Section 11 Referral Court cannot adjudicate "Accord and Satisfaction" or Novation of Contract as they are Arbitrable Issues

The Petitioner, a supply chain management company, entered into a Carriage of Goods Agreement with the Respondent on 01st June 2015

Disputes arose when the Respondent allegedly detained a shipment of ceiling fans worth Rs. 38,00,000/- from August to September 2016, leading to claims for damages and penalties under Clause 17 of the Agreement

The parties executed a Minutes of Meeting (MoM) on 06th September 2016 and a subsequent Settlement Agreement before the SHO Panchkula on 27th September 2016 to facilitate the release of goods

An initial arbitral award dated 08th December 2017 was set aside by the Patiala House Courts on 22nd July 2025 on the grounds of unilateral appointment of the arbitrator

The Petitioner subsequently issued a fresh notice invoking arbitration under Clause 28 of the Agreement, which the Respondent resisted, claiming that the MoM and Settlement Agreement constituted a "full and final settlement" that novated the original contract

1. Whether the disputes raised by the Petitioner stand resolved by way of "accord and satisfaction" through the MoM and Settlement Agreement

2. Whether the MoM and Settlement Agreement novated the original Agreement, thereby extinguishing the arbitration clause under Section 62 of the Indian Contract Act

3. Whether the Referral Court under Section 11(6) of the Arbitration Act can adjudicate the issues of settlement and novation

Section 11(6) of the Arbitration and Conciliation Act, 1996, which limits the judicial role to a prima facie examination of the existence of an arbitration agreement

Supreme Court’s ruling in SBI General Insurance Co. Ltd. v. Krish Spinning, which held that "accord and satisfaction" is a mixed question of fact and law falling under the exclusive jurisdiction of the Arbitral Tribunal

Principles from Sanjiv Prakash v. Seema Kukreja and Benetton India Pvt. Ltd. v. Gini and Jony Ltd., establishing that whether a contract is novated under Section 62 of the Indian Contract Act, 1872, requires a detailed factual inquiry that must be left to the arbitrator under the doctrine of kompetenz-kompetenz

The scope of inquiry at the Section 11 stage is restricted to the scrutiny of the existence of the arbitration agreement and does not include a "laborious enquiry" into contested facts

The Petitioner’s claims regarding illegal payments, damages for detention, and interest are at least "plainly arguable" and not ex-facie meritless

Determining whether the MoM superseded the original Agreement involves examining the unequivocal intention of the parties and the surrounding circumstances, which would amount to a "mini-trial" if conducted by the Referral Court

Since an arbitration agreement (Clause 28) prima facie exists in the base Agreement, the Court found it necessary to refer the parties to arbitration, leaving the defenses of "accord and satisfaction" and "novation" open for the arbitrator's adjudication

The Court appointed Ms. Alka Chawla as the Sole Arbitrator to adjudicate the disputes arising from the Agreement dated 01st June 2015; all rights and contentions, including objections to arbitrability and counter-claims, remain open for the arbitrator’s determination