Delhi High Court
Jindal Ferrous Limited vs A To Z Company on 17 April, 2026
$~6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 17.04.2026
+ ARB.P. 2108/2025
JINDAL FERROUS LIMITED .....Petitioner
Through: Mr. Sarad Kumar Sunny and
Ms. Madhav Binzani,
Advocates.
versus
A TO Z COMPANY .....Respondent
Through: Mr. Alok Raj, Mr. Madhav
Suri, Mr. Akhand Shresth
Pandey, Mr. Anurag Kumar
Singh, Mr. Ashish Kumar
Singh, Mr. Ashutosh Pandey
and Ms. Akanksha Singh,
Advocates.
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
% JUDGEMENT (ORAL)
1. The present petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 19961, seeking the appointment of
a Sole Arbitrator to adjudicate upon the disputes arising out of the
Service Order dated 02.02.20232.
2. The Agreement is stated to contain a Dispute Resolution
Clause, which contemplates adjudication of disputes arising out of the
Agreement, inter se the parties, by way of Arbitration. In this regard,
1
Act
2
Agreement
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reliance is place on Clause 16 of the Agreement, which reads as under:
"16. GOVERNING LAW AND ARBITRATION
This Agreement shall be governed by and construed in accordance
with the laws of India. The Parties shall endeavor to settle all
disputes and differences relating to and/ or arising out of this
Agreement amicably. In the event the Parties fail to resolve any
dispute amicably, the same shall be referred to arbitration of a sole
arbitrator, mutually appointed by the Parties. The arbitration
proceedings shall be in accordance with the Arbitration and
Conciliation Act, 1996, as amended from time to time. In the event
the Parties fail to mutually consent to the appointment of a sole
arbitrator within a period of thirty (30) days, the said sole arbitrator
shall be appointed in accordance with the Arbitration and
Conciliation Act, 1996 and the rules thereunder. The Place of
arbitration shall be New Delhi, India."
3. Learned counsel appearing for the Respondent, at the outset,
objects to the maintainability of the present Petition on the ground that
the Respondent is a registered enterprise under the Micro, Small and
Medium Enterprises Development Act, 20063, and therefore is fully
entitled to all the statutory protections and benefits available
thereunder inter alia, proceedings before the Micro, Small and
Medium Enterprises Facilitation Council4.
4. Learned counsel for the Respondent further submits that the
Respondent has already invoked the jurisdiction of Jharkhand Micro
and Small Enterprises Facilitation Council at Ranchi on 22.01.2026
under Section 18 of MSMED Act, vide an Application bearing E-
Filing No. ED-2026-0003544.
5. In this backdrop, learned counsel for the Respondent submits
that the present Petition, filed on 12.12.2025, is therefore statutorily
3
MSMED Act
4
MSME Facilitation Council
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barred by express provision of Section 24 of the MSMED Act, and in
this regard places reliance on the Judgements of Hon‟ble Supreme
Court, inter alia, in Shilpi Industries and Ors. Vs. Kerela State
Road Transport Corporation and Anr.5, and Gujarat State Civil
Supplies Corporation Ltd. Vs. Mahakali Foods (P) Ltd. Unit and
Anr.6, to submit that the provisions of the Special Act, namely, the
MSMED Act herein contains non-obstante clauses, and therefore
would prevail over the general provisions of the Arbitration and
Conciliation Act,1996.
6. Learned counsel further places reliance upon the Judgement of
the Coordinate Bench of this Court in Idemia Syscom India Private
Limited vs. M/s Conjoinix Total Solutions Private Limited7, to
contend that the disputes raised herein, inter alia, the issue of
jurisdiction with respect to the MSMED Act and the nature of the
contract would be subject to adjudication under the MSMED Act and
the MSME Facilitation Council constituted thereunder, since the
jurisdiction of this Court is very circumscribed under Section 11 of the
Act. In this regard, reliance is specifically placed on Paragraph Nos.
15 and 16 of the aforesaid Judgement, which read as follow:
"15. The petitioner has not denied the factum of the respondent
being registered as an MSME at the time of entering into the
contract. It has also not denied that the respondent has approached
the MSME facilitation council under Section 18 of the Act. It is the
petitioner‟s case that the subject contract is a works contract and
hence not covered under the MSMED Act. He has relied on a
number of decisions to that effect. However, the respondent has
denied that the contract is a works contract. Since the parties are at
odds about the nature of the contract, this becomes a triable issue
5
2021 SCC OnLine SC 439
6
(2023) 6 SCC 401
7
2025:DHC:1205
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requiring adjudication and the same would involve detailed
appreciation of evidence. The scope of enquiry vested with the
Court under Section 11 of the Arbitration and Conciliation Act is
no longer Res integra. The same is limited to forming a prime facie
opinion as to the existence of an agreement between the parties.
(Ref: SBI General Insurance Co. Ltd. vs. Krish Spinning.8) Since
the dispute in question would require detailed appreciation of
evidence and interpretation of the terms of the contract, it would
not be appropriate for this Court at the stage of a petition under
Section 11 of the A&C Act to undertake the same. It may very well
happen that the parties resolve their issues in the conciliation and
the question becomes merely an academic one. Even if the
conciliation fails, the parties would still have recourse to arbitration
under the MSMED Act and the AT so constituted would be the
most suited forum for the parties to put forth their respective
contentions.
16. Looking from another angle, even if the petitioner‟s
contention regarding works contracts can be said to have some
merit, the same essentially becomes a question regarding the
jurisdiction of the AT constituted under Section 18 of the MSMED
Act. It is no longer Res integra that the AT would be competent to
rule on its own jurisdiction. The same has been reiterated by the
Supreme Court in Mahakali Foods (Supra) in the context of an AT
constituted under MSMED Act:-
"48. When the Facilitation Council or the institution or the centre acts
as an arbitrator, it shall have all powers to decide the disputes
referred to it as if such arbitration was in pursuance of the arbitration
agreement referred to in sub-section (1) of Section 7 of the Arbitration
Act, 1996 and then all the trappings of the Arbitration Act, 1996
would apply to such arbitration. It is needless to say that such
Facilitation Council/institution/centre acting as an Arbitral Tribunal
would also be competent to rule on its own jurisdiction like any other
Arbitral Tribunal appointed under the Arbitration Act, 1996 would
have, as contemplated in Section 16 thereof.""
7. Per contra, learned counsel appearing on behalf of the
Petitioner submits that the Agreement, as between the parties is in fact
a „Works Contract‟ and therefore falls outside the ambit of the
MSMED Act and the protections available thereunder. Learned
counsel, in order to substantiate the said contention, places reliance on
Paragraph No. 4 of the reply filed by the Respondent to the present
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Petition, to submit that a perusal of the same makes it apparent that the
Respondent admits to the fact that the present Agreement is a „Works
Contract‟ and therefore would fall outside the purview of the MSME
Act.
8. Learned counsel for the Petitioner further submits that the
various tax invoices, as annexed by the Respondent, with their reply to
the present Petition, clearly show the nature of the work and clearly
evidences that the present Agreement is indeed nothing, but a „Works
Contract‟.
9. Learned counsel, in this light, in order to substantiate his
contention that a „Works Contracts‟ falls outside the ambit of the
MSMED Act and therefore parties to a Works Contract are not
amenable to the protection envisaged thereunder, places reliance upon
a catena of Judgements, inter alia, on TATA Power Co. Ltd. vs.
Genesis Engineering Co.8, M/s Shree Gee Enterprises vs. Union of
India & Anr.9, Sterling and Wilson Private Limited and Anr. vs.
Union of India10.
10. Learned counsel for the Petitioner therefore submits that, in the
backdrop of the judicial precedents, the present Petition is clearly
maintainable and the Respondent are not amenable to the protective
statutory provisions of the MSMED Act.
11. Learned counsel for the Petitioner further submits that the
Respondent had approached the Jharkhand Micro and Small
Enterprises Facilitation Council at Ranchi, under the MSMED Act, as
8
2023 SCC OnLine Del 2366
9
2015 SCC OnLine Del13169
10
2017 SCC OnLine Bom 6829
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early as in the month of January, 2026, however no intimation has
been received by the Petitioner in respect of the same and therefore,
dismissal of the present Petition would leave Petitioner remediless.
12. This Court has heard the learned counsel for the appearing on
behalf of the parties and with their able assistance, perused the
material available on record and the various Judgements handed
across the bar.
13. This Court finds merit in the assertions made by the learned
counsel for the Respondent, particularly in view of the limited scope
of jurisdiction exercisable by this Court under Section 11 of the Act
and as highlighted in similar facts in a decision of the Coordinate
Bench of this Court in Idemia Syscom India (supra).
14. 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
Spinning11, 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 re12, 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
11
(2024) 12 SCC 1
12
(2024) 6 SCC 1
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party, to resolve the deadlock between the parties in appointing the
arbitrators.
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,
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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.
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"
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before it, and only after such an objection is rejected by the
Arbitral Tribunal, that the claims raised by the claimant can be
adjudicated.
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
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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
same inference, most likely in the first few hearings itself, with the
benefit of extensive pleadings and evidentiary material."
(emphasis supplied)
15. 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.
16. However, in the present case, there appears to be a clear dispute
with respect to whether or not the Agreement itself is a „Works
Contract‟, which requires this Court to delve into the contents of the
Agreement and various documentary evidence, which is outside the
scope of jurisdiction of this Court under Section 11 of the Act, as
succinctly laid down by the Hon‟ble Supreme Court in Krish
Spinning (supra).
17. Further, as held by the Coordinate Bench of this Court in
Idemia Syscom India (supra), when the parties are at odds about the
nature of the contract, the same becomes a triable issue requiring
adjudication and in turn detailed appreciation of evidence, a scope of
enquiry not vested with this Court under Section 11 of the Act.
18. In view of the foregoing discussion, this Court is of the
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considered view that the MSME Facilitation Council under Section 18
of the MSME Act, would be the appropriate forum for determining the
aspects as raised herein.
19. Accordingly, the present Petition, along with all pending
Application(s), if any, is disposed of in aforementioned terms.
HARISH VAIDYANATHAN SHANKAR, J.
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