Punjab-Haryana High Court
M/S Karan Engineers vs Union Of India And Others on 10 March, 2026
Author: Jasgurpreet Singh Puri
Bench: Jasgurpreet Singh Puri
ARB-45-2026 (O&M) -1-
286
IN THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH
***
ARB-45-2026 (O&M)
Date of Decision: 10.03.2026
M/s Karan Engineers .... Applicant
Versus
Union of India and others ..... Respondents
CORAM: HON'BLE MR. JUSTICE JASGURPREET SINGH PURI
Present: Mr. Pawandeep Singh, Advocate for
Mr. Anand Vardhan Khanna, Advocate,
for the applicant.
Mr. Brijeshwar Singh Kanwar, Senior Panel Counsel,
for the respondents-UOI.
****
JASGURPREET SINGH PURI, J. (ORAL)
CM-3207-CII-2026
For the reasons mentioned in the application, the same is allowed
and written statement filed on behalf of the respondents is taken on record, subject
to all just exceptions.
CM-3208-CII-2026
For the reasons mentioned in the application, the same is allowed
and the documents as Annexures R-1 to R-13 are taken on record, subject to all
just exceptions.
Main Case:
1. The present application has been filed under Section 11(5) of
the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the
Act’) praying for appointment of an independent Sole Arbitrator to adjudicate
upon the disputes and differences which have arisen between the parties.
2. Learned counsel for the applicant submitted that there was a
1 of 10
::: Downloaded on – 16-03-2026 21:09:03 :::
ARB-45-2026 (O&M) -2-
Contract executed between the applicant and the respondents vide Annexure
P-1, which contains a valid arbitration clause and the same is reflected at
Page No.36 of the paperbook. The aforesaid clause stipulates that it was
agreed between the parties that the general conditions of contract including
condition No.70 pertaining to the settlement of disputes by Arbitration, form
part of this agreement. He referred to the aforesaid general condition of the
contract annexed at Page No.131 of the paperbook wherein Condition 70
provides that all the disputes and differences between the parties to the
Contract (other than those for which the decision of the C.W.E. or any other
person is by the Contract expressed to be final and binding) shall, after
written notice by either party to the Contract, be referred to the Sole
Arbitrator. He further submitted that a dispute arose between the parties and
initially the applicant had filed a writ petition bearing No.CWP-21657-2025
before this Court which was dismissed as withdrawn since the petitioner had
so submitted that he is entitled to interest on the delayed refund as well as
damages and he intends to invoke the arbitration clause for the said purpose
and it was in view of the aforesaid that the permission was granted to the
petitioner to withdraw the petition with liberty as aforesaid. He submitted
that the dispute still exists between the parties and hence, a notice under
Section 21 of the Act was issued to the respondents for invoking the
aforesaid arbitration clause vide Annexure P-31 on 05.12.2025. However, no
response was received from the respondent in this regard. In view of the
same, he prays that any independent Sole Arbitrator may be appointed by
this Court.
3. On the other hand, learned counsel for the respondents-UOI has
submitted that there is no dispute with regard to existence of the aforesaid
2 of 10
::: Downloaded on – 16-03-2026 21:09:04 :::
ARB-45-2026 (O&M) -3-
clause in the Contract (Annexure P-1) and the invocation of the said clause
by issuing a notice to the respondents under Section 21 of the Act vide
Annexure P-31. He however submitted that the respondents have two-fold
objections. Firstly, the applicant had filed a writ petition which he had
withdrawn and hence, he cannot file an application under Section 11 of the
Act. Secondly, the claim sought to be referred by the applicant is a stale
claim and barred by limitation and therefore, this Court cannot appoint an
Arbitrator.
4. I have heard learned counsels for the parties.
5. The existence of an agreement between the parties containing
an arbitration clause is not disputed by learned counsel for the respondents.
The invocation thereof by the applicant by issuing notice under Section 21
of the Act to the respondents is also not in dispute. However, the aforesaid
two-fold objections which the learned counsel for the respondents have
raised, are required to be considered by this Court. First objection which was
taken by learned counsel for the respondents was that earlier a writ petition
was filed by the applicant before this Court which was dismissed as
withdrawn vide Annexure P-30 dated 13.10.2025. The aforesaid order is
reproduced as under:-
“1. At the outset, counsel for the petitioner submits
that during the pendency of the instant petition, payment
has been released. He however, submits that petitioner is
entitled to interest on the delayed refund as well as
damages and he intends to invoke the arbitration clause
for the said purpose.
2. In view of the above development, he seeks and is
granted permission to withdraw the writ petition with
liberty as aforesaid.
3 of 10
::: Downloaded on - 16-03-2026 21:09:04 :::
ARB-45-2026 (O&M) -4-
3. Dismissed as withdrawn with liberty as aforesaid.”
6. A perusal of the aforesaid would show that the petitioner had
withdrawn the aforesaid writ petition bearing CWP-21657-2025 in order to
invoke the arbitration clause and a Co-ordinate Bench of this Court had
granted permission to withdraw the said writ petition with liberty aforesaid.
Therefore, this Court is of the considered view that the aforesaid order
cannot become a bar for appointment of an Arbitrator under Section 11 of
the Act especially when all the conditions sine qua non for the purpose of
appointment of an Arbitrator by reference Court stand fulfilled. Hence, the
aforesaid objection raised by learned counsel for the respondents is not
sustainable in law.
7. So far as the second objection raised by learned counsel for the
respondents regarding the claim being stale and time-barred is concerned,
the same is also not sustainable in view of the settled law that such plea
cannot be taken before a reference Court which is considering an application
under Section 11 of the Act. It is a settled law that at the stage of reference
under Section 11 of the Act, the Court is only to see prima facie existence of
an arbitration clause in the agreement and its invocation under Section 21 of
the Act. A plea of time-barred claim cannot be entertained at the time of
reference stage. In this regard, a reference can be made to the judgments
passed by 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 in “SBI General Insurance Company
Limited Vs. Krish Spinning”, 2024 SCC Online SC 1754 wherein it was so
held that the scope of examination under Section 11(6-A) of the Act is
4 of 10
::: Downloaded on – 16-03-2026 21:09:04 :::
ARB-45-2026 (O&M) -5-
confined to the existence of an arbitration agreement on the basis of Section
7 of the Act. The use of the term ‘examination’ under Section 11(6-A) as
distinguished from the use of term ‘rule’ under Sectioln 16 of the Act
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 and 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.
8. A Seven Judge Constitution Bench of Hon’ble Supreme Court
in Interplay Between Arbitration Agreements Under Arbitration and
Conciliation Act, 1996 and Stamp Act, 1899, in Re: case (Supra) had
observed that at the stage of reference under Section 11 of the Act, the Court
has only to see prima facie existence of an arbitration clause and its
invocation thereof. The relevant portion of the said judgment is 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,5 of 10
::: Downloaded on – 16-03-2026 21:09:04 :::
ARB-45-2026 (O&M) -6-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 as6 of 10
::: Downloaded on – 16-03-2026 21:09:04 :::
ARB-45-2026 (O&M) -7-
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 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.”
9. The relevant portion of the judgment passed by Hon’ble
Supreme Court in SBI General Insurance Company Limited’s case (Supra)
is also 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
7 of 10
::: Downloaded on – 16-03-2026 21:09:04 :::
ARB-45-2026 (O&M) -8-11(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 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.
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 a8 of 10
::: Downloaded on – 16-03-2026 21:09:04 :::
ARB-45-2026 (O&M) -9-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
9 of 10
::: Downloaded on – 16-03-2026 21:09:04 :::
ARB-45-2026 (O&M) -10-
of looking into it.”
10. In this way, the second objection taken by leaned counsel for
the respondents is also unsustainable in law being contrary to the settled law.
11. In view of the aforesaid facts and circumstances, the present
application is allowed. Mr. Chanchal K. Singla, Senior Advocate, resident of
(1) House No.544, Sector 109, Mohali Hills, SAS Nagar, Punjab (2) SCO
40-41, Level III, Sector-17 A, Chandigarh, Mobile No.9888345677, Email
ID: [email protected], is nominated as the Sole Arbitrator to
adjudicate the dispute between the parties, subject to compliance of statutory
provisions including Section 12 of the Act.
12. Parties are directed to appear before the learned Arbitrator on
date, time and place to be fixed and communicated by the learned Arbitrator
at her convenience.
13. Fee shall be paid to the learned Arbitrator in accordance with
the Fourth Schedule of the Arbitration Act, as amended.
14. Learned Arbitrator is also requested to complete the
proceedings as per the time limit prescribed under Section 29-A of the Act.
15. A request letter alongwith a copy of the order be sent to Mr.
Chanchal K. Singla, Senior Advocate.
10.03.2026 (JASGURPREET SINGH PURI)
Bhumika JUDGE
1. Whether speaking/reasoned: Yes/No
2. Whether reportable: Yes/No
10 of 10
::: Downloaded on - 16-03-2026 21:09:04 :::