S/O TRILOCHAN SINGH KAKKAR vs THROUGH ITS DESIGNATED PARTNERS

(Through: Ms. Rishika Nagpal, Adv for P-1. Mr.Suyash Pandey, Adv for P-2) versus

1. M/S LOVELY JEWELLERS LLP THROUGH ITS DESIGNATED PARTNERS H-7, KIRTI NAGAR, NEW DELHI-15

2. KUSH KAKKAR S/O TRILOCHAN SINGH KAKKAR R/O H-7, SECOND FLOOR, KIRTI NAGAR, NEW DELHI- 110015.

3. MAMTA KAKKAR W/O KUSH KAKKAR R/O H-7, SECOND FLOOR, KIRTI NAGAR, NEW DELHI- 110015. (Through: Ms. Tanishka, Adv.) .....RESPONDENTS CORAM: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV J U D G E M E N T PURUSHAINDRA KUMAR KAURAV, J. (ORAL) 1. The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act) by the petitioners, seeking appointment of an Arbitrator to adjudicate upon the disputes that have arisen between the parties. 2. The facts of the case indicate that there existed a limited liability partnership firm named Lovely Jewellers LLP, constituted vide the registered agreement dated 20.06.2017 and modified on 24.03.2018 (the Agreement), and petitioner no. 2, respondents no. 2 and 3, and one late Smt. Jeet Kakkar were the partners therein. 3. The aforesaid Smt. Jeet Kakkar is stated to have passed away intestate on 02.07.2023, upon which, her share in the said concern was to be divided amongst the petitioners and respondent no. 2, being her legal heirs, as per the terms of the Agreement. However, the respondents are stated not to have paid any heed to the demands of the petitioners. 4. The respondents were served with notice dated 17.01.2025, invoking arbitration under Section 21 of the Act, in response to which, the respondents proposed resolution of the dispute through mediation. However, the ensuing attempts at mediation are stated to have been unsuccessful.

5. Clause 43 of the Agreement which provides for resolution of disputes through arbitration is extracted below, for reference: “43. That all disputes between the partners or between the Partner and the Lovely Jewellers LLP arising out of the Limited Liability Partnership agreement which cannot bee resolved in terms of this agreement shall be referred for arbi trati on as per th e provi si ons of th ee Arbi trati on and Conci li ati on Act, 1996.‖

6. It is the case of the respondents that the petitioners have approached this Court with unclean hands with deliberate falsehoods, having wilfully suppressed and concealed a materially important fact/document i.e., a Will dated 12.05.2022 which has duly been registered. 7. Besides the aforesaid submissions, various other averments have been put forth by the respondents in their reply. 8. The facts of the case would, however, indicate that there is no denial of the execution of the Agreement, and the existence of an arbitration clause as has been extracted hereinabove. 9. Under these circumstances, the Court finds that the law with respect to the scope and standard of judicial scrutiny under Section 11(6) of the Act has been fairly well settled. This Court in Pradhaan Air Express Pvt Ltd v. Air Works India Engineering Pvt Ltd1, as well, has extensively dealt with the scope of interference at the stage of Section 11. Furthermore, this Court, recently, in Axis Finance Limited Vs. Mr. Agam Ishwar Trimbak2 has held that the scope of inquiry under Section 11 of the Act has been limited to a prima facie examination of the existence of an arbitration agreement. Further, it was also reiterated that the objections relating to the arbitrability of disputes are not to be entertained by a referral Court acting under Section 1 2025 SCC OnLine Del 3022 2 2025:DHC:7477 8 or 11 of the Act. The relevant extract of the aforesaid decision reads as under: -

19.In In Re: Interplay , the Supreme Court confined the analysis under Section 11 of the Act to the existence of an arbitration agreement and under Section 8 of the Act to the existence and validity of an arbitration agreement. Under both the provisions, examination was to be made at the touchstone of Section 7 of the Act. Further, issues pertaining to the arbitrability of the dispute fell outside the scope of both Section 11(6A) and Section 8 of the Act. The material part of the judgement of the Supreme Court in In Re: Interplay reads as under: it was held laid down different 164. The 2015 Amendment Act has parameters for judicial review under Section 8 and Section 11. Where Section 8 requires the referral Court to look into the prima facie existence of a valid arbitration agreement. Section 11 confi nes th e Court’s j uri sdi cti on to th e exami nati on of th e existence of an arbitration agreement. Although the object and purpose behind both Sections 8 and 11 is to compel parties to abide by their contractual understanding, the scope of power of the referral Courts under the said provisions is intended to be different. The same is also evident from the fact that Section 37 of the Arbitration Act allows an appeal from the order of an arbitral tribunal refusing to refer the parties to arbitration under Section 8, but not from Section 11. Thus, the 2015 Amendment Act has legislatively overruled the dictum of Patel Engineering (supra) that Section 8 and Section 11 are complementary in nature. Accordingly, the two provisions cannot be read as laying down a similar standard. 165. The legislature confined the scope of reference under Section 11(6A) to the examination of the existence of an arbitration agreement. The use of th e term ―exami nati on‖ i n i tself connotes th at th e scope of th e power is limited to a prima facie determination. Since the Arbitration Act is a self-contained code, the requirement of ement draws effect from ―exi stence‖ of an arbi trati on agre 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(6A) should be confined to the existence of an arbitration agreement on the basis of Section 7Similarly, 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 11 of 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 competencecompetence, 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. 167. Section 11(6A) uses th e expressi on ―exami nati on of th e exi stence of an arbi trati on agreement.‖ Th e purport of usi ng th e word ―exami nati on‖ connotes that the legislature intends that the referral Court has to inspect or scrutinize the dealings between the parties for the existence of an arbitration agreement. Moreover, the expression ―exami nati on‖ does not connote or i mply a labori ous or contested inquiry. On the other hand, Section 16 provides that the arbitral tri bunal can ―rule‖ on i ts j uri sdi cti on, i ncludi ng th e exi stence and vali di ty of an arbi trati on agreement. A ―ruli ng‖ connotes adjudication of disputes after admitting evidence from the parties. Therefore, it is evident that the referral Court is only required to examine the existence of arbitration agreements, whereas the arbitral tribunal ought to rule on its jurisdiction, including the issues pertaining to the existence and validity of an arbitration agreement. A similar view was adopted by this Court in Shin-Etsu Ch emi cal Co. Ltd. v. Ak sh Opti fi bre Ltd.‖ [Emph asi s supplied]

20. The effect of In Re: Interplay was further explained by a Three Judge Bench of the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning3 wherein the Court declared Vi dya Droli a and NTPC Ltd.’s findings qua scope of inquiry under Section 8 and Section 11 of the Act to no longer be compatible with modern principles of arbitration. The material portions of the judgement read as under: 3 2024 SCC OnLine SC 1754 made by this Court in In Re : ―114. In vi ew of th e observati ons 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 wi th th e i ssue of ―accord and sati sfacti on‖ under Secti on 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision i n In Re : Interplay (supra). … 118. Tests li needle‖ and ―ex extent of judicial interference, yet they require the referral Court to examine contested facts and appreciate prima facie evidence (however limited the scope of enquiry may be) and thus are not in conformity with the principles of modern arbitration which place arbitral autonomy and judicial non-interference on the highest pedestal.‖ [Emph asi s suppli ed] -faci e meri tless‖, alth ough try to mi ni mi se th e k e th e ―eye of th e

21. Similarly, in BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Ltd4 the Supreme Court succinctly explained the effect of In Re: Interplay on a he Act. The relevant part of Referral Court’s powers under Secti on 11 of t the judgement is as under:

15. … (a) Section 11 confines the Court's jurisdiction to the examination regarding the existence of an arbitration agreement. (b) Th e use of th e term ―exami nati on‖ i n i tself connotes th at th e scope of the power is limited to a prima facie determination. (c) 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. Such a legal approach will help the Referral Court in weeding out prima facie non-existent arbitration agreements. (d) Th e purport of usi ng th e word ―exami nati on‖ connotes th at the legislature intends that the Referral Court has to inspect or scrutinise the dealings between the parties for the existence of an arbi trati on agreement. However, th e expressi on ―exami nati on‖ 4 2025 SCC OnLine SC 1471 does not connote or imply a laborious or contested inquiry. (e) The burden of proving the existence of arbitration agreement generally lies on the party seeking to rely on such agreement. 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 mini- trial 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. (f) Section 16 provides that the Arbi tral Tri bunal can ―rule‖ on its jurisdiction, including the existence and validity of an arbi trati on agreement. A ―ruli ng‖ connotes adj udi cati on of disputes after admitting evidence from the parties. Therefore, when the Referral Court renders a prima facie opinion, neither the Arbitral Tribunal, nor the Court enforcing the arbitral award is bound by such a prima facie view. If a prima facie view as to the existence of an arbitration agreement is taken by the Referral Court, it still allows the Arbitral Tribunal to examine the issue in depth. [Emphasis supplied]

22. Thus from the above-menti oned auth ori ti es i t i s clear th at a Court’s scope of inquiry under Section 11 of the Act has been limited to a prima facie examination of the existence of an arbitration agreement while the adjudication under Section 8 is to be made for both existence and validity. Further, the examination so undertaken under both the said provisions must be within the confines of Section 7 of the Act. Objections relating to arbitrability of disputes are not to be entertained by a referral Court acti ng under Secti on 8 or 11 of th e Act.‖

10. In view of the fact that disputes have arisen between the parties and there is an arbitration clause in the contract, this Court appoints Mr. Akash Panwar, Advocate (Mobile No. +91-9910296585, e-mail id:[email protected]) as the Sole Arbitrator. 11. The Sole Arbitrator may proceed with the arbitration proceedings, subject to furnishing to the parties the requisite disclosures as required under Section 12 of the Act.

12. The Sole Arbitrator shall be entitled to fees in accordance with the IV Schedule of the Act or as may otherwise be agreed to between the parties and the learned Sole Arbitrator. 13. The parties shall share the arbitrator's fee and arbitral cost, equally. 14. All rights and contentions of the parties in relation to the claims/counter claims are kept open, to be decided by the Sole Arbitrator on their merits, in accordance with law. 15. Needless to state, nothing in this order shall be construed as an expression of opinion of this Court on the merits of the controversy. All rights and contentions of the parties in this regard are reserved. Let the copy of the said order be sent to the newly appointed Arbitrator through the electronic mode as well. 16. Accordingly, the instant petition stands disposed of. (PURUSHAINDRA KUMAR KAURAV) JUDGE SEPTEMBER 19, 2025 aks/amg