Section 11 Scrutiny is Confined to Prima Facie Existence of Arbitration Agreement Without Adjudicating Factual Disputes

The Petitioner, Oriental Foundry Private Limited, sought the appointment of a Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

The dispute arose from Contract No. 2022/RS(I)/954/212/1945 dated 17.05.2025, which contained an arbitration clause (Clause 18) incorporating the Railway Board’s Arbitration Policy.

The Petitioner issued a Section 21 notice on 24.12.2025.

Simultaneously, the Petitioner filed a Section 9 petition seeking to restrain the Respondent from encashing a bank guarantee valued at approximately Nine Crores.

The Respondent expressed no objection to the reference of the dispute to arbitration.

Whether a Sole Arbitrator should be appointed under Section 11(6) of the Act given the existence of an arbitration agreement and the failure of the contractual appointment mechanism.

Whether the Section 9 petition for interim relief regarding the bank guarantee should be referred to the appointed Arbitrator as a Section 17 application.

The court primarily applied Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the court’s power to appoint arbitrators.

It relied heavily on the three-Judge Bench decision in *SBI General Insurance Co. Ltd. v. Krish Spinning* (2024), which clarified that judicial scrutiny under Section 11 is confined strictly to the *prima facie* examination of the existence of an arbitration agreement.

The court also referenced the seven-Judge Bench decision in *Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re*, emphasizing minimal judicial interference and the principle of competence-competence.

The Court observed that under the prevailing legal standard established in *Krish Spinning*, the Referral Court’s role is purely facilitative and procedural.

Since both parties agreed to the existence of the arbitration agreement and the Respondent consented to the reference, the Court found no impediment to appointing an independent arbitrator.

The Court noted that the valuation of the dispute (approx. Rs. 9 Crores) exceeded the threshold for a multi-member tribunal under the contract's standard Railway terms, but opted to appoint a retired judge as a Sole Arbitrator to resolve the deadlock.

Regarding the Section 9 petition, the Court determined that once an Arbitral Tribunal is seated, interim reliefs are best adjudicated by that Tribunal under Section 17 to uphold arbitral autonomy.

It directed the Arbitrator to provide disclosures under Section 12(2) and fixed fees as per the Fourth Schedule.

The Section 9 petition was disposed of with directions that it be treated as an application under Section 17 before the Arbitrator, with the existing interim protection (dated 11.12.2025) staying the bank guarantee encashment continued until the Arbitrator decides the Section 17 application.