Mr. Vatsal Sharma, Advocate v. PANKAJ HIRALAL KHINWASARA

Through: Mr. B.S. Bagga, Mr. Pratik Gaurava and Mr. Shikhar Baxi, Advocates. ARB.P. 311/2025 AXIS FINANCE LIMITED .....Petitioner Through: Mr. Vatsal Sharma, Advocate versus SOMNATH RAMCHANDRA THOPTE .....Respondent Through: Mr. B S Bagga, Mr. Pratik Gaurav & Mr. Shikhar Baxi, Advocates CORAM: HON’BLE MR. JUSTICE AMIT BANSAL AMIT BANSAL, J. (Oral)

1. These petitions have been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘Act’) to appoint a Sole Arbitrator, to adjudicate the disputes arising out of Loan Agreements executed between the parties. The arbitration clause is contained in Clause 14 of the said agreements. Signature Not Verified Digitally Signed By:AANCHAL TAGGAR Signing Date:10.09.2025 12:55:11 ARB.P. 301/2025 & connected matter

2. Both the petitions are identical and are being disposed of by a common judgment. For the sake of brevity, facts of ARB.P. 301/2025 are reproduced below. 3. As per the petitioner, the respondent applied for and was sanctioned a loan of Rs. 8,08,693/- by the petitioner pursuant to execution of Loan Agreement dated 31st May, 2021 (hereinafter ‘Agreement’). However, it is stated that the respondent has defaulted in repayment of the loan amount. The said Agreement contains an arbitration clause, i.e. Clause 14, which is set out below:- “14. All disputes, differences and/or claim or questions arising out of these presents or in any way touching or concerning the same or as to constructions, meaning or effect thereof, or as to the right, obligations and liabilities of the parties hereunder shall be referred to and settled by arbitration, to be held in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof, of a sole arbitrator to be nominated by the Lender, and in the event of death, unwillingness, refusal, neglect, inability of incapability of a person so appointed as an arbitrator, the Lender may appoint a new arbitrator to be a sole arbitrator. The arbitrator shall not be required to given any reasons for the award and the award of the arbitrator shall be final and binding on all parties concerned. The arbitration proceedings shall be held Mumbai/Delhi.”

4. The notice of invocation of arbitration was sent by the petitioner on 21st June, 2024, which, as per the tracking report, has been delivered. However, there has been no response from the respondent. 5. Pursuant to the notice issued by this Court, reply has been filed on behalf of the respondent. Signature Not Verified Digitally Signed By:AANCHAL TAGGAR Signing Date:10.09.2025 12:55:11 ARB.P. 301/2025 & connected matter

6. Essentially, the case of the respondent is that the respondent has not signed the Agreement, which contains the arbitration clause. He further submits that the amount of loan was disbursed in the account of the respondent and on the very next date, it was fraudulently removed therefrom. 7. It is submitted that the aforesaid fraudulent transaction is the subject matter of investigation by the Pune Police in FIR No.0084 dated 17th March,

2023. 8. Counsel for the respondent submits that, like the respondent, 76 other investors have been defrauded in this manner and the amounts credited in their accounts have been transferred to the account of one M/s Ashtavinayak Investments in collusion with the officials of the Bank. He places reliance on the judgment of the Supreme Court in A. Ayyasamy v. A. Paramasivam & Ors. (2016) 10 SCC 386 to submit that in cases of serious fraud, the parties should not be referred for arbitration and the matter should be adjudicated in a civil suit. 9. Counsel for the respondent submits that the aforesaid allegations are issues that require detailed examination and adjudication, which can only be undertaken in arbitration. He further relies on the judgment of the Hon’ble Supreme Court in Goqii Technologies Private Limited v. Sokrati Technologies Private Limited (2025) 2 SCC 192, more particularly paragraphs 20 and 21, which read as under:- “20. As observed in Krish Spg.[SBI General Insurance Co. Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine SC 1754 : 2024 INSC 532], frivolity in litigation too is an aspect which the referral court should not decide at the stage of Section 11 as the arbitrator is equally, if not more, competent to adjudicate the same. Signature Not Verified Digitally Signed By:AANCHAL TAGGAR Signing Date:10.09.2025 12:55:11 ARB.P. 301/2025 & connected matter

21. Before we conclude, we must clarify that the limited jurisdiction of the referral courts under Section 11 must not be misused by parties in order to force other parties to the arbitration agreement to participate in a time consuming and costly limited to, where the claimant canvasses the adjudication of non-existent and mala fide claims through arbitration.”

10. Per contra, the counsel appearing on behalf of the petitioner submits that in the present case, the loan was disbursed on 31st May, 2021, to the account of the respondent pursuant to the execution of the Agreement, which bears the signatures of the respondent. 11. It is further submitted that the respondent continued to pay EMI payments towards the repayment of the loan till 14th July, 2023, and only thereafter, the loan was declared to be a Non-Performing Asset (NPA). 12. The petitioner has placed on record the loan account statement along with his rejoinder, which reflects that the loan amount was paid to the respondent on 31st May, 2021. The statement also reflects that continuous payments towards EMI were made to the petitioner till 5th February, 2023. 13. Counsel appearing on behalf of the petitioner submits that EMI payments were not paid by the respondent but by M/s Ashtavinayak Investments. 14. 15. Various objections raised by the respondent can be raised before the I have heard the counsel for the parties. Arbitral Tribunal. In a batch of similar petitions filed by the petitioner against third persons, the Coordinate Bench vide order dated 29th August 2025 in ARB.P.731/2024, rejected a similar challenge and referred the parties to arbitration by appointing a Sole Arbitrator. 16. Counsel for the respondent submits that the same Sole Arbitrator be Signature Not Verified Digitally Signed By:AANCHAL TAGGAR Signing Date:10.09.2025 12:55:11 ARB.P. 301/2025 & connected matter appointed in the present petitions as was appointed by the aforesaid order passed by the Coordinate Bench in ARB.P.731/2024 17. In my considered view, the respondent has failed to make out a case of egregious fraud which would prevent the Court from appointing an Arbitrator to adjudicate the disputes between the parties in terms of the arbitration clause. 18. In fact in Goqii Technologies (supra) cited by the respondent, the Supreme Court specifically held that frivolity in litigation is also an aspect which the referring court should not decide at the stage of Section 11 and has to be left for the Arbitrator to decide. 19. For the said reasons, the petitions are allowed and disposed of with the following directions: i. Mr. Tanoodbhav Singhdev, Advocate (Mob. No. +91- 9999012345) is appointed as a Sole Arbitrator to adjudicate the disputes between the parties. ii. The arbitration will be held under the aegis and rules of the Delhi International Arbitration Centre, Delhi High Court, Sher Shah Road, New Delhi (hereinafter, referred to as the ‘DIAC’). iii. The remuneration of the learned Arbitrator shall be in terms of DIAC (Administrative Cost and Arbitrators’ Fees) Rules, 2018 and each petition will be considered a separate reference. The learned Arbitrator is requested to furnish a declaration in terms of Section 12 of the Act prior to entering into the reference. The parties shall approach the learned Arbitrator within two (2) iv. v. Signature Not Verified Digitally Signed By:AANCHAL TAGGAR Signing Date:10.09.2025 12:55:11 ARB.P. 301/2025 & connected matter weeks from today.

20. It is made clear that all the rights and contentions of the parties, including as to the arbitrability of any of the claim, defence including fraud or any other preliminary objection, as well as claims/counter-claims and merits of the dispute, allegations of fraud of either of the parties, are left open for adjudication by the learned Arbitrator. 21. Nothing said in the order will be construed as adjudication on the merits by the Arbitrator, and he shall decide the matter without being influenced by any observations made. SEPTEMBER 3, 2025 Vivek/- AMIT BANSAL, J Signature Not Verified Digitally Signed By:AANCHAL TAGGAR Signing Date:10.09.2025 12:55:11 ARB.P. 301/2025 & connected matter