Issues of Novation and Accord & Satisfaction Are for Arbitrator: Delhi High Court Appoints Arbitrator Despite Settlement Agreement Claim

1. Case Snapshot

Case Name: M/S Supply Chain Solutions Pvt. Ltd. vs M/S Prime Trans Express Pvt. Ltd.

Citation: ARB.P. 171/2026

High Court: High Court of Delhi

Bench: Hon'ble Ms. Justice Mini Pushkarna

Date of Judgment: 1st July, 2026

Area of Law: Arbitration Law, Contract Law, Novation, Accord and Satisfaction

2. Judgment in Brief

The Delhi High Court allowed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, appointing a Sole Arbitrator to adjudicate disputes between the parties. The petitioner sought arbitration of claims arising from a Carriage of Goods Agreement, including damages for illegal detention of a consignment. The respondent opposed the petition, contending that the disputes had been settled through a Minutes of Meeting (MoM) and a subsequent Settlement Agreement, which novated the original Agreement and extinguished the arbitration clause. The Court held that the scope of inquiry under Section 11 is limited to the prima facie existence of an arbitration agreement. Questions of novation, accord and satisfaction, and whether disputes stand settled involve mixed questions of law and fact that fall within the exclusive jurisdiction of the Arbitral Tribunal. The Court relied on SBI General Insurance Company Limited v. Krish Spinning and Sanjiv Prakash v. Seema Kukreja to hold that the Referral Court cannot conduct a mini-trial on such issues. The Court appointed a Sole Arbitrator and left all contentions open for the Arbitral Tribunal to decide.

3. Relevant Facts

The Agreement

• The petitioner (Supply Chain Solutions Pvt. Ltd.) entered into a Carriage of Goods Agreement with the respondent (Prime Trans Express Pvt. Ltd.) on 01.06.2015 for transportation services.

• The Agreement contained an Arbitration Clause (Clause 28) providing for arbitration of disputes.

The Dispute

• A consignment worth Rs. 38,00,000/- was detained by the respondent from 26.08.2016 to 27.09.2016.

• The petitioner claimed entitlement to penalty under Clause 17 of the Agreement for delay.

Minutes of Meeting (MoM) and Settlement Agreement

• On 06.09.2016, the parties signed an MoM where the petitioner agreed to pay Rs. 12,41,500/- for release of the shipment.

• The petitioner paid the amount by 12.09.2016, but the respondent released all but one consignment.

• On 27.09.2016, the parties entered into a Settlement Agreement before the SHO, Panchkula, where the petitioner agreed to pay an additional Rs. 30,000/- for release of the pending consignment

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