Supreme Court Reaffirms Limited Scrutiny When Referring Disputes to Arbitration

The Supreme Court reiterated that a referral court should send parties to arbitration once the prima facie existence of an arbitration agreement is established.

Background and legal issue

The dispute concerned contractual arrangements arising from a joint venture and a memorandum of understanding. At the appointment stage, one side sought closer judicial examination of the underlying disputes before an arbitral tribunal could be constituted.

Legal reasoning and context

The Court emphasised the narrow statutory role of a court dealing with appointment of an arbitrator. Questions requiring detailed examination of contractual obligations or merits ordinarily belong to the tribunal rather than being decided at the threshold.

Legal effect and next step

The ruling reinforces the referral-first approach under Section 11 of the Arbitration and Conciliation Act. Parties cannot ordinarily convert an arbitrator-appointment proceeding into a full trial of their contractual claims.