Mr. Asav Rajan, Adv v. DR VIKAS SAROHA ANR

Through: Mr. Asav Rajan, Adv. versus DR VIKAS SAROHA & ANR. .....Respondents Through: None. HON’BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV JUDGEMENT PURUSHAINDRA KUMAR KAURAV, J. (ORAL)

1. The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (the 1996 Act), seeking appointment of an Arbitrator to adjudicate upon the dispute between the parties, in terms of the Finance cum Hypothecation Agreement dated 29.03.2019.

2. The service report placed by the Registry indicates that notices have been served upon the respondents, despite that nobody appears on behalf of the respondents.

3. A perusal of the petition indicates that the petitioner is a non-banking financial corporation. On 19.03.2019, respondent No.1 applied for a loan facility, wherein respondent No.2 stood as guarantor. Pursuant thereto, a loan was sanctioned vide a sanction letter bearing reference No. 8988592-1. Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:07.05.2025 17:54:59 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV On 29.03.2019, respondent No.1 executed Finance cum Hypothecation Agreement bearing no. A8988592 (hereinafter referred to as Finance Agreement) with the petitioner for availing a loan facility to the tune of Rs. 63,75,000 and hypothecated Vivid E 95V 202 CMV Unit with four probes (1 No.), in favour of the petitioner.

4. Thereafter, as per the plaint, on the even date, a promissory notice was provided to the petitioner under the signature of respondent No.2 in the capacity of guarantor, for the loan facility availed by respondent No.1. It is the case of petitioner that respondent No.1 appears to have made certain repayments. Thereafter, on 09.09.2024, the petitioner appears to have issued statement of account of the respondent No.1 along with pre-termination statement indicating the outstanding amount to the tune of Rs.56,97,110/-.

5. It is also seen from the petition that on 19.11.2024, the petitioner issued the demand notice for recall of loan and invocation of arbitration under the agreement, and since the respondents did not act upon the same, the petitioner by invoking Clause 13(e) of the Agreement in question has instituted the instant proceedings.

6. At this stage, the Court takes note of Clause 13 (e) of the Finance Agreement dated 29.03.2019, which reads as under:- “13 (e). Arbitration: All disputes, differences and/or claim arising out of or in connection with this Agreement and the Schedule(s) attached hereto or the performance of this Agreement shall be settled by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996, or any statutory amendments thereof and shall be referred to the sole Arbitrator nominated/appointed by the Lender. The place of arbitration shall be Delhi and the award given by such an Arbitrator shall be final and binding on the parties to this Agreement.” Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:07.05.2025 17:54:59 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

7. 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 Spinning,1 while considering all earlier pronouncements including the Constitutional Bench decision of seven judges in the case of Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re 2 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. 10It 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.,3 and adopted in NTPC Ltd. v. SPML Infra Ltd.,4 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).”