[Cites 13, Cited by 0]

Punjab-Haryana High Court

M/S Vca Estate Private Limited Through ... vs Pawan Kumar on 29 April, 2026

Author: Jasgurpreet Singh Puri

Bench: Jasgurpreet Singh Puri

                 ARB-537-2025 (O&M)                1


                               IN THE HIGH COURT OF PUNJAB & HARYANA
                                            AT CHANDIGARH
                 228
                                                        ARB-537-2025 (O&M)
                                                       Date of Decision:29.04.2026

                 M/s VCA Estate Private Limited through its authorized representative
                 Nakul Lohia

                                                                        .......Petitioner
                                              Versus
                  Pawan Kumar and others
                                                                    .......Respondents

                 CORAM: HON'BLE MR. JUSTICE JASGURPREET SINGH PURI

                 Present:-     Mr. Ambanshu Sahni, Advocate for the petitioner.

                               Mr. Rohit Kumar, Advocate for the respondents.

                                   *****

                 JASGURPREET SINGH PURI J.(Oral)

1. The present is a petition filed under Section 11 of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act'),

seeking appointment of a sole arbitrator in the present case.

2. Learned counsel for the petitioner submitted that there exists

an agreement to sell between the parties vide Annexure P-1 pertaining to

sale of certain land belonging to the respondents, regarding which some

earnest money has also been paid to the respondents and the aforesaid

agreement contains an arbitration clause, i.e., Clause No. 23, which

provides that in the event of any disputes or differences arising out of the

agreement, the same shall be referred to arbitration and the arbitration

proceedings shall be conducted by a sole arbitrator mutually appointed by

the parties. He further submitted that, since a dispute arose between the

parties, the petitioner served a notice dated 08.04.2025 upon the

respondents vide Annexure P-4 for invoking the arbitration clause and also

proposed the names of arbitrators, but no reply was received from the

respondents. Therefore, he submitted that this Hon'ble Court may appoint a

sole arbitrator for adjudicating the dispute. Learned counsel also contended

that in a similar matter pertaining to the present petitioner and some other

respondents, this Court had appointed an arbitrator in ARB No.536-2025

on the basis of the same arbitration clause and the present case is similar to

the aforesaid case.

3. Reply filed on behalf of respondents is taken on record.

Learned counsel appearing for the respondents submitted that there is no

dispute with regard to the existence of the aforesaid agreement to sell

containing the aforesaid arbitration clause and there is also no dispute with

regard to invocation of the said arbitration clause by issuance of notice vide

Annexure P-4. He, however, submitted that the objection of the respondents

is that the signatures on the agreement were obtained from them under

undue influence and coercion and therefore, the agreement itself was

unenforceable. He further submitted that the second objection of the

respondents is that although there exists an arbitration clause at Clause

No.23, as referred to by learned counsel for the petitioner yet in addition

thereto, there exists another clause, being Clause No.20, which provides

that in case the vendors fail to perform their part of the contract, in that

event the vendee shall be entitled to get the agreement enforced against the

vendors by filing a suit in the Civil Court and, therefore, no arbitrator can

be appointed by this Court.

4. I have heard learned counsels for the parties.

5. So far as the agreement between the parties is concerned, the

same has not been disputed by learned counsel for the respondents. The

invocation of the arbitration clause by issuance of notice (Annexure P-4) is

also not in dispute. However, two-fold objections have been raised by

learned counsel for the respondents, which are required to be considered by

this Court.

6. The first objection raised by learned counsel for the

respondents is that the signatures on the original agreement were obtained

by undue influence and coercion. The aforesaid objection is unsustainable

and liable to be rejected in view of the fact that the issue as to whether the

signatures of the respondents on the agreement were obtained by undue

influence and coercion is not within the scope of this Court at the stage of

reference and the same can always be raised by the respondents at an

appropriate stage before the learned Arbitrator.

7. So far as the second objection raised by learned counsel for the

respondents is concerned, both the provisions contained in the agreement,

i.e. Clauses No.20 and 23, are required to be considered and are reproduced

as under:-

"20. That in case the VENDORS fails to perform

their part of the contract, in that event the VENDEE shall be

entitled to get this agreement enforced against the VENDORS

through specific performance through Civil Court as

contemplated under this agreement, Yamuna Nagar

Jurisdiction. All costs and expenses incurred by the VENDEE

in instituting and prosecuting litigation shall be borne by the

VENDORS.

23. That in the event of any disputes or

differences arising out of this agreement between the Parties

to this Agreement, the same shall be attempted to be resolved

through good faith consultation mutually within a period of 15

(fifteen) days from the date of dispute, failing which either

Party shall be entitled to refer such a dispute or differences to

arbitration. The arbitration proceedings shall be conducted

by a sole arbitrator as mutually appointed by the Parties and

the arbitration proceedings shall be conducted in accordance

with the provision of the Arbitration and Conciliation Act,

1996 and amendments made therein from time to time. The

place of arbitration shall be at Yamuna Nagar and the

language for arbitration shall be in English. The courts at

Yamuna Nagar shall have supervisory jurisdiction over the

said arbitration proceedings."

8. The aforesaid agreement has not been disputed by learned

counsel for the respondents except for the fact that the signatures of the

respondents were obtained by way of undue influence and coercion. In so

far as the second objection raised by learned counsel for the respondents

regarding the existence of another clause providing for filing of a suit for

specific performance is concerned, the same is also not tenable in view of

the settled position of law that at the stage of reference under Section 11 of

the Act, the referral Court is only required to examine the prima facie

existence of an arbitration clause and its invocation thereof by issuance of

notice. The Court at the reference stage under Section 11 of the Act is not

required to conduct a mini trial and has only to see the existence of the

aforesaid two conditions-nothing more, nothing less. The Hon'ble Supreme

Court in "SBI General Insurance Company Limited Vs. Krish Spinning",

2024 SCC Online SC 1754 and also another judgment of Hon'ble Supreme

Court in "Interplay between Arbitration Agreements under Arbitration

and Conciliation Act, 1996 and Stamp Act, 1899, In Re" (2024) 6 SCC 1

and therefore, the law is no longer res integra. The relevant portion of the

aforesaid judgment of Hon'ble Supreme Court passed in SBI General

Insurance Company Limited's case (Supra) is reproduced as under:-

"110. The scope of examination under Section 11(6-A) is

confined to the existence of an arbitration agreement on the

basis of Section 7. The examination of validity of the

arbitration agreement is also limited to the requirement of

formal validity such as the requirement that the agreement

should be in writing.

111. 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 prima facie view on existence of

the arbitration agreement taken by the referral court does not

bind either the arbitral tribunal or the court enforcing the

arbitral award.

112. The aforesaid approach serves a two-fold purpose -

firstly, it allows the referral court to weed out nonexistent

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.

113. Referring to the Statement of Objects and Reasons of the

Arbitration and Conciliation (Amendment) Act, 2015, it was

observed in In Re: Interplay (supra) that the High Court and

the Supreme Court at the stage of appointment of arbitrator

shall examine the existence of a prima facie arbitration

agreement and not any other issues. The relevant observations

are extracted hereinbelow:

"209. The above extract indicates that the Supreme

Court or High Court at the stage of the appointment of

an arbitrator shall "examine the existence of a prima

facie arbitration agreement and not other issues". These

other issues not only pertain to the validity of the

arbitration agreement, but also include any other issues

which are a consequence of unnecessary judicial

interference in the arbitration proceedings. Accordingly,

the "other issues" also include examination and

impounding of an unstamped instrument by the referral

court at the Section 8 or Section 11 stage. The process

of examination, impounding, and dealing with an

unstamped instrument under the Stamp Act is not a

timebound process, and therefore does not align with

the stated goal of the Arbitration Act to ensure

expeditious and time-bound appointment of arbitrators.

[...]

(Emphasis supplied)

114. In view of the observations made by this Court in In Re:

Interplay (supra), it is clear that the scope of enquiry at the

stage of appointment of arbitrator is limited to the scrutiny of

prima facie existence of the arbitration agreement, and

nothing else. For this reason, we find it difficult to hold that

the observations made in Vidya Drolia (supra) and adopted in

NTPC v. SPML (supra) that the jurisdiction of the referral

court when dealing with the issue of "accord and satisfaction"

under Section 11 extends to weeding out ex-facie non-

arbitrable and frivolous disputes would continue to apply

despite the subsequent decision in In Re: Interplay (supra).

115. The dispute pertaining to the "accord and satisfaction"

of claims is not one which attacks or questions the existence of

the arbitration agreement in any way. As held by us in the

preceding parts of this judgment, the arbitration agreement,

being separate and independent from the underlying

substantive contract in which it is contained, continues to

remain in existence even after the original contract stands

discharged by "accord and satisfaction"

116. 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."

9. The relevant paragraphs of the aforesaid judgment passed in

Interplay between Arbitration Agreements under Arbitration and

Conciliation Act, 1996 and Stamp Act, 1899, In Re Case (Supra) are also

reproduced as under:-

"120. In view of the above discussion, we formulate our

conclusions on this aspect. First, the separability presumption

contained in Section 16 is applicable not only for the purpose

of determining the jurisdiction of the Arbitral Tribunal. It

encapsulates the general rule on the substantive independence

of an arbitration agreement. Second, parties to an arbitration

agreement mutually intend to confer jurisdiction on the

arbitral tribunal to determine questions as to jurisdiction as

well as substantive contractual disputes between them. The

separability presumption gives effect to this by ensuring the

validity of an arbitration agreement contained in an

underlying contract, notwithstanding the invalidity, illegality,

or termination of such contract. Third, when the parties

append their signatures to a contract containing an

arbitration agreement, they are regarded in effect as

independently appending their signatures to the arbitration

agreement. The reason is that the parties intend to treat an

arbitration agreement contained in an underlying contract as

distinct from the other terms of the contract; and Fourth, the

validity of an arbitration agreement, in the face of the

invalidity of the underlying contract, allows the Arbitral

Tribunal to assume jurisdiction and decide on its own

jurisdiction by determining the existence and validity of the

arbitration agreement. In the process, the separability

presumption gives effect to the doctrine of competence-

competence.

xx xx xx

165. The legislature confined the scope of reference under

Section 11(6-A) to the examination of the existence of an

arbitration agreement. The use of the term "examination" in

itself connotes that the scope of the power is limited to a prima

facie determination. Since the Arbitration Act is a

self-contained code, the requirement of "existence" of an

arbitration agreement draws effect from section 7 of the

Arbitration Act. In Duro Felguera (supra), this Court held that

the referral courts only need to consider one aspect to

determine the existence of an arbitration agreement - whether

the underlying contract contains an arbitration agreement

which provides for arbitration pertaining to the disputes which

have arisen between the parties to the agreement. Therefore,

the scope of examination under Section 11(6-A) should be

confined to the existence of an arbitration agreement on the

basis of Section 7. Similarly, the validity of an arbitration

agreement, in view of Section 7, should be restricted to the

requirement of formal validity such as the requirement that the

agreement be in writing. This interpretation also gives true

effect to the doctrine of competence-competence by leaving the

issue of substantive existence and validity of an arbitration

agreement to be decided by arbitral tribunal under Section 16.

We accordingly clarify the position of law laid down in Vidya

Drolia (supra) in the context of Section 8 and section 11of the

Arbitration Act.

166. The burden of proving the existence of arbitration

agreement generally lies on the party seeking to rely on such

agreement. In jurisdictions such as India, which accept the

doctrine of competence-competence, only prima facie proof of

the existence of an arbitration agreement must be adduced

before the referral court. The referral court is not the

appropriate forum to conduct a minitrial by allowing the

parties to adduce the evidence in regard to the existence or

validity of an arbitration agreement. The determination of the

existence and validity of an arbitration agreement on the basis

of evidence ought to be left to the arbitral tribunal. This

position of law can also be gauged from the plain language of

the statute."