Mr.Murari Kumar Shankar, Advocates. and Mr.Shiv v. MR. BABLU (BORROWER) R/O. HOUSE NO

and Mr.Shiv Versus MR. BABLU (BORROWER) R/O. HOUSE NO. 539, 3RD FLOOR, GALI NO.1, SRI NAGAR, SHAKURBASTI DELHI-110034 MRS. JANAK DULARI (CO-BORROWER) R/O. HOUSE NO. 539, 3RD FLOOR, GALI NO.1, SRI NAGAR, SHAKURBASTI DELHI-110034 MR. DEVENDER SHARMA (CO-BORROWER) R/O. HOUSE NO. 539, 3RD FLOOR, GALI NO.1, SRI NAGAR, SHAKURBASTI DELHI-110034 .... RESPONDENTS 1 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(6) of the Arbitration and Conciliation Act, 1996 (the 1996 Act) by the petitioner, seeking appointment of an Arbitrator, to adjudicate upon the disputes that have arisen between the parties under the Loan Agreement dated

29.02.2020.

2. The instant matter was earlier called out on 05.03.2025 and the Court has directed for issuance of notice. On 01.04.2025, one Mr.Sumit Goswami, learned counsel appeared on behalf of the respondents and sought time to file the reply. It appears that thereafter on 24.04.2025, when the matter was called out, no one appeared on behalf of the respondents. The Court, therefore, directed for fresh service of notice on the respondents. Pursuant thereto, learned counsel for the petitioner has filed affidavit of service, which reads as under:- “AFFIDAVIT OF SERVICE I, Nilesh Kumar, S/o. Sh. Mukesh Prasad Singh, Aged about 33 years, working as the counsel for the Petitioner and having office at:-G-27, First Floor, Jangpura Extension, New Delhi- 110014; do hereby solemnly affirm and declare as under:- 1 . That I am the counsel for the petitioner and am fully conversant with the facts and circumstance of the case and am competent to swear and 2 depose the present affidavit of service.

2. That the Respondent No.1 have been served a copy of the petition along with documents by way of e-mail dated 28.02.2025 sent from to [email protected] at [email protected] 03:49 PM. The said E-mail has been delivered and has not bounced back. Copy of the e-mail dated 28.02.2025 has been annexed in the plaint at Page No.74.”

3. Learned counsel for the petitioner contended that the service of notice has been sent on email ID, which is forming part of the agreement.

4. In view of the aforesaid, the Court treats the service to be completed on the respondents. Since, no one appears on behalf of the respondents despite service, the matter is taken up for final disposal.

5. The facts of the case would indicate that the petitioner is a Non- Banking Financial Company (NBFC) regulated by the Reserve Bank of India (RBI). As per the case set up by the petitioner, the respondents has approached the petitioner to avail of a loan facility and it sactioned a loan to the respondents for a sum of Rs.10,56,110/-(Rupees Ten Lakhs Fifty-Six Thousand One Hundred Ten Rupees Only). The said loan amount was agreed to be paid in monthly EMIs to be payable on the 10th of each month. Thereafter, the petitioner entered into a Loan Agreement dated 29.02.2020 with the respondents, whereby, respondent no.1 stood as a principal borrower, and respondent nos.2 and 3 were the co-borrowers. It is submitted on behalf of the petitioner that the respondents have failed to comply with the terms outlined under the Amortization Schedule and Schedule II of the Loan Agreement dated 29.02.2020 and breached the loan agreement under clauses 3.5, 6.1, 6.8 and clause 8 of the loan agreement. Thereafter, the 3 petitioner has terminated the existing loan facility vide Loan Recall Notice dated 30.03.2023.

6. It is also stated that the respondents continued to disregard the outstanding dues, and therefore, the petitioner has issued a Legal Notice dated 13.12.2024 invoking an arbitration clause (Clause 21) of Loan Agreement dated 29.02.2020, seeking the appointment of a Sole Arbitrator.

7. The Court takes note of Clause 21 of the Loan Agreement dated

29.02.2020, which reads as under:- “„Clause 21.

21. All dispute, differences and/ or claim arising out of these presents Including any dispute as to any amount outstanding, or in any way touching or as to the right and liabilities of the parties hereunder shall be settled by arbitration to be held in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof and shall be referred to the arbitration of a sole arbitrator, to be nominated by SFPL only and borrower shall have no rightto object the appointment of said Arbitrator. In the event of death, refusal, neglect, inability or incapability of a person so appointed to act as an arbitrator, SFPL may appoint a new arbitrator. The award ofthe arbitrator shall be final and binding on all parties concerned. The arbitration shall be final be final and binding on all parties concerned. The arbitration proceedings shall be held at Delhi and the arbitration shall be conducted i n Engli sh language.”

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 the 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 4

11. The Court held as under:- “9. Th e law wi th respect to th e scope and standard of j udi ci al scruti ny 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 Spinning1, 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 i ssue of “accord and sati sfacti on” under Secti on 11 extends to weedi ng 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 vi ew of th e observati ons made by th Re: Interplay (supra), it is clear that the scope of enquiry at the stage of appointment of arbitrator is limited to the the arbitration scrutiny of prima 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 sati sfacti on” under Secti on 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).” i s Court i n In

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