1 $-6 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ARB.P. 901/2025 Date of Decision : 20.08 .2025 IN THE M ATER OF: M /S. M INDRAY M EDICAL INDIA PVT. LTD. REGISTERED OFICE AT: - UNIT NO. 1061, SOLITAIRE CORPORATE PARK, ANDHERI KURLA ROAD, CHAKALA, AN DHERI (EAST), M UM BAI, INDIA - 400093. CORPORATE OFICE AT: - 16TH FLOOR, BUILDING 9B, DLF CYBER CITY, PHASE -I, GURGAON, HARYANA. ..... PETITIONER Through: M s.Nahid Aman, Advocate. Versus M /S. VISION RAY HEALTH CARE PVT. LTD. REGD. OFICE AT : B-1/33, (BASEM ENT), SHRI RAM M ANDIR M ARG, PASCHIM VIHAR, DELHI -110 063. .... RESPONDENT Through: M r.Tarun Gaur, Advocate. HON'BLE M R. JUSTICE PURUSHAINDRA KUM AR KAURAV JUDGEM ENT PURUSHAINDRA KUM AR KAURAV , J. (ORAL) 1. The present petition has ben file d under Section 11 of the Arbitration 2 and Conciliation Act, 1996 (the 1996 Act) by the petitioner seking appointment of an Arbitrator to adjudicate upon the disputes that have arisen between the parties under Exclusive Distribution and Supply Agrement da ted 01.01.2023. 2. Heard learned counsel appearing on behalf of the parties. 3. On notice being issued, M r.Tarun Gaur, learned counsel appears on behalf of the respondent. He submits that the respondent has no objection to the appointment of an arbitrator to dec ide the dispute in the present case. 4. The facts of the case indicate that disputes have arisen betwen the parties concerning the unsatisfactory performance and services rendered by the respondent in its capacity as distributor under the Exclusive Distribut ion and Supply Agrement dated 01.01.2023. It is further noted that the petitioner issued an arbitration notice dated 25 .03.2025 under Section 21 of the 1996 Act , invoking the arbitration clause (Clause 6) and seking recovery of Rs. 47,48,000/ - along wi th interest at the rate of 18% per annum. The petitioner also called upon the respondent to either pay the said amount or consent to the nomination of a proposed oficial as sole arbitrator to adjudicate the disputes between the parties within 15 days. 5. It is submitted on behalf of the petitioner that, in its reply dated 07.04.2025, the respondent acknowledged the existence of an arbitral dispute but expressed reservations regarding the impartiality and integrity of the proposed oficial, who holds the posit io n of M anager ± Legal and Compliance. Consequently, the respondent declined to consent to the 3 appointment of the proposed arbitrator. Hence, the petitioner has filed the present petition under Section 11(5) of the 1996 Act. 6. The Court takes note of the Cla use 6 of Exclusive Distribution & Supply Agrement dated 01.01.2023, which reads as under: - ³ $UWLFOH RI WKH $JUHHPHQW replaced with tl,e folows: "15. Dispute Resolution. The Parties agre to use their best reas onable eforts to resolve al disputes, controversies and differences which may arise out of or in connection with this Agreement in an amicable maner. If the setlement fails to be reached, the disputes arising from or in conection with this contract sh al be refered to Arbitration in accordance with the statutory provisions of the Arbitration and Conciliation Act, 196. The Arbitration shall be refered to the Sole Arbitrator by mutual agreement or consent of the Parties. The arbitral award is final an d binding upon both parties. The arbitration shall be conducted in English, and the place of arbitra tion shall be New Delhi, ,QGLD´ 7. The law with respect to the scope and standard of judicial scrutiny under Section 11(6) of the 1996 Act has ben 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 W orks India Engineering Pvt Ltd has extensively dealt with the scope of interference at the stage of Section 11. The Court held as under: - ³7KHODZZLWKUHVSHFWWRWKHVF under Section 1(6) of the 196 Act has been fairly wel setled. The Supreme Court in the case of SBI General Insurance Co. Ltd. v. Krish Spinning 1, while co nsidering al earlier pronouncements including the Constitutional Bench decision of seven judges in the case of Interplay between Arbitration Agreements under the Arbitration & Conciliation 1 2024 SCC OnLine SC 1754 4 Act, 196 & the Indian Stamp Act, 189 , In re 2 has held that scop e of inquiry at the stage of apointment of an Arbitrator is limited to the extent of prima facie existence of the arbitration agrement and nothing else. 10. It has unequivocaly been held in paragraph no.14 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. SPM L Infra Ltd. ,4 that the jurisdiction of the referal court when dealing with the LVVXHRI³DFFRUGDQGVDWLVIDFWLRQ´ out ex -facie non -arbitrable and frivolous disputes would not aply after the decision of Re: Interplay . The abovenoted paragraph no.14 in the case of SBI General Insurance Co. Ltd reads as under: - ³,QYLHZRIWKHREVHUYDWLRQV Re: I nterplay (supra), it is clear that the scope of enquiry at the stage of apointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agrement, and nothing else. For this reason, we find it difficult to hold that the obs ervations made in Vidya Drolia (supra) and adopted in NTPC v. SPM L (supra) that the jurisdiction of the referal court when dealing with the isue RI ³DFFRUG DQG VDWLVIDFWLRQ´ XQGH weeding out ex -facie non -arbitrable and frivolous di sputes would continue to aply despite the subsequent decision in In 5H,QWHUSOD\VXSUD´ 1. 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 apreciation of evidence aduced by the parties. W hile considering the aforesaid pronouncements of the Supreme Court, the Supreme Court in the case of Goqi Technologies (P) Ltd. v. Sokrati Technologies (P) Ltd. 5, however, has held that the refer al Courts under Section 1 must not be misused by one party in order to force other parties to the arbitration agrement to participate in a time - consuming and costly arbitration proces. Few instances have been delineated such as, the adjudication of a no n-existent and malafide claim through arbitration. The Court, however, in order to balance the limited scope of judicial interference of the referal Court with the interest of the parties who might be constrained to participate in the arbitration 2 2023 SCC OnL ine SC 166. 3 (2021) 2 SCC 1. 4 (2023) 9 SCC 385. 5 (2025) 2 SCC 192 5 proceedi ngs, has held that the Arbitral Tribunal eventually may direct that the costs of the arbitration shall be borne by the party which the Arbitral Tribunal finds to have abused the proces of law and caused unecesary harasment to the other parties to the a rbitration. 12. It is thus seen that the Supreme Court has defered the adjudication of aspects relating to frivolous, non -existent and malafide claims from the referal stage til the arbitration proceedings eventually come to an end. The relevant extra cts of Goqi Technologies (P) Ltd. reads as under: - ³ As observed in Krish Spg. [SBI General Insurance Co. Ltd. v. Krish Spg. , (2024) 12 SC 1 : 2024 SC OnLine SC 1754 : 2024 INSC 532] , frivolity in litigation to is an aspect which the referal cour t should not decide at the stage of Section 1 as the arbitrator is equaly, if not more, competent to adjudicate the same. 21. Before we conclude, we must clarify that the limited jurisdiction of the referal courts under Section 1 must not be misused b y parties in order to force other parties to the arbitration agrement to participate in a time consuming and costly arbitration proces. This is posible in instances, including but not limited to, where the claimant canvases the adjudication of non -exis tent and mala fide claims through arbitration. 2. W ith a view to balance the limited scope of judicial interference of the referral courts with the interests of the parties who might be constrained to participate in the arbitration proceedings, the Arbit ral Tribunal may direct that the costs of the arbitration shall be borne by the party which the Tribunal ultimately finds to have abused the proces of law and caused unecesary harasment to the other party to the arbitration. Having said that, it is cla rified that the aforesaid is not to be construed as a determination of the merits of the mater before us, which the Arbitral Tribunal ZLOOULJKWIXOO\EHHTXLSSHGWRGH 13. In view of the aforesaid, the scope at the stage of Section 1 proceedi ngs is akin to the eye of the needle test and is limited to the extent of finding a prima facie existence of the arbitration agrement and nothing beyond it. The jurisdictional contours of the referal Court, as meticulously delineated under the 196 Act a nd further crystallised 6 through a consistent line of authoritative pronouncements by the Supreme Court, are unequivocaly confined to a prima facie examination of the existence of an arbitration agrement. These boundaries are not merely procedural safegua rds but fundamental to upholding the autonomy of the arbitral proces. Any transgresion beyond this limited judicial threshold would not only contravene the legislative intent enshrined in Section 8 and Section 1 of the 196 Act but also risk undermining the sanctity and eficiency of arbitration as a prefered mode of dispute resolution. The referal Court must, therefore, exercise restraint and refrain from venturing into the merits of the dispute or adjudicating isues that fal squarely within the jur isdictional domain of the arbitral tribunal. It is thus seen that the scope of enquiry at the referal stage is conservative in nature. A similar view has also been expresed by the Supreme Court in the case of Ajay M adhusudan Patel v. Jyotrindra S. Patel ´6. 9. In view of the fact that disputes have arisen betwen the parties and there is an arbitration clause in the agreement , this Court is inclined to appoint an Arbitrator to adjudicate upon the disputes betwen the same . 10. Acordingly, M r. Arnav M ittal , Ad vocate (M obile No .+91 8588916612 , e -mail id :- advarnavmittal@ gmail.com ) is appointed as the sole Arbitrator. 11. The Sole Arbitrator may proced with the arbitration procedings, subject to furnishing to the pa rties the requisite disclosures as required under Section 12 of the Arbitration and Conciliation Act. 12. The Sole Arbitrator shall be entitled to fe in acordance with the IV th