Section 11 Scrutiny is Limited to Prima Facie Examination of the Existence of an Arbitration Agreement

The Petitioner, TFS Investment Pvt Ltd, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator to resolve disputes arising from a Lease Deed dated 28.12.2023, a Correction Deed dated 12.01.2024, and an Agreement dated 09.09.2024

Clause 27 of the Lease Deed contained an arbitration agreement requiring disputes—unresolved by mediation within 60 days—to be referred to a single arbitrator

The Petitioner invoked the arbitration clause via a Section 21 notice dated 28.05.2025

Despite being served through various modes including email and WhatsApp, the Respondent failed to appear before the Court

The dispute value is approximately Rs. 8.3 Crores

1. Whether the Court should appoint a Sole Arbitrator under Section 11 of the Act given the existence of a valid arbitration agreement and the Respondent's failure to participate in the appointment process

2. What is the appropriate scope of judicial scrutiny by a Referral Court at the Section 11 stage

The Court applied Section 11(6) and Section 21 of the Arbitration and Conciliation Act, 1996

It relied heavily on the precedent set by the three-judge bench in SBI General Insurance Co. Ltd. v. Krish Spg., which incorporated the seven-judge bench ruling in Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re

Judicial intervention under Section 11 is confined strictly to a prima facie examination of the existence of the arbitration agreement, leaving issues of "accord and satisfaction," validity, or frivolousness to the Arbitral Tribunal under the principle of competence-competence

The Court observed that the Petitioner successfully established the existence of a valid arbitration agreement through Clause 27 of the Lease Deed

Following the mandate in Krish Spg., the Court limited its enquiry to the "existence" of the agreement rather than the "validity" or the merits of the underlying claims, noting that the Referral Court's role is merely facilitative to resolve deadlocks in appointment

The Court found that the statutory requirement for invoking arbitration was met by the Section 21 notice

Since the Respondent remained unrepresented despite valid service, and the Court found no "eye of the needle" impediment to arbitration, it determined that the dispute must be referred to a neutral third party to uphold the principle of arbitral autonomy

The Court allowed the petition and appointed Hon’ble Mr. Justice C.T. Ravikumar, Former Judge of the Supreme Court, as the Sole Arbitrator. The arbitrator’s fee shall be governed by the Fourth Schedule of the Act