Section 11 judicial scrutiny is limited to the prima facie existence of the arbitration agreement.

The Petitioner, Hero Fincorp 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 September 22, 2023, which contained an arbitration clause (Clause 20.1) designating New Delhi as the seat of arbitration.

The Petitioner invoked arbitration via a legal notice dated June 3, 2025.

The total valuation of the dispute is approximately Rs. 8.5 crores.

During the proceedings, both parties expressed mutual consent (ad idem) to refer the matter to an arbitrator under the aegis of the Delhi International Arbitration Centre (DIAC).

1. What is the permissible scope and standard of judicial scrutiny by a referral court under Section 11(6) of the Arbitration and Conciliation Act, 1996?

2. Whether the court should adjudicate on contested factual issues or "accord and satisfaction" at the stage of appointing an arbitrator.

The court primarily applied Section 11 of the Arbitration and Conciliation Act, 1996, specifically Section 11(6-A), which limits judicial examination to the existence of an arbitration agreement.

It relied on the Supreme Court’s authoritative pronouncements in SBI General Insurance Co. Ltd. v. Krish Spinning and the seven-judge bench decision in Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re.

These precedents established that the court’s role is confined to a prima facie scrutiny of the agreement’s existence and that the principle of "competence-competence" mandates that the Arbitral Tribunal, not the court, should rule on its own jurisdiction and the merits of the dispute.

The court reasoned that its role under Section 11 is "facilitative and procedural," intended to give effect to the parties' mutual intention to arbitrate when the agreed-upon appointment mechanism fails.

Citing Krish Spinning, the court emphasized that tests like "eye of the needle" or "ex facie meritless" are no longer in conformity with modern arbitration principles, which prioritize arbitral autonomy and minimal judicial interference.

The court noted that delving into complex issues like "accord and satisfaction" at this nascent stage would risk leaving claimants without a forum and would frustrate the legislative intent of a time-bound disposal of Section 11 applications.

Consequently, the court found that as long as an arbitration agreement exists prima facie, all other contentions must be left open for the Arbitral Tribunal to decide.

The court appointed Ms. Mohini Bhat, Advocate, as the sole arbitrator to adjudicate the disputes under the aegis of the DIAC.

The arbitrator was directed to provide disclosure under Section 12(2) within one week.

all rights and contentions regarding the merits of the claims were kept open for the tribunal’s determination.