Section 11 Judicial Scrutiny is Confined Solely to Prima Facie Examination of Arbitration Agreement Existence

The Petitioner, Bizloan Private 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 Facility Agreement dated 29.09.2023, which incorporated an arbitration clause (Clause 20) in its General Terms Conditions.

The Petitioner invoked arbitration via a statutory notice dated 12.01.2026 pursuant to Section 21 of the Act.

Despite being served notice by the Court and being granted an additional opportunity to represent their case on 21.04.2026, the Respondents failed to appear or file a reply.

The underlying value of the dispute is approximately Rs. 4.5 Lakhs.

Whether the Court should appoint an arbitrator under Section 11(6) of the Act given the non-appearance of the Respondents and the existence of a prima facie valid arbitration agreement.

Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators.

Precedent established by a three-judge bench of the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning (2024), which followed the seven-judge bench ruling in Interplay Between Arbitration Agreements under Arbitration Act, 1996 Stamp Act, 1899, In re.

Judicial interference under Section 11 is confined strictly to a prima facie examination of the existence of the arbitration agreement.

The Referral Court must not conduct a contested or laborious enquiry into issues such as "accord and satisfaction" or the merits of the dispute, as these are reserved for the Arbitral Tribunal under the principle of competence-competence.

The Court observed that its jurisdiction is "extremely circumscribed" and facilitative in nature.

Applying the Krish Spinning standard, the Court verified the existence of an arbitration clause (Clause 20) within the Facility Agreement and found that the Petitioner had complied with the procedural requirement of invoking arbitration under Section 21.

Since the Respondents failed to appear to contest the existence of the agreement despite service, the Court found no impediment to exercising its power.

The Court reasoned that any further delay in adjudication would be inappropriate and that all substantive contentions or defenses should be urged before the arbitrator, who is legally empowered to decide on jurisdictional and merit-based issues.

The Court held that a valid arbitration agreement existed prima facie and that the statutory requirements were met.

The Arbitrator was directed to file a disclosure under Section 12(2) within one week.

All rights and contentions regarding claims and counter-claims were kept open for the Arbitrator’s determination.

The petition was disposed of accordingly.