Ms. Preeti Kumari, Advocate v. MK TRADERS THROUGH ITS PROPRIETOR AND ANR

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 [email protected], e-mail [email protected], [email protected], [email protected], on 22.04.2025 via e-mail i.e [email protected]. It is submitted that mail sent Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:16.05.2025 15:51:40 1 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV id. [email protected], [email protected] [email protected] are bounced back. However, notices were duly served upon to the respondents on email id. i.e. [email protected]. 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. 7837777754. 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 Petitioner Company via speed post and Courier to the following addresses: Sr No. ADDRESS Speed post Courier 1 2 No.B, IX-1469, Mandi Bagh Bute Shah, 26 Pulliab, Bute Shah Mandi, Ludhiana Punjab-141008 SERVED (REFUSED) NOT SERVED Rio House No.122, Street No.01, New Deep Nagar, Civil Lines, Ludhiana, Ward No.30, Punjab-141001 SERVED (REFUSED) 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. Rio House No.122, Street No.01, New Deep Nagar, Civil Lines, Ludhiana, Ward No.30, Punjab- 141001 SERVED(REFUSED) SERVED

6. That the Postal Receipts, Courier Receipts along with Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:16.05.2025 15:51:40 2 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV their tracking reports are annexed herewith Annexure C.”

2. A perusal of affidavit shows that the respondents refused to accept service. It is also submitted by the learned counsel that the email and whatsapp number on which notice was additionally sent are forming the part of the loan agreement.

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 office situated at 11/6 B Shanti Chambers, Pusa Road, New Delhi - 110005. The petitioner is engaged in the business of making loans against property, unsecured business and personal loans, SME receivables, medical equipment and IPO financing to meet the growing credit requirement of its customers globally. According to the petitioner, respondent No.1, who is stated to be engaged in the business of wholesale trading of rice and pulses under the name and style of MK Traders, with its registered office at B, IX-1469, Mandi Bagh Bute Shah, 26 Punjab, Bute Shah Mandi, Ludhiana, Punjab – 141008, approached the petitioner seeking a loan facility. It is further submitted that respondent No.2, Mr. Naveen Aggarwal, the husband of Respondent No.1, along with respondent No.1, was jointly responsible for the day-to-day management and business affairs of the said concern.

4. The plaintiff avers that the respondents requested a loan facility of Rs.25,22,323/- (Rupees Twenty-Five Lakhs Twenty-Two Thousand Three Hundred and Twenty-Three only) for the purpose of business expansion, and assured the plaintiff of timely repayment along with applicable interest. Relying on these representations, the plaintiff sanctioned the loan, and the Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:16.05.2025 15:51:40 3 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV parties entered into a loan agreement dated 29.10.2022.

5. However, the plaintiff alleges that, despite repeated requests and the issuance of a legal notice, the respondents failed to repay the outstanding amount. Consequently, the plaintiff issued a notice of reference under Section 21 of the Arbitration and Conciliation Act, 1996 (Act, 1996), via speed post and email on 07.11.2024. It is stated that, as of 29.10.2022, the respondents had failed to clear their outstanding dues amounting to Rs.22,92,791/- (Rupees Twenty-Two Lakhs Ninety-Two Thousand Seven Hundred and Ninety-One only), thereby breaching the loan agreement dated

29.10.2022 and failing to honour their repayment commitments.

7. Subsequently, the instant petition was filed with the following prayer : “a) Allow the present petition and appoint sole arbitrator in terms of the loan agreement dated 29.10.2022 for adjudication of the dispute between the parties.” Clause 8.2 of the Loan Agreement dated 29.10.2022 reads as under limitation any question regarding “8.2 "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, without its existence, validity, 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 Award shall 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.” Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:16.05.2025 15:51:40 4 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

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,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.

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.,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 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 facie existence of