Delhi High Court
Cars24 Services Private Limited vs Tsisia Entrepreneur Private Limited & … on 24 July, 2025
Author: Purushaindra Kumar Kaurav
Bench: Purushaindra Kumar Kaurav
$~O-2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 382/2025
Date of Decision: 24.07.2025
CARS24 SERVICES PRIVATE LIMITED .....Petitioner
Through: Mr Rit Arora, Advocate.
versus
TSISIA ENTREPRENEUR PRIVATE LIMITED & ORS.
.....Respondents
Through: Mr Danish Syed, Advocate for R1 to
R4.
CORAM:
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
JUDGEMENT
PURUSHAINDRA KUMAR KAURAV, J. (ORAL)
1. Learned counsel appearing for the respondents raised two objections:
(i) that this Court lacks jurisdiction to entertain the instant application, and
(ii) that the earlier arbitration agreement no longer exists in view of the
subsequent settlement reached between the parties.
2. In response to the said objections, learned counsel appearing for the
petitioner submitted that Clause 8.1 of the Agreement dated 17.01.2019
unequivocally confers jurisdiction upon this Court. As regards the purported
settlement agreement between the parties, learned counsel contended that
the said agreement has not been fully acted upon. He further submitted that
there are several deficiencies, including non-payment of stamp duty,
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associated with the subsequent agreement. He also argued that the dispute
arises out of the original agreement, which has not been expressly rescinded
by the later agreement. Accordingly, it was submitted that this Court may
consider appointing an arbitrator.
3. I have considered the submissions made by the learned counsel
appearing for the parties and have perused the record. Clause 8.1 of the
agreement dated 17.01.2019 reads as under:
“8.1 Dispute Resolution. In case of any difference(s) and/or dispute(s)
arising out of the Agreement shall be mutually settled between the parties
within (Three) 3 days of any such dispute being referred by any
aggrieved party to the other. In the event of any such difference(s)
and/or dispute(s) and/or any part thereof not amicably settled between
the parties within the stipulated time may be referred to an Arbitration
Tribunal consisting of a sole arbitrator to be appointed by the Company.
The award passed by the said Arbitration Tribunal shall be final and
binding upon the parties. The language shall be English and the venue
shall be New Delhi.”
4. A perusal thereof is clearly indicated that the parties have voluntarily
agreed and conferred the jurisdiction to the court at New Delhi.
5. In light of the above, the provisions of the Code of Civil Procedure
regarding cause of action may not be strictly applicable, as the parties have
expressly agreed to the jurisdiction of this Court at New Delhi. In Kings
Chariot v. Tarun Wadhwa1, a coordinate bench of this Court affirmed this
principle by stating:
“30. There is thus, no confusion and law is explicit that for the
purpose of Arbitration, even if no part of cause of action has
arisen in a place, then too, the parties can agree on a seat of
jurisdiction, which would then become the place for all litigation1
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under the Arbitration Act. However, if the parties do not specify
any seat/place of Arbitration, them the jurisdiction of the Court
shall be determined in a accordance with Section 16 to
Section 20 of CPC”
This demonstrates that the provisions of the CPC concerning cause of action
may not be rigidly applied where parties have mutually agreed upon a
particular forum, such as the Court at New Delhi in the instant case.
6. As regards the settlement-cum-undertaking dated 10.12.2020, it
appears that an arrangement was made for repayment of the amount.
However, this subsequent document does not expressly rescind the earlier
Agreement dated 17.01.2019. In any event, this issue may be examined by
the Arbitral Tribunal once the parties are permitted to lead evidence,
whether oral or documentary.
7. In view of the aforesaid, the court finds that there exists an arbitration
clause.
8. The law with respect to the scope and standard of judicial scrutiny
under Section 11(6) of the 1996 Act has been fairly well settled. This Court
as well in the order dated 24.04.2025 in case of ARB.P. 145/2025 titled as
Pradhaan Air Express Pvt Ltd v. Air Works India Engineering Pvt Ltd has
extensively dealt with the scope of interference at the stage of Section 11.
The Court held as under:-
“9. The law with respect to the scope and standard of judicial scrutiny
under Section 11(6) of the 1996 Act has been fairly well settled. The
Supreme Court in the case of SBI General Insurance Co. Ltd. v. Krish
Spinning2, while considering all earlier pronouncements including the
Constitutional Bench decision of seven judges in the case of Interplay
2
2024 SCC OnLine SC 1754
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between Arbitration Agreements under the Arbitration & Conciliation
Act, 1996 & the Indian Stamp Act, 1899, In re 3 has held that scope of
inquiry at the stage of appointment of an Arbitrator is limited to the
extent of prima facie existence of the arbitration agreement and nothing
else.
10. It has unequivocally been held in paragraph no.114 in the case of
SBI General Insurance Co. Ltd that observations made in Vidya Drolia
v. Durga Trading Corpn.4, and adopted in NTPC Ltd. v. SPML Infra
Ltd.,5 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 not apply after
the decision of Re: Interplay. The abovenoted paragraph no.114 in the
case of SBI General Insurance Co. Ltd reads 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
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 in In
Re: Interplay (supra).”
11. 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 appreciation of evidence adduced by the
parties. While considering the aforesaid pronouncements of the Supreme
Court, the Supreme Court in the case of Goqii Technologies (P) Ltd. v.
Sokrati Technologies (P) Ltd.6, however, has held that the referral
Courts under Section 11 must not be misused by one party in order to
force other parties to the arbitration agreement to participate in a time-
consuming and costly arbitration process. Few instances have been
delineated such as, the adjudication of a non-existent and malafide claim
through arbitration. The Court, however, in order to balance the limited
scope of judicial interference of the referral Court with the interest of the
parties who might be constrained to participate in the arbitration
proceedings, has held that the Arbitral Tribunal eventually may direct
3 2023 SCC OnLine SC 1666.
4
(2021) 2 SCC 1.
5 (2023) 9 SCC 385.
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that the costs of the arbitration shall be borne by the party which the
Arbitral Tribunal finds to have abused the process of law and caused
unnecessary harassment to the other parties to the arbitration.
12. It is thus seen that the Supreme Court has deferred the adjudication
of aspects relating to frivolous, non-existent and malafide claims from
the referral stage till the arbitration proceedings eventually come to an
end. The relevant extracts of Goqii Technologies (P) Ltd. reads as
under:-
“20. As observed in Krish Spg. [SBI General Insurance Co.
Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine SC
1754 : 2024 INSC 532] , frivolity in litigation too is an aspect
which the referral court should not decide at the stage of
Section 11 as the arbitrator is equally, if not more, competent
to adjudicate the same.
21. Before we conclude, we must clarify that the limited
jurisdiction of the referral courts under Section 11 must not
be misused by parties in order to force other parties to the
arbitration agreement to participate in a time consuming and
costly arbitration process. This is possible in instances,
including but not limited to, where the claimant canvasses the
adjudication of non-existent and mala fide claims through
arbitration.
22. With 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 Arbitral Tribunal may direct that
the costs of the arbitration shall be borne by the party which
the Tribunal ultimately finds to have abused the process of
law and caused unnecessary harassment to the other party to
the arbitration. Having said that, it is clarified that the
aforesaid is not to be construed as a determination of the
merits of the matter before us, which the Arbitral Tribunal
will rightfully be equipped to determine.”
13. In view of the aforesaid, the scope at the stage of Section 11
proceedings is akin to the eye of the needle test and is limited to the
extent of finding a prima facie existence of the arbitration agreement and
nothing beyond it. The jurisdictional contours of the referral Court, as
meticulously delineated under the 1996 Act and further crystallised
through a consistent line of authoritative pronouncements by the
Supreme Court, are unequivocally confined to a prima facie examination
of the existence of an arbitration agreement. These boundaries are not
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merely procedural safeguards but fundamental to upholding the
autonomy of the arbitral process. Any transgression beyond this limited
judicial threshold would not only contravene the legislative intent
enshrined in Section 8 and Section 11 of the 1996 Act but also risk
undermining the sanctity and efficiency of arbitration as a preferred
mode of dispute resolution. The referral Court must, therefore, exercise
restraint and refrain from venturing into the merits of the dispute or
adjudicating issues that fall squarely within the jurisdictional domain of
the arbitral tribunal. It is thus seen that the scope of enquiry at the
referral stage is conservative in nature. A similar view has also been
expressed by the Supreme Court in the case of Ajay Madhusudan Patel
v. Jyotrindra S. Patel”7.
9. In view of the fact that disputes have arisen between the parties and
there is an arbitration clause in the contract, this Court is inclined to appoint
an Arbitrator to adjudicate upon the disputes between the parties.
9. Therefore, the Court deems it appropriate to appoint, Ms. Kaarunya
Lakshmi, Advocate (Mobile No. – +91 8586801514 ; Email Id-
[email protected] ) as the Sole Arbitrator.
10. The Sole Arbitrator may proceed with the arbitration proceedings,
subject to furnishing to the parties the requisite disclosures as required under
Section 12 of the Arbitration and Conciliation Act.
11. The Sole Arbitrator shall be entitled to fee in accordance with the
IVth Schedule of the Arbitration and Conciliation Act or as may otherwise
be agreed to between the parties and the learned Sole Arbitrator.
12. The parties shall share the arbitrator’s fee and arbitral cost, equally.
13. All rights and contentions of the parties in relation to the
claims/counter claims are kept open, to be decided by the Sole Arbitrator on
their merits, in accordance with law.
7
(2025) 2 SCC 147.
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14. Needless to state, nothing in this order shall be construed as an
expression of opinion of this Court on the merits of the controversy. All
rights and contentions of the parties in this regard are reserved. Let the copy
of the said order be sent to the Arbitrator through the electronic mode as
well.
15. Accordingly, the instant petition stands disposed of.
PURUSHAINDRA KUMAR KAURAV, J
JULY 24, 2025
tr/sph
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