Mr.Ankush Bhardwaj and Mr.Shikhar Gupta, Advocates v. HITESH BIPINBHAI PATEL

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

1. The present petition has been instituted under Section 11(6) of the Signature Not Verified Signed By:NEHA CHOPRA Signing Date:16.05.2025 17:00:39 1 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV Arbitration and Conciliation Act, 1996 (the 1996 Act), wherein the petitioner seeks appointment of an Arbitrator for adjudication of disputes arising out of the Loan Agreement dated 22.10.2022 executed between the parties.

2. Learned counsel for the petitioner, while referring to the affidavit of service, submits that the respondents have been duly served through speed post as well as electronic mail. It is contended that the email addresses at which service was effected are those specifically mentioned in the Loan Agreement itself.

3. Upon perusal of the affidavit of service, this Court is satisfied that the respondents have been duly served. However, despite service, there is no appearance on behalf of the respondents. Accordingly, the Court proceeds to deal with the prayer.

4. The facts, as pleaded, indicate that the petitioner is a registered Non- Banking Financial Institution (NBFI) under the regulatory framework of the Reserve Bank of India, engaged in the business of extending financial assistance by way of loans and credit facilities. The respondents, having availed a personal loan from the petitioner, entered into a Loan Agreement dated 22.10.2022 for a sanctioned amount of INR 34,69,893/-.

5. In terms of the said agreement, the respondents were contractually obligated to repay the loan amount in equated monthly instalments over a period of 84 months.

6. Learned counsel for the petitioner further submits that the respondents Signature Not Verified Signed By:NEHA CHOPRA Signing Date:16.05.2025 17:00:39 2 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV committed persistent defaults in repayment, as a result of which the account was classified as a Non-Performing Asset (NPA). A loan recall notice dated

21.10.2024 was issued demanding payment of INR 29,12,135/-. Upon continued failure to regularise the account, a legal notice dated 19.02.2025 was issued invoking the arbitration clause, calling upon the respondents to make payment of INR 28,53,764/- along with interest pendente lite, within a period of thirty days.

7. The Court takes note of Clause 14 of the Loan Agreement dated

22.10.2022, which reads as under:- “14. Arbitration: (i) 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 or incapability of a person so appointed to act as an arbitrator, the Lender may appoint a new arbitrator to be a sole arbitrator. The arbitrator shall not be required to give 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. (ii) Notwithstanding anything to the contrary contained herein, any dispute, controversy or claim arising out of or relating to this contract, including its construction, meaning, scope or validity thereof, shall be resolved and settled by arbitration under the Arbitration and Conciliation Act, 1996 (as amended) which may be administered electronically under Online Dispute Resolution (ODR), in accordance with its Dispute Resolution Rules (“Rules”). (iii)The parties consent the aforesaid proceedings electronically via the email addresses and / or mobile numbers as per Axis Finance records, updated from time to time. (iv)The parties agree that the aforesaid proceedings shall be carried out by a sole arbitrator appointed under the Rules. The juridical seat of to carry out Signature Not Verified Signed By:NEHA CHOPRA Signing Date:16.05.2025 17:00:39 3 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV arbitration shall be Delhi/Mumbai, India and the aforesaid proceedings shall be subject to the exclusive jurisdiction of the competent courts in Delhi/Mumbai, India. The language of arbitration shall be English. The law governing the arbitration proceedings shall be Indian law. The decision of the arbitrator shall be final and binding on the parties.”

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