Mr.Shikhar Garg, Ms.Rabiya, Mr.Ojasvi and Ms.Ankita, Advocates v. MR. NAVEEN KUMAR SOLE PROPRIETOR OF M/S SAI FASHION HAVING RESIDENCE AT

Through: Mr.Shikhar Garg, Ms.Rabiya, Mr.Ojasvi and Ms.Ankita, Advocates. Versus MR. NAVEEN KUMAR SOLE PROPRIETOR OF M/S SAI FASHION HAVING RESIDENCE AT: D-283/11B, LAXMI NAGAR, DELHI-110092, NCT OF DELHI, INDIA .... RESPONDENT Through: None. HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV JUDGEMENT PURUSHAINDRA KUMAR KAURAV, J. (ORAL)

1. The present petition has been filed under Section 11(5) of the 1 Arbitration and Conciliation Act, 1996 (the 1996 Act) by the petitioner, seeking appointment of an Arbitrator, to adjudicate upon the disputes that have arisen between the parties under the Lease Agreement dated

05.08.2021.

2. The office report indicates that by ordinary post as well as through email, service is effected on the respondent. However, despite service, no one appears on behalf of the respondent.

3. The facts of the case would indicate that the petitioner and the respondent entered into a lease Agreement for a period of 6 years on

05.08.2021 [inadvertently mentioned as 9 years in the Agreement] with effect from 01.05.2021 to be used for the purpose of the trading of the Lady Garments under the name and style of M/s Sai Fashion. That as per the agreement respondent agreed to pay monthly rent of INR 1,70,000 from

01.08.2021 to 31.07.2024 and INR 1,95,500 from 01.08.2024 to 31.07.2027 along with an interest free refundable security deposit of INR 5,10,000/- to be paid to the petitioner. It is also stated in the agreement that, in the event of delay in payment of the monthly lease rent by the respondent, he would be liable to pay an addition 18% interest of the monthly lease rental.

4. As per the case set up by the petitioner, the respondent on his own defaulted in making the regular monthly lease rent from July 2024 till date, to the petitioner. Thereafter, a Board of Resolution dated 01.11.2024 has been executed in favour of Mr. Punnet Chandra by the petitioner and the petitioner has sent the legal notice for violation of the Lease Agreement dated 19.12.2024 to the respondent requesting to remit the full outstanding 2 payment which includes an additional 18% interest of the monthly rent in reference with the Clause 2.2 of the Agreement which amounts to be INR 13,54,050 (Indian Rupees Thirteen Lakh Fifty-Four Thousand and Fifty Rupees only) within 15 days from the date of the notice. Thereafter, the petitioner issued a legal notice dated 04.03.2025. Neither the respondent reply to the said legal notice nor any payment has been made. After getting no positive response from the respondent, the petitioner invoked the Arbitration clause (Clause 15) under the said Agreement to adjudicate the disputes and differences between the parties for appointment of the Sole Arbitrator.

5. The Court takes note of Clause 15 of the Lease Agreement dated

05.08.2021, which reads as under:- “15. JURISDICTION In event of any dispute between both the parties the resolution will be done peacefully if the resolution does not happen peacefully. The matter shall be referred to Arbitration& Reconciliation through appointment of (cid:86)(cid:82)(cid:79)(cid:72)(cid:3) (cid:68)(cid:85)(cid:69)(cid:76) (cid:87)(cid:85)(cid:68)(cid:87)(cid:82)(cid:85)(cid:3) (cid:68)(cid:83)(cid:83)(cid:82)(cid:76) (cid:81)(cid:87)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:87)(cid:75) (cid:72)(cid:3) (cid:54)(cid:72)(cid:70)(cid:82)(cid:81)(cid:71)(cid:3) (cid:51)(cid:68)(cid:85)(cid:87)(cid:92)(cid:17)(cid:180)

6. The law with respect to the scope and standard of judicial scrutiny under Section 11(6) of the 1996 Act has been fairly well settled. This Court as well in the order dated 24.04.2025 in the case of ARB.P. 145/2025 titled as Pradhaan Air Express Pvt Ltd v. Air Works India Engineering Pvt Ltd has extensively dealt with the scope of interference at the stage of Section

11. The Court held as under:- (cid:179)(cid:28)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75) (cid:72)(cid:3) (cid:79)(cid:68)(cid:90)(cid:3) (cid:90)(cid:76) (cid:87)(cid:75) (cid:3) (cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:75) (cid:72)(cid:3) (cid:86)(cid:70)(cid:82)(cid:83)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71)(cid:3) (cid:82)(cid:73)(cid:3) (cid:77) (cid:88)(cid:71)(cid:76) (cid:70)(cid:76) (cid:68)(cid:79)(cid:3) (cid:86)(cid:70)(cid:85)(cid:88)(cid:87)(cid:76) (cid:81)(cid:92)(cid:3) under Section 11(6) of the 1996 Act has been fairly well settled. The Supreme Court in the case of SBI General Insurance Co. Ltd. v. Krish 3 Spinning1, while considering all earlier pronouncements including the Constitutional Bench decision of seven judges in the case of Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re 2 has held that scope of inquiry at the stage of appointment of an Arbitrator is limited to the extent of prima facie existence of the arbitration agreement and nothing else.

10. It has unequivocally been held in paragraph no.114 in the case of SBI General Insurance Co. Ltd that observations made in Vidya Drolia v. Durga Trading Corpn.3, and adopted in NTPC Ltd. v. SPML Infra Ltd.,4 that the jurisdiction of the referral court when dealing with the (cid:76) (cid:86)(cid:86)(cid:88)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:179)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:86)(cid:68)(cid:87)(cid:76) (cid:86)(cid:73)(cid:68)(cid:70)(cid:87)(cid:76) (cid:82)(cid:81)(cid:180)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:54)(cid:72)(cid:70)(cid:87)(cid:76) (cid:82)(cid:81)(cid:3) (cid:20)(cid:20)(cid:3) (cid:72)(cid:91)(cid:87)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:90)(cid:72)(cid:72)(cid:71) out ex-facie non-arbitrable and frivolous disputes would not apply after the decision of Re: Interplay. The abovenoted paragraph no.114 in the case of SBI General Insurance Co. Ltd reads as under:- facie existence of in In (cid:179)(cid:20)(cid:20)(cid:23)(cid:17)(cid:3) (cid:44)(cid:81)(cid:3) (cid:89)(cid:76) (cid:72)(cid:90)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75) (cid:72)(cid:3) (cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:87)(cid:76) (cid:82)(cid:81)(cid:86)(cid:3) (cid:80)(cid:68)(cid:71)(cid:72)(cid:3) (cid:69)(cid:92)(cid:3) (cid:87)(cid:75) 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 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 (cid:82)(cid:73)(cid:3) (cid:179)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:86)(cid:68)(cid:87)(cid:76) (cid:86)(cid:73)(cid:68)(cid:70)(cid:87)(cid:76) (cid:82)(cid:81)(cid:180)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:54)(cid:72)(cid:70)(cid:87)(cid:76) (cid:82)(cid:81)(cid:3) (cid:20)(cid:20)(cid:3) (cid:72)(cid:91)(cid:87)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) weeding out ex-facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision in In (cid:53)(cid:72)(cid:29)(cid:3) (cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:83)(cid:79)(cid:68)(cid:92)(cid:3) (cid:11)(cid:86)(cid:88)(cid:83)(cid:85)(cid:68)(cid:12)(cid:17)(cid:180) (cid:76) (cid:86)(cid:3) (cid:38)(cid:82)(cid:88)(cid:85)(cid:87)(cid:3)

11. Ex-facie frivolity and dishonesty are the issues, which have been held to be within the scope of the Arbitral Tribunal which is equally capable of deciding upon the appreciation of evidence adduced by the parties. While considering the aforesaid pronouncements of the Supreme Court, the Supreme Court in the case of Goqii Technologies (P) Ltd. v. Sokrati Technologies (P) Ltd.5, however, has held that the referral Courts under Section 11 must not be misused by one party in order to force other parties to the arbitration agreement to participate in a time- consuming and costly arbitration process. Few instances have been