MONEYWISE FINANCIAL SERVICES PVT LTD v. RUDRA CREATION

CORAM: HON'BLE MR. JUSTICE HARISH VAIDYANATHAN SHANKAR % JUDGEMENT (ORAL)

#1. The present Petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 [“Act”], seeking appointment of a Sole Arbitrator to adjudicate upon the disputes inter se the parties, arising out of the Loan Agreement dated 16.07.2024 [“Agreement”] executed between the parties.

#2. The Agreement contains a dispute resolution mechanism, which contemplates adjudication of disputes, arising between the parties, by way of Arbitration. The relevant stipulation is contained as Clause 8.2 of the Agreement [“Arbitration clause”]. The same reads as follows:- “8.2 Arbitration: Any disputes, differences, controversies and questions directly or indirectly arising at any time hereafter between the Parties or their respective representatives or assigns, arising out of or in connection with this Agreement (or the subject matter of this Agreement), including, without ARB.P. 281/2026 limitation, any question regarding its existence, validity, interpretation, construction, performance, enforcement, rights and liabilities of the Parties, or termination ("Dispute") thereof shall be finally settled by arbitration in accordance with the Arbitration and Conciliation Act, 1996, as amended ("Arbitration Act"). The Dispute shall be referred to a sole arbitrator duly appointed by the Parties with mutual consent failing which the sole arbitrator shall be appointed in accordance with the Arbitration Act. The language of the arbitration shall be English. The seat of the arbitration shall be at Delhi and the language of proceedings shall be English. The award rendered shall be in writing and shall set out the reasons for the arbitrator's decision. The costs and expenses of the arbitration shall be borne equally by each Party, with each Party paying for its own fees and costs including attorney fees, except as may be determined by the arbitration tribunal. Any award by the arbitration tribunal shall be final and binding.”

#3. The material on record also reflects the statutory requirement of addressing a Legal Notice under Section 21 of the Act, invoking the aforestated Arbitration clause, stands duly complied with by the Petitioner vide Legal Notice dated 07.06.2025 [“Section 21 Notice”].

#4. This Court takes note of the fact that the Petitioner has placed on record, the Affidavit of service dated 10.03.2026 [“Affidavit”] duly declaring that service has been effectuated upon all Respondents through e-mail and Respondent No. 3 has also been served through courier. The relevant documents, proving the effectuation of service upon the Respondents, is annexed with the said Affidavit.

#5. Despite due service upon the Respondents, none has appeared on their behalf, either on the previous date of hearing i.e., 13.03.2026 or today.

#6. At this juncture, it is apposite to note that the legal position governing the scope and standard of judicial scrutiny under Section 11(6) of the Act is no longer res integra. A three-Judge Bench of the ARB.P. 281/2026 Hon’ble Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning1, after into consideration the authoritative taking pronouncement of the seven-Judge Bench in Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re2, comprehensively delineated the contours of judicial intervention at the stage of Section 11 of the Act. The excerpt of Krish Spg (supra) reads as under:- “(c) Judicial interference under the 1996 Act 110. The parties have been conferred with the power to decide and agree on the procedure to be adopted for appointing arbitrators. In cases where the agreed upon procedure fails, the courts have been vested with the power to appoint arbitrators upon the request of a party, to resolve the deadlock between the parties in appointing the arbitrators. 111. Section 11 of the 1996 Act is provided to give effect to the mutual intention of the parties to settle their disputes by arbitration in situations where the parties fail to appoint an arbitrator(s). The parameters of judicial review laid down for Section 8 differ from those prescribed for Section 11. The view taken in SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618 and affirmed in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 that Sections 8 and 11, respectively, of the 1996 Act are complementary in nature was legislatively overruled by the introduction of Section 11(6-A) in 2015. Thus, although both these provisions intend to compel parties to abide by their mutual intention to arbitrate, yet the scope of powers conferred upon the courts under both the sections are different. 112. The difference between Sections 8 and 11, respectively, of the 1996 Act is also evident from the scope of these provisions. Some of these differences are: 112.1. While Section 8 empowers any “judicial authority” to refer the parties to arbitration, under Section 11, the power to refer has been exclusively conferred upon the High Court and the Supreme Court. 112.2. Under Section 37, an appeal lies against the refusal of the judicial authority to refer the parties to arbitration, whereas no such provision for appeal exists for a refusal under Section 11. 112.3. The standard of scrutiny provided under Section 8 is that of prima facie examination of the validity and existence of an