Mr. Rajat Katyal, Ms. Ruchika, Mr. Sparsh Agarwal, Advs v. DINESH VASWANI

Through: Mr. Rajat Katyal, Ms. Ruchika, Mr. Sparsh Agarwal, Advs. versus DINESH VASWANI .....Respondent Through: None. CORAM: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV O R D E R PURUSHAINDRA KUMAR KAURAV, J. (ORAL) 1. Heard learned counsel for the petitioner. She has placed on record the affidavit of service which reads as under: “AFFIDAVIT I, Ruchika, D/o Suresh Lakra, aged about 26 years, counsel for the Petitioner in the present matter, having office at F-I5, Kailash Colony, New Delhi 110048, do hereby solemnly affirm and declare as under: 1. 1. That vide order dated 01.04.2025 notice was directed to be issued to the Respondent. In compliance of the order dated 01.04.2025, copy of the notice along with copy of the Petition was attempted to be served upon the Respondent, by Speed Post, Registered Post and Email. Service by Email: Signature Not Verified Signed By:AMIT KUMAR SHARMA Signing Date:13.05.2025 11:15:47 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

2. That a copy of the petition was sent to Respondent via email dated 25.04.2025sent from the email-id of the office of the counsel for the Petitioner i.e., [email protected] at the E-mail ID of the Respondent i.e., [email protected] as mentioned at the E-mail ID of the Respondent i.e., [email protected] as mentioned in the loan agreement and Memo of Parties. It is submitted that no failure/ bounce-back message has been received at the abovementioned e-mail of the office of the counsel ([email protected]). Copy of the Email dated 25.04.2025 is Document A. Service by Speed Post:

3. It is submitted that on 24.04.2025 a copy of the petition was duly sent by Speed Post, via Consignment No. SU002075063IN, at the address of the Respondent as mentioned in the Memo of Parties. It is submitted that as per the internet generated tracking report, the said consignment was reported as delivered to the Respondent on 28.04.2025 and thus service by Speed Post as per the tracking report was complete. Proof of Dispatch by Speed Post along with Speed Post tracking Report is Document B. Service by Courier:

4. It is submitted that on 24.04.2025 a copy of the Petition was duly sent by Courier, via Consignment No. DEL203683037, at the address of the Respondent as mentioned in the Memo of Parties. It is submitted that as per the internet generated tracking report, the said consignment was reported as delivered to the Respondent on 26.04.2025 and thus service by Courier as per the tracking report was complete. Proof of Dispatch by Courier along with Courier tracking Report is Document C. –(Colly) -sd- DEPONENT”

2. A perusal of the aforesaid would indicate that the service has been made upon the respondent through speed post, besides other modes as well. However, there is no appearance on behalf of the respondent. 3. It is seen from the petition that a Loan cum Hypothecation agreement (hereinafter referred to as loan agreement) was executed between the parties on 07.01.2020, and, thereafter, an amount of Rs. 10,00,000/- was disbursed to respondent no.1, whereas respondent no.2 stood as co- borrower. 4. The facts further indicate that on commission of default by the Signature Not Verified Signed By:AMIT KUMAR SHARMA Signing Date:13.05.2025 11:15:47 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV respondents, the petitioner recalled the loan facility on 08.08.2024. The petitioner, subsequently, issued notices to the respondents directing respondents to clear the outstanding dues. However, despite the said notices no response was received from the respondents. As per the petition, as of

07.08.2024, an amount of Rs. 32,26,121/- is due from the respondents. Therefore, the petitioner invoked arbitration vide notice dated 22.08.2024. Under the aforesaid circumstances, the petitioner has approached this Court by way of the instant petition. 5. The Court has perused Clause 9 of the loan agreement dated

07.01.2020, which mandates arbitration in case any dispute arises and the same reads as under: “9. Arbitration If any dispute, difference or claim arises between any of the Obligors and the Lender in connection with the Facility or as to the interpretation, validity, implementation or effect of the Facility Documents or as to the rights and liabilities of the parties under the Facility Documents or alleged breach of the Facility Documents or anything done or omitted to be done pursuant to the Facility Documents, the same shall be settled by arbitration to be held at the place as mentioned at Serial No. 13 of Annexure 1 hereto in accordance with the Arbitration and Conciliation Act, 1996, or any statutory amendments thereto and shall be referred to a sole arbitrator to be appointed by the Lender. The award of the arbitrator shall be final and binding on all parties concerned. The arbitration proceedings shall be in English language. Cost of arbitration shall be borne by the Obligors.”

6. 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:- Signature Not Verified Signed By:AMIT KUMAR SHARMA Signing Date:13.05.2025 11:15:47 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

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:- 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.,5 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