator was directed to enter upon the reference within three weeks of appointment, conduct the proceedings under the rules and aegis of the DIAC, and furnish the disclosures required under Section 12(2) of the Act.

The parties were permitted to raise all available pleas, including objections to arbitrability and jurisdiction, before the arbitrator.

The petition was disposed of accordingly, with the Court clarifying that its observations were confined to the Section 11 proceedings and would not affect adjudication on the merits.