Ms. Preeti Kumari, Advocate v. M/S ISHWARI HEALTH CARE PVT LTD AND ORS

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV JUDGEMENT PURUSHAINDRA KUMAR KAURAV, J. (ORAL)

1. Affidavit of service reads as under: “1. That I am the Counsel of the Petitioner Company in the present petition and as such I am fully competent to swear this affidavit.

2. That the notice issued by the Hon’ble Delhi High Court all the Respondents on behalf of the Petitioner Company through e-mail [email protected], [email protected], [email protected], [email protected], [email protected] on 06.05.2025 via e- Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:17.05.2025 11:39:52 1 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV mail i.e [email protected]. The said e-mail has not bounced back and has been duly served upon the respondents. The copy of the e-mail is annexed herewith as Annexure A.

3. That I have also served the copy of notice through my whatsapp mobile No.9711615978 to the mobile no of the respondent i.e. 9820583410. The copy of the screenshot is annexed herewith as Annexure B.

4. That notice issued by this Hon’ble Delhi High Court were duly served to the Respondent No.1 on behalf of the Petitoner Company via speed post and Courier to the following addresses: Sr. No. Address Speed post Courier

1. 2 52, Whispering Palm Center, Lokhandwala Township, Akurl i Road, Kandivali (E), Mumbai, Maharashtra-400101 Plant No. 7-7A, Building No.5, Shiv Shambhu Industrial Estate, OffNH 8, Valiv Vasai (E), District Thane, Maharashtra- 401208 SERVED NOT SSERVED NOT SERVED NOT SERVED

5. That I have sent the notice issued by this Hon’ble Court to the Respondent No.2 on behalf of the Petitioner Company via Speed post and Courier to the following addresses: S.No. Address Speed post Courier

1. 2 Flat No.1101, Eleventh Floor Tower No.1, Spring Grover, Building No.2, CTS No.17111A/60, Akurli Road, Kandiwali (E) Mumbai Maharashtra-400101. 6/B 702, Alika Nagar, Akurli Road, Near School, Lokanhndwala Lokhandwala Township, Kandiwali East, Mumbai, Maharashtra-400101 Foundation NOT SERVED NOT SERVED NOT SERVED NOT SERVED Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:17.05.2025 11:39:52 2 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

6. That I have sent the notice issued by this Hon’ble Court to Respondent No.3 on behalf of the Petitioner Company via Speed post and Courier to the following addresses: S.No. Address Speed Post Courier 1 2 Flat No.1101, Eleventh Floor Spring Grover, Tower No.1, Building No.2, CTS No.17111A/60, Akurli Road, Kandiwali (E) Mumbai Maharashtra-400101. 6/B 702, Alika Nagar, Akurli Road, Near Lokanhndwala Foundation School, Lokhandwala Township, Kandiwali Mumbai, East, Maharashtra-400101 NOT SERVED NOT SERVED NOT SERVED NOT SERVED

7. That the Postal Receipts, Courier Receipts along with their tracking reports are annexed herewith Annexure C.”

2. Learned counsel for the petitioner submits that the email ID on which the notice has been served is part of the Agreement. She also submits that whatsapp number has been obtained from various correspondences between the parties. As no one appears on behalf of the respondent, the Court proceeds to decide the matter on the basis of facts and averments made by the petitioner.

3. The facts of the case indicate that, the petitioner is a registered Non- Banking Financial Company (NBFC) incorporated under the provisions of the Companies Act, 1956, having its registered office at 11/6 B, Shanti Chambers, Pusa Road, New Delhi 110005. The petitioner asserts that it is engaged in providing a broad spectrum of loan services, including loans against property, unsecured business and personal loans, financing for SME receivables, medical equipment financing, and IPO funding. These services Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:17.05.2025 11:39:52 3 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV are claimed to cater to the growing credit needs of its clientele, both domestically and internationally. According to the petitioner, respondent No.1, Ishwari Healthcare Private Limited, a private limited company having its registered office at 52, Whispering Palm Center, Lokhandwala Township, Akurli Road, Kandivali (East), Mumbai, Maharashtra 400101 approached the petitioner seeking a loan facility. Respondents No.2 and No.3, stated to be directors of respondent No.1 and responsible for its day-to-day affairs, are also parties to the transaction.

4. The petitioner contends that the respondents requested a loan facility of Rs. 35,35,807/- (Rupees Thirty-Five Lakhs Thirty-Five Thousand Eight Hundred and Seven only) for the purpose of business expansion and provided assurances of timely repayment along with applicable interest. Relying on these representations, the petitioner sanctioned the loan. However, it is alleged that the respondents failed to honour their repayment obligations despite repeated demands and issuance of a legal notice.

5. The petitioner further states that, owing to the default, a notice of reference under Section 21 of the Arbitration and Conciliation Act, 1996 (1996 Act), was issued to the respondents via speed post on 07.11.2024 and via email on 29.10.2024. As of 24.10.2024, the respondents are claimed to have defaulted on repayment, with the outstanding dues amounting to Rs.8,56,120/- (Rupees Eight Lakhs Fifty-Six Thousand One Hundred and Twenty only). The petitioner alleges that the respondents have thereby breached the terms of the loan agreement dated 19.10.2020 and made false assurances regarding repayment.

6. Subsequently, the instant petition was filed with the following prayer : Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:17.05.2025 11:39:52 4 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV “a) Allow the present petition and appoint sole arbitrator in terms of the loan agreement dated 15.01.2019 for adjudication of the dispute between the parties.”

7. Clause 10.1 of the Loan Agreement dated 19.10.2020 reads as under: limitation any question regarding “10.1 "Any disputes, differences, controversies and questions directly or indirectly arising at any time hereafter between the Parties or their respective representatives or assigns, arising out of or in connection with this Agreement (or the subject matter of the Agreement), including, its existence, validity, without interpretation, construction, performance, enforcement, rights and liabilities of the parties, or termination("Dispute. ',), shall be referred to Sole arbitrator duly appointed by the lender. The Language of the arbitration shall be English. The seat of the Arbitration shall be at New Delhi and the language of the proceedings shall be English. The Awardshall be in writing and shall set out the reasons for the Arbitrator's decision. The costs and expenses of the Arbitration shall be borne equally by each Party, with each cost and expenses of the Arbitration shall be borne equally by each party, with each party paying for its own fees and costs including attorney fees, except as may be determined by the arbitral tribunal. Any award by the Arbitration tribunal shall be final and binding.”

8. 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, 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 Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:17.05.2025 11:39:52 5 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV Act, 1996 & the Indian Stamp Act, 1899, In re 1 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.

10. It 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.,2 and adopted in NTPC Ltd. v. SPML Infra Ltd.,3 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:- facie existence of “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 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).”

11. Ex-facie frivolity and dishonesty are the issues, which have been held to be within the scope of the Arbitral Tribunal which is equally capable of deciding upon the appreciation of evidence adduced by the parties. While considering the aforesaid pronouncements of the Supreme Court, the Supreme Court in the case of Goqii Technologies (P) Ltd. v. Sokrati Technologies (P) Ltd.,4 however, has held that the referral Courts under Section 11 must not be misused by one party in order to force other parties to the arbitration agreement to participate in a time- consuming and costly arbitration process. Few instances have been delineated such as, the adjudication of a non-existent and malafide claim through arbitration. The Court, however, in order to balance the limited scope of judicial interference of the referral Court with the interest of the parties who might be constrained to participate in the arbitration proceedings, has held that the Arbitral Tribunal eventually may direct