ADVERTISEMENT
Delhi High Court
Madnani Engineerings Works vs Union Of India on 25 March, 2026
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 25.03.2026
+ ARB.P. 1532/2025
MADNANI ENGINEERINGS WORKS .....Petitioner
Through: Mr. Ashish Khorana, Advocate
versus
UNION OF INDIA .....Respondent
Through: Mr. Premtosh K. Mishra,
CGSC, Mr. Shrey Sharma, Mr.
Anubhav Upadhyay and Mr.
Arpit Bamal, Advocates
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
% JUDGEMENT (ORAL)
I.A. 23242/2025 (For Delay of 13 days in Re-Filling the Petition.)
1. The present application, under Section 5 of the Limitation Act,
1963, seeks condonation of delay of 13 days in re-filing the present
Petition.
2. For the sufficient reasons stated in the application, the delay is
condoned. Application stands disposed of.
ARB.P. 1532/2025
1. The present petition has been filed under Section 11 of the
Arbitration and Conciliation Act, 1996 ["the Act"], seeking the
appointment of an Arbitrator to adjudicate the disputes between the
parties arising out of the Rate Contract dated 23.11.2012
Signature Not Verified
Digitally Signed
ARB.P. 1532/2025 Page 1 of 8
By:HARVINDER KAUR
BHATIA
Signing Date:27.03.2026
16:23:32
["Agreement"].
2. The said Agreement contains an Arbitration Clause, being
Clause 24, which reads as under:
"24. ARBITRATION
(i) In the event of any question, dispute or difference arising under
these conditions or any special conditions of contract or in
connection with this contract (except as to any matters the decision
of which is specially provided for by these or the special
conditions) the same shall be referred to the sole arbitration of an
officer in the Ministry of Law, appointed to be the arbitrator by the
Director General of Supplies & Disposals. It will be no objection
that the arbitrator is a Government Servant that he had to deal with
the matters to which the contract relates or that in the course of his
duties as a Government servant he has expressed views on all or
any of the matters in dispute or difference. The award of the
arbitrator shall be final and binding on the parties to this contract.
(ii) In the event of the Arbitrator dying, neglecting or refusing to
act or resigning or being unable to act for any reason, or his award
being set aside by the court for any reason, it shall be lawful for the
Director General of Supplies & Disposals to appoint another
arbitrator in place of the outgoing arbitrator in the manner
aforesaid.
(iii) It is further a term of this contract that no person other than the
person appointed by the Director General of Supplies & Disposals
as aforesaid should act as arbitrator and that, if for any reason that
is not possible, the matter is not to be referred to Arbitration at all.
(iv) The arbitrator may from time to time with the consent of all the
parties to the contract enlarge the time for making the award.
(v) Upon every and any such reference, the assessment of the costs
incidental to the reference and award respectively shall be in the
discretion of the arbitrator.
(vi) Subject as aforesaid, the Arbitration Act, 1940 and the rules
thereunder and any statutory modification thereof for the time
being in force shall be deemed to apply to the Arbitration
proceedings under this clause.
(vii) If the value of the claim in a reference exceeds Rs. 1 lakh, the
arbitrator shall give reasoned award.
(viii) The venue of arbitration shall be the place from which formal
Acceptance of Tender is issued or such other place as the Director
General of Supplies & Disposals in his discretion may determine.
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ARB.P. 1532/2025 Page 2 of 8
By:HARVINDER KAUR
BHATIA
Signing Date:27.03.2026
16:23:32
(ix) In this clause, the expression "the Director General of Supplies
and Disposals" means the Director General of Supplies and
Disposals for the time being and includes if there be no Director
General of Supplies & Disposals or if Director General of Supplies
& Disposals is on leave or is absent from duty or is not available
for any reason whatsoever, the Additional Director General of
Supplies & Disposals; in case both the Director General and the
Additional Director General of Supplies & Disposals are on leave
or are absent from duty or are not available for any reason
whatsoever, the officer who is looking after the current duties of
Director General and/or Additional Director General of Supplies &
Disposals whether in addition to other functions or otherwise."
3. The material on record indicates that the Petitioner herein
invoked arbitration in terms of Section 21 of the Act vide legal notice
dated 03.05.2025.
4. 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
Hon'ble Supreme Court in SBI General Insurance Co. Ltd. v. Krish
Spinning1, after taking into consideration the authoritative
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.
1
(2024) 12 SCC 1
2
(2024) 6 SCC 1
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ARB.P. 1532/2025 Page 3 of 8
By:HARVINDER KAUR
BHATIA
Signing Date:27.03.2026
16:23:32
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
arbitration agreement. Whereas, the standard of scrutiny under
Section 11 is confined to the examination of the existence of the
arbitration agreement.
112.4. During the pendency of an application under Section 8,
arbitration may commence or continue and an award can be passed.
On the other hand, under Section 11, once there is failure on the
part of the parties in appointing the arbitrator as per the agreed
procedure and an application is preferred, no arbitration
proceedings can commence or continue.
113. 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.
114. 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
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ARB.P. 1532/2025 Page 4 of 8
By:HARVINDER KAUR
BHATIA
Signing Date:27.03.2026
16:23:32
taken by the Referral Court does not bind either the Arbitral
Tribunal or the Court enforcing the arbitral award.
115. The aforesaid approach serves a twofold 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.
****
117. In view of the observations made by this Court in Interplay
Between Arbitration Agreements under the Arbitration Act, 1996
& the Stamp Act, 1899, In re, (2024) 6 SCC 1, 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 inVidya Drolia v. Durga Trading
Corpn., (2021) 2 SCC 1 and adopted inNTPC Ltd. v. SPML Infra
Ltd., (2023) 9 SCC 385 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 inInterplay Between Arbitration Agreements under the
Arbitration Act, 1996 & the Stamp Act, 1899, In re, (2024) 6 SCC
1.
****
119. 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.
120. By referring disputes to arbitration and appointing an
arbitrator by exercise of the powers under Section 11, the Referral
Court upholds and gives effect to the original understanding of the
contracting parties that the specified disputes shall be resolved by
arbitration. Mere appointment of the Arbitral Tribunal does not in
any way mean that the Referral Court is diluting the sanctity of
"accord and satisfaction" or is allowing the claimant to walk back
on its contractual undertaking. On the contrary, it ensures that the
principle of arbitral autonomy is upheld and the legislative intent of
minimum judicial interference in arbitral proceedings is given full
effect. Once the Arbitral Tribunal is constituted, it is always open
for the defendant to raise the issue of "accord and satisfaction"
before it, and only after such an objection is rejected by the
Arbitral Tribunal, that the claims raised by the claimant can be
adjudicated.
Signature Not Verified
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ARB.P. 1532/2025 Page 5 of 8
By:HARVINDER KAUR
BHATIA
Signing Date:27.03.2026
16:23:32
121. Tests like the "eye of the needle" and "ex facie meritless",
although try to minimise the 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.
122. Appointment of an Arbitral Tribunal at the stage of Section 11
petition also does not mean that the Referral Courts forego any
scope of judicial review of the adjudication done by the Arbitral
Tribunal. The 1996 Act clearly vests the national courts with the
power of subsequent review by which the award passed by an
arbitrator may be subjected to challenge by any of the parties to the
arbitration.
*****
126. The power available to the Referral Courts has to be construed
in the light of the fact that no right to appeal is available against
any order passed by the Referral Court under Section 11 for either
appointing or refusing to appoint an arbitrator. Thus, by delving
into the domain of the Arbitral Tribunal at the nascent stage of
Section 11, the Referral Courts also run the risk of leaving the
claimant in a situation wherein it does not have any forum to
approach for the adjudication of its claims, if its Section 11
application is rejected.
127. Section 11 also envisages a time-bound and expeditious
disposal of the application for appointment of arbitrator. One of the
reasons for this is also the fact that unlike Section 8, once an
application under Section 11 is filed, arbitration cannot commence
until the Arbitral Tribunal is constituted by the Referral Court. This
Court, on various occasions, has given directions to the High
Courts for expeditious disposal of pending Section 11 applications.
It has also directed the litigating parties to refrain from filing bulky
pleadings in matters pertaining to Section 11. Seen thus, if the
Referral Courts go into the details of issues pertaining to "accord
and satisfaction" and the like, then it would become rather difficult
to achieve the objective of expediency and simplification of
pleadings.
128. We are also of the view that ex facie frivolity and dishonesty
in litigation is an aspect which the Arbitral Tribunal is equally, if
not more, capable to decide upon the appreciation of the evidence
adduced by the parties. We say so because the Arbitral Tribunal
has the benefit of going through all the relevant evidence and
pleadings in much more detail than the Referral Court. If the
Referral Court is able to see the frivolity in the litigation on the
basis of bare minimum pleadings, then it would be incorrect to
doubt that the Arbitral Tribunal would not be able to arrive at the
Signature Not Verified
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ARB.P. 1532/2025 Page 6 of 8
By:HARVINDER KAUR
BHATIA
Signing Date:27.03.2026
16:23:32
same inference, most likely in the first few hearings itself, with the
benefit of extensive pleadings and evidentiary material."
(emphasis supplied)
5. The decision in Krish Spinning (supra) thus unequivocally
reiterates that the Referral Court, while exercising jurisdiction under
Section 11 of the Act, is required to confine itself to a prima facie
examination of the existence of a valid Arbitration Agreement and
nothing beyond. The Court's role is facilitative and
procedural, namely, to give effect to the parties' agreed mechanism of
dispute resolution when it has failed, without embarking upon an
adjudication of contentious factual or legal issues, which are reserved
for the Arbitral Tribunal.
6. Learned counsel appearing for the parties are ad idem that the
matter may be referred to arbitration under the aegis Delhi
International Arbitration Centre ["DIAC"].
7. Learned counsel appearing for the parties are also ad idem and
waive the specific qualification as mentioned in the arbitration clause
of the Agreement.
8. Material on record further indicates that the disputes as between
the parties is valued at approximately Rs. 10,00,000/-.
9. Accordingly, this Court appoints Mr. Farman Ali, Advocate
(Mobile No. 9469448888), to adjudicate the disputes as between the
parties.
10. The arbitration would take place under the aegis of the DIAC
and would abide by its rules and regulations. The learned Arbitrator
shall be entitled to fees as per the Schedule of Fees maintained by the
DIAC.
11. The learned Arbitrator is also requested to file the requisite
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ARB.P. 1532/2025 Page 7 of 8
By:HARVINDER KAUR
BHATIA
Signing Date:27.03.2026
16:23:32
disclosure under Section 12 (2) of the Act within a week of entering of
reference.
12. The Registry is directed to send a receipt of this order to the
learned Arbitrator through all permissible modes, including through e-
mail.
13. All rights and contentions of the parties in relation to the
claims/counter-claims are kept open, to be decided by the learned
Arbitrator on their merits, in accordance with law.
14. Needless to say, nothing in this order shall be construed as an
expression of opinion of this Court on the merits of the controversy
between the parties.
15. Accordingly, the present Petition, along with all pending
application(s), if any, is disposed of.
HARISH VAIDYANATHAN SHANKAR, J.
MARCH 25, 2026/ rk/va
Signature Not Verified
Digitally Signed
ARB.P. 1532/2025 Page 8 of 8
By:HARVINDER KAUR
BHATIA
Signing Date:27.03.2026
16:23:32
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