Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd.
Background
Galaxy Infra claimed it had helped Pravin Electricals win a government tender under a Consultancy Agreement dated 7 July 2014 containing an arbitration clause, and sought appointment of an arbitrator when Pravin allegedly refused to pay its commission. Pravin disputed that any such agreement was ever concluded, pointing to a forensic report that could not confirm the authenticity of the signature on the agreement, a notary who was not even licensed to notarize it at the time, and invoices and payments that were actually addressed to and made by a different company. The Delhi High Court's Single Judge nevertheless held that an arbitration agreement existed and appointed a sole arbitrator, prompting Pravin's appeal to the Supreme Court.
Decision Breakdown
The Supreme Court explained that under Section 11(6A), as interpreted in its earlier decision in Vidya Drolia, a court examining a request to appoint an arbitrator should apply only a limited "prima facie" review of whether an arbitration agreement exists, leaving a deeper, fact-intensive dispute to the arbitrator himself where the evidence is genuinely contested. Reviewing the record, the Court found the High Court's findings were factually incorrect on several points (confusing which company actually raised and paid invoices, misreading the dates of the draft agreement, and glossing over the signature dispute and notary's lack of authorization) and that the case's many unresolved factual contradictions made it unsafe to conclusively hold either way that a valid arbitration agreement existed. It therefore set aside the High Court's conclusive finding on the agreement's existence but upheld the appointment of the sole arbitrator, directing him to first decide as a preliminary issue whether a valid arbitration agreement exists, based on full evidence and cross-examination, before proceeding to the merits.
Lesson Learnt
When courts decide whether to appoint an arbitrator, they should only check if an arbitration agreement appears to exist on the surface, not conclusively resolve genuinely disputed facts (like disputed signatures or unclear contract formation): those deeper factual disputes are for the arbitrator to determine first, based on evidence and cross-examination.