The Delhi High Court on September 01, 2022 in the matter of OYO Hotels and Homes Pvt. Ltd. v. Agarwal Packers and Movers Ltd. held that the limited scope of judicial scrutiny under Section 11 of the Arbitration and Conciliation Act, 1996 (“A&C Act”) does not permit the High Court to examine an issue as to whether the arbitration clause in a subsequent agreement would govern past transactions of similar nature as it requires detailed consideration of clauses and surrounding circumstances, therefore, all such issues are to be referred to arbitrator.

In the instant matter, a petition was filed before the Court for the appointment of an arbitrator after the refusal of the respondent to refer the dispute to arbitration on the grounds that there was no written agreement between the parties that governed the transactions for which the arbitration is sought and the past services were rendered on the basis of oral understanding between the parties. It was contented that the arbitration clause in the agreement between the parties cannot be resorted to for disputes that arose prior to the agreement itself as it does not cover past services.

The Court held that while exercising jurisdiction under Section 11 of the A&C Act, the High Court cannot examine an issue as to whether the arbitration clause in a subsequent agreement would govern the past transactions of similar nature as it requires detailed consideration of clauses and surrounding circumstances. It was further observed that

“Court may interfere at Section 8 and 11 stage when it is manifestly and ex facie certain that the arbitration agreement is not existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably “non-arbitrable”. It is not the stage for the Court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism. Both the parties have relied on the clauses of the agreement to advance their cases; therefore, the issue requires interpretation of the clauses and of surrounding circumstances.”

Thus, the Court allowed the petition and appointed the sole arbitrator.