Mr.Ankush Bhardwaj, Mr.Shikhar Gupta, Mr.Vishal Yadav, Advocates v. NUTHAN PEREIRA

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 Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:52:18 1 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV 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

21.07.2023.

2. Learned counsel for the petitioner has placed on record the sevice affidavit which reads as under:- “AFFIDAVIT OF SERVICE AFFIDAVIT OF SERVICE OF SHIKHAR GUPTA, S/O SH. MAHESH GUPTA, AGED ABOUT 30 YEARS, HAVING OFFICE AT 16, 2ND FLOOR, WAZIRPUR INDUSTRIAL AREA, DELHI - 1110052. I do hereby solemnly affirm and declare as under:

1. That I am the Counsel for the Petitioner in the captioned matter and hence, I am competent to swear the present Affidavit.

2. That the accompanying Petition being filed online through E-fling before this Hon'ble Court on May 16, 2025.

3. That the copy of the said Petition has been duly served upon the Respondents on their email ID i.e. nuthan [email protected] on May 15, 2025 from my email address [email protected].

4. I state that the said email was delivered and has not bounced or received back as undelivered. Copy of the said email is enclosed herewith.”

3. Learned counsel for the petitioner submits that the email address on which the notice was sent forms part of the agreement. In view of the above, it is noted that despite proper service, no one has appeared on behalf of the respondent to contest the petition.

4. The facts of the case indicate that the petitioner is a non-banking Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:52:18 2 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV financial institution engaged in providing loan and credit facilities. As per the petitioner’s case, it sanctioned a loan facility of Rs. 25,21,122/- to the respondent, with repayment agreed to be made by monthly installments on or before the 5th of each month for a period of 60 months. Accordingly, a Loan Agreement dated 21.07.2023 was executed between the parties. Subsequently, it is alleged that the respondent defaulted on the monthly installments and failed to adhere to the agreed repayment schedule. Despite reminders and efforts by the petitioner, the respondent failed to make payments and did not respond to multiple reminders.

5. Consequently, the petitioner issued a Loan Recall Notice dated

22.05.2024 to the respondent, demanding an amount of Rs. 24,44,413/- as of that date. Thereafter, the petitioner claims to have issued a Legal Notice dated 14.04.2025, invoking the arbitration clause (Clause 14) of the Loan Agreement dated 21.07.2023, seeking the appointment of a sole arbitrator.

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

21.07.2023, 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 Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:52:18 3 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV proceedings held Mumbai/Delhi. arbitrator shall be final and binding on all parties concerned. The arbitration (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 to carry out 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 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.”

7. 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

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 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 1 2024 SCC OnLine SC 1754 2 2023 SCC OnLine SC 1666. Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:52:18 4 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV 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 as, the adjudication of a non-existent and malafide claim through arbitration. The Court, however, in order to balance the limited scope of judicial interference of the referral Court with the interest of the parties who might be constrained to participate in the arbitration proceedings, has held that the Arbitral Tribunal eventually may direct

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 Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:52:18 1 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV 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

21.07.2023.

2. Learned counsel for the petitioner has placed on record the sevice affidavit which reads as under:- “AFFIDAVIT OF SERVICE AFFIDAVIT OF SERVICE OF SHIKHAR GUPTA, S/O SH. MAHESH GUPTA, AGED ABOUT 30 YEARS, HAVING OFFICE AT 16, 2ND FLOOR, WAZIRPUR INDUSTRIAL AREA, DELHI - 1110052. I do hereby solemnly affirm and declare as under:

1. That I am the Counsel for the Petitioner in the captioned matter and hence, I am competent to swear the present Affidavit.

2. That the accompanying Petition being filed online through E-fling before this Hon'ble Court on May 16, 2025.

3. That the copy of the said Petition has been duly served upon the Respondents on their email ID i.e. nuthan [email protected] on May 15, 2025 from my email address [email protected].

4. I state that the said email was delivered and has not bounced or received back as undelivered. Copy of the said email is enclosed herewith.”

3. Learned counsel for the petitioner submits that the email address on which the notice was sent forms part of the agreement. In view of the above, it is noted that despite proper service, no one has appeared on behalf of the respondent to contest the petition.

4. The facts of the case indicate that the petitioner is a non-banking Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:52:18 2 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV financial institution engaged in providing loan and credit facilities. As per the petitioner’s case, it sanctioned a loan facility of Rs. 25,21,122/- to the respondent, with repayment agreed to be made by monthly installments on or before the 5th of each month for a period of 60 months. Accordingly, a Loan Agreement dated 21.07.2023 was executed between the parties. Subsequently, it is alleged that the respondent defaulted on the monthly installments and failed to adhere to the agreed repayment schedule. Despite reminders and efforts by the petitioner, the respondent failed to make payments and did not respond to multiple reminders.

5. Consequently, the petitioner issued a Loan Recall Notice dated

22.05.2024 to the respondent, demanding an amount of Rs. 24,44,413/- as of that date. Thereafter, the petitioner claims to have issued a Legal Notice dated 14.04.2025, invoking the arbitration clause (Clause 14) of the Loan Agreement dated 21.07.2023, seeking the appointment of a sole arbitrator.

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

21.07.2023, 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 Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:52:18 3 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV proceedings held Mumbai/Delhi. arbitrator shall be final and binding on all parties concerned. The arbitration (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 to carry out 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 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.”

7. 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

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 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 1 2024 SCC OnLine SC 1754 2 2023 SCC OnLine SC 1666. Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:52:18 4 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV 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 as, the adjudication of a non-existent and malafide claim through arbitration. The Court, however, in order to balance the limited scope of judicial interference of the referral Court with the interest of the parties who might be constrained to participate in the arbitration proceedings, has held that the Arbitral Tribunal eventually may direct