The High Court of Delhi has appointed a Sole Arbitrator to resolve disputes arising from an Agreement to Sell, reinforcing the settled legal position that judicial review under Section 11 of the Arbitration and Conciliation Act, 1996 (“Act”) must strictly be confined to the prima facie examination of the existence of an arbitration agreement.
Justice Harish Vaidyanathan Shankar referred all pending factual and legal objections, including pleas regarding the absence of a cause of action and claims being barred by limitation, to the arbitral tribunal. The court held that such contentious issues fall within the exclusive domain of the arbitrator.
Background of the Case
The petitioner, Sh. Rajani Kanta Jena, filed a petition under Section 11(6) of the Act seeking the appointment of a Sole Arbitrator. The petition was based on Clause 12 of an “Agreement of Sell” (Agreement to Sell) entered into by the parties on August 18, 2018.
The arbitration clause contained within the Agreement of Sell reads as follows:
“12. That in case of any dispute arises between the First party and the Second party pertaining to this Agreement or in respect of the aforesaid plot or in any manner directly or indirectly touching the same, the same will be referred to the sole Arbitrator whose decision shall be final and binding on all the parties and the provisions of the Arbitration Act shall apply in such circumstances.”
The statutory requirement of invoking arbitration under Section 21 of the Act was fulfilled via a Notice dated April 2, 2025. With disputes remaining unresolved, the petitioner approached the High Court. The financial valuation of the dispute is stated to be approximately Rs. 32 Lakhs.
Arguments of the Parties
During the proceedings, Mr. Krishna Kumar Mishra, Advocate, appeared on behalf of the petitioner, while Mr. B.K. Pandey and Ms. Pragati Kumari, Advocates, represented the respondent, Sh. Anirudha Jena.
The respondent’s counsel raised preliminary objections to referring the disputes to arbitration, arguing on two primary grounds:
- Lack of Cause of Action: The respondent contended that there are no outstanding amounts due by the respondent, and therefore, no cause of action exists.
- Limitation: The respondent submitted that the claims, as sought to be raised, are barred by limitation, and consequently, the relief of appointing an arbitrator should not be granted.
The Court’s Analysis and Legal Framework
Having heard the objections, Justice Harish Vaidyanathan Shankar observed that given the limited consideration that can be accorded at this stage, the disputes must be referred to arbitration. The Court noted:
“All objections and contentions of the parties, as permissible under law may be raised before the learned Tribunal.”
The Court emphasized that the legal position governing the scope and standard of judicial scrutiny under Section 11(6) of the Act is “no longer res integra.” It relied on the authoritative pronouncements of the Supreme Court of India.
Specifically, the Court cited the three-Judge Bench decision in SBI General Insurance Co. Ltd. v. Krish Spinning (2024) 12 SCC 1, which had comprehensively delineated the contours of judicial intervention under Section 11 by factoring in the seven-Judge Bench ruling in Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re (2024) 6 SCC 1.
Quoting from the landmark judgment in Krish Spinning, the Court highlighted the differences between the scope of powers under Section 8 and Section 11:
- “The standard of scrutiny provided under Section 8 is that of prima facie examination of the validity and existence of an arbitration agreement. Whereas, the standard of scrutiny under Section 11 is confined to the examination of the existence of the arbitration agreement.”
- “The use of the term “examination” under Section 11(6-A) as distinguished from the use of the term “rule” under Section 16 implies that the scope of enquiry under Section 11(6-A) is limited to a prima facie scrutiny of the existence of the arbitration agreement, and does not include a contested or laborious enquiry, which is left for the Arbitral Tribunal to “rule” under Section 16.”
The Supreme Court in Krish Spinning observed that this approach serves a twofold purpose:
“firstly, it allows the Referral Court to weed out non-existent arbitration agreements, and secondly, it protects the jurisdictional competence of the Arbitral Tribunal to rule on the issue of existence of the arbitration agreement in depth.”
Addressing the respondent’s defense concerning the absence of outstanding dues, the Court cited the Supreme Court’s ruling on “accord and satisfaction”:
“The question of ‘accord and satisfaction’, being a mixed question of law and fact, comes within the exclusive jurisdiction of the Arbitral Tribunal, if not otherwise agreed upon between the parties. Thus, the negative effect of competence-competence would require that the matter falling within the exclusive domain of the Arbitral Tribunal, should not be looked into by the Referral Court, even for a prima facie determination, before the Arbitral Tribunal first has had the opportunity of looking into it.”
The Supreme Court had also observed in Krish Spinning that tests like the “eye of the needle” and “ex facie meritless,” though attempting to minimize the extent of judicial interference, actually require the Referral Court to examine contested facts and appreciate prima facie evidence, and thus “are not in conformity with the principles of modern arbitration which place arbitral autonomy and judicial non-interference on the highest pedestal.”
Furthermore, the Court noted that issues of “ex facie frivolity and dishonesty in litigation” are aspects that the Arbitral Tribunal is equally, if not more, capable of deciding:
“We say so because the Arbitral Tribunal has the benefit of going through all the relevant evidence and pleadings in much more detail than the Referral Court. If the Referral Court is able to see the frivolity in the litigation on the basis of bare minimum pleadings, then it would be incorrect to doubt that the Arbitral Tribunal would not be able to arrive at the same inference, most likely in the first few hearings itself, with the benefit of extensive pleadings and evidentiary material.”
Synthesizing these principles, the High Court observed:
“The decision in Krish Spinning (supra) thus unequivocally reiterates that the Referral Court, while exercising jurisdiction under Section 11 of the Act, is required to confine itself to a prima facie examination of the existence of a valid Arbitration Agreement and nothing beyond.”
The Court characterized its role under Section 11 as purely “facilitative and procedural, namely, to give effect to the parties’ agreed mechanism of dispute resolution when it has failed, without embarking upon an adjudication of contentious factual or legal issues, which are reserved for the Arbitral Tribunal.”
The Decision
Consequent to its analysis, the High Court allowed the petition and made the following directions:
- Appointment of Arbitrator: Ms. Monisha Handa, Advocate (Mobile No. 9899707345), was appointed as the Sole Arbitrator to adjudicate the disputes between the parties.
- Fees: The Arbitrator’s fee will be in accordance with the Fourth Schedule of the Act or as otherwise agreed to between the parties and the Arbitrator.
- Disclosure: The Arbitrator was requested to file the requisite disclosure under Section 12(2) of the Act within a week of entering the reference.
- Preservation of Rights: All rights and contentions of the parties in relation to the claims/counter-claims are kept open to be decided by the Arbitrator on their merits, in accordance with law.
- Neutrality on Merits: The Court clarified that nothing in the order shall be construed as an expression of opinion on the merits of the controversy between the parties.
The petition, along with any pending applications, was disposed of in these terms.
Case Details
- Case Title: Sh Rajani Kanta Jena v. Sh Anirudha Jena
- Case No.: ARB.P. 813/2026
- Bench: Justice Harish Vaidyanathan Shankar
- Date: May 15, 2026
