M/S Lord Bihari Furnitures PVT LTD vs. Kanchan Bala Thukral

The facts would indicate that the petitioner and respondent executed an agreement to lease dated 13.04.2012, where various terms of conditions were agreed upon. The petitioner is the lesser and the respondent is the lessee.

It is stated that the lease agreement was followed by the Letter of Intent dated 15.07.2020 extending the lease. As per the case set up by the petitioner, upon expiry of the said extended period on 31.12.2023, the petitioner time and again called upon the respondent to get the fresh lease deed executed and registered in terms of the letter of intent dated 15.07.2020, in case, the Respondent intends to continue in the subject property.

However, it is stated that the respondent never came forward to execute the fresh lease deed. Furthermore, as per the case of the petitioner, dehors the execution of a fresh lease deed, the lease rent was enhanced by 5% with effect from 01.01.2024 and again by 5% from 01.01.2025, making the payable rent Rs. 4,42,000/- plus GST per month, while the respondent continued as a month-to-month tenant.

However, it further urged that the respondent began making short and deficient payments against the monthly invoices. On 30.06.2025, it is alleged that the petitioner received an unsigned letter from the respondent containing baseless allegations and demands for renovation and repair works, despite there being no structural damage attributable to the petitioner.

Consequently, vide notice dated 09.07.2025, the petitioner terminated the tenancy and called upon the respondent to hand over possession within 15 days and pay arrears of Rs.16,24,120/- with interest.

In view of the aforesaid, the petitioner has filed the present petition.

Learned counsel appearing for the respondent submits that he has multiple objections including the arbitrability of the dispute.

I have heard learned counsel appearing for the parties and have perused the record.

Clause M of the lease agreement, is extracted as under: ―(M) All disputes and differences shall be referred to arbitration. The arbitration proceedings shall be held in accordance with Arbitration and Conciliation Act, 1996, or any subsequent enactment or amendment thereto ("the Arbitration Act"). The LESSOR shall appoint an arbitrator within thirty (30) days of the receipt by such party of the other party’s request to initiate arbitration. The arbitrator not appointed within the time limit set forth in the preceding sentence shall be appointed in accordance with the Arbitration Act. The decision of the arbitration shall be final and binding upon the parties. The venue of arbitration shall be New Delhi, India. The language of the arbitration and award shall be English.‖

extract of the aforesaid decision reads as under: - 19.In In Re: Interplay , the Supreme Court confined the analysis under Section 11 of the Act to the existence of an arbitration agreement and under Section 8 of the Act to the existence and validity of an arbitration agreement. Under both the provisions, examination was to be made at the touchstone of Section 7 of the Act. Further, issues pertaining to the arbitrability of the dispute fell outside the scope of both Section 11(6A) and Section 8 of the Act. The material part of the judgement of the Supreme Court in In Re: Interplay reads as under:

The 2015 Amendment Act has laid down different parameters for judicial review under Section 8 and Section 11. Where Section 8 requires the referral Court to look into the prima facie existence of a valid arbitration agreement. Section 11 confines the Court’s juri iction to the examination of the existence of an arbitration agreement. Although the object and 1 2025 SCC OnLine Del 3022 2 2025:DHC:7477 purpose behind both Sections 8 and 11 is to compel parties to abide by their contractual understanding, the scope of power of the referral Courts under the said provisions is intended to be different. The same is also evident from the fact that Section 37 of the Arbitration Act allows an appeal from the order of an arbitral tribunal refusing to refer the parties to arbitration under Section 8, but not from Section 11. Thus, the 2015 Amendment Act has legislatively overruled the dictum of Patel Engineering (supra) where it was held that Section 8 and Section 11 are complementary in nature. Accordingly, the two provisions cannot be read as laying down a similar standard. 165. The legislature confined the scope of reference under Section 11(6A) 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(6A) should be confined to the existence of an arbitration agreement on the basis of Section 7Similarly, the validity of an arbitration agreement, in view of Section 7, should be restricted to the requirement of formal validity such as 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.

The burden of proving the existence of arbitration agreement generally lies on the party seeking to rely on such agreement. In juri ictions such as India, which accept the doctrine of competencecompetence, 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. 167. Section 11(6A) uses the expression ―examination of the existence of an arbitration agreement.‖ The purport of using the word ―examination‖ connotes that the legislature intends that the referral Court has to inspect or scrutinize the dealings between the parties for the existence of an arbitration agreement. Moreover, the expression ―examination‖ does not connote or imply a laborious or contested inquiry. On the other hand, Section 16 provides that the arbitral tribunal can ―rule‖ on its juri iction, including the existence and validity of an arbitration agreement. A ―ruling‖ connotes adjudication of disputes after admitting evidence from the parties. Therefore, it is evident that the referral Court is only required to examine the existence of arbitration agreements, whereas the arbitral tribunal ought to rule on its juri iction, including the issues pertaining to the existence and validity of an arbitration agreement. A similar view was adopted by this Court in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd.‖ [Emphasis supplied]

The effect of In Re: Interplay was further explained by a Three Judge Bench of the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning3 wherein the Court declared Vidya Drolia and NTPC Ltd.’s findings qua scope of inquiry under Section 8 and Section 11 of the Act to no longer be compatible with modern principles of arbitration. The material portions of the judgement read as under: ―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 juri iction 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). … 118. 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.‖ [Emphasis supplied]

Thus from the above-mentioned authorities it is clear that a Court’s scope of inquiry under Section 11 of the Act has been limited to a prima facie examination of the existence of an arbitration agreement while the adjudication under Section 8 is to be made for both existence and validity. Further, the examination so undertaken under both the said provisions must be within the confines of Section 7 of the Act. Objections relating to arbitrability of disputes are not to be entertained by a referral Court acting under Section 8 or 11 of the Act.‖

Therefore, in view of the fact that disputes have arisen between the parties and there is an arbitration clause in the contract, this Court appoints Ms. Mehak Nakra, Advocate (Mobile No.+ 91 9871144582, e-mail id: advmehaknakra@gmail.com ) as the sole Arbitrator.

The arbitration would take place under the aegis of the Delhi International Arbitration Centre (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.

The learned arbitrator is also requested to file the requisite disclosure under Section 12 (2) of the Act within a week of entering on reference.

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.

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. Let the copy of the said order be sent to the Arbitrator through the electronic mode as well.

Accordingly, the instant petition stands disposed of.