Prima facie non-arbitrability bars arbitration where a comprehensive settlement has already discharged the dispute and later challenge is untenable.

At Section 11 of the Arbitration and Conciliation Act, the referral court applies only a narrow prima facie scrutiny of the arbitration agreement and may decline reference where the record shows the claim is manifestly non-arbitrable. Where the underlying grievance was never raised during the contract, the parties entered into and acted upon a comprehensive settlement, and a later allegation of coercion or economic duress appears only after receipt of settlement benefits, the court may treat the proposed reference as ex facie frivolous and dishonest. The settlement was held to have discharged the disputes, so the later request for arbitration could not be used to reopen accord and satisfaction, and the appointment of an arbitrator was set aside.

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Issues: (i) whether the referral court under Section 11 of the Arbitration and Conciliation Act, 1996 could refuse appointment of an arbitrator where the dispute was, on a prima facie view, an afterthought arising after a settlement and no subsisting dispute survived; (ii) whether the High Court exceeded its limited pre-referral jurisdiction by allowing arbitration despite the alleged accord and satisfaction embodied in the settlement agreement.

Issue (i): whether the referral court under Section 11 of the Arbitration and Conciliation Act, 1996 could refuse appointment of an arbitrator where the dispute was, on a prima facie view, an afterthought arising after a settlement and no subsisting dispute survived.

Analysis: The pre-referral court is confined to a limited prima facie scrutiny of the existence and validity of the arbitration agreement and, exceptionally, whether the dispute is manifestly non-arbitrable. Where the facts show that the underlying claims were not raised during the contract, the parties entered into a comprehensive settlement, the settlement was acted upon, and the later plea of coercion or economic duress is raised only after the benefits of settlement are received, the court may conclude that the proposed reference is ex facie frivolous and dishonest.

Conclusion: The dispute sought to be referred was not bona fide and, on a prima facie view, did not survive for arbitration.

Issue (ii): whether the High Court exceeded its limited pre-referral jurisdiction by allowing arbitration despite the alleged accord and satisfaction embodied in the settlement agreement.

Analysis: Under the post-amendment regime, the court at the Section 11 stage is not to conduct a mini trial, but it must still filter out manifestly non-arbitrable claims. A settled claim, followed by implementation of the settlement and withdrawal of related proceedings, can justify refusal of reference when the challenge to settlement is unsupported and appears to be an afterthought. On the facts, the settlement agreement discharged the disputes, and the later arbitration request was an attempt to wriggle out of that settlement.

Conclusion: The High Court ought not to have appointed an arbitrator and its order was unsustainable.

Final Conclusion: The appeal succeeded, the order appointing the arbitral tribunal was set aside, and the dispute was held not fit for referral under Section 11 on the facts found.

Ratio Decidendi: At the Section 11 stage, the court must apply a narrow prima facie test and may decline reference where the record shows that the alleged dispute is ex facie non-arbitrable, including cases where a comprehensive settlement has already brought about accord and satisfaction and the challenge to that settlement is plainly untenable.

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