Mr.Ankush Bhardwaj, Mr.Shikhar Gupta, Mr.Vishal Yadav, Advocates v. PADMANABHA PRASAD CHAKRADHARA VENKATA SANKA PROPRIETOR

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

22.11.2021.

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 i.e. [email protected] on May 15, 2025 from my email address [email protected]. i.e. ID

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 Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:55:52 2 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV herewith.”

3. Learned cousenl for the petitioner submits that the email address on which the noice was sent, is forming part of the agreement. In view of the aforesaid, it is seen that despite service, no one appears on behalf of the respondents to contest this petition.

4. The facts of the case indicate that the petitioner is a non-banking financial institution engaged in the business of providing loan and credit facilities. According to the petitioner, it sanctioned a loan facility to the respondents for the sum of Rs. 30,13,818/-, which was agreed to be repaid by the respondents through monthly installments payable on or before the 5th of every month for a period of 60 months. Accordingly, a Loan Agreement dated 22.11.2021 was executed between the parties. Thereafter, the respondents defaulted on their monthly installments and failed to adhere to the agreed repayment schedule. Despite reminders and efforts by the petitioner, the respondents failed to make the payments and did not respond to the various reminders.

5. Accordingly, according the petitioner issued a Loan Recall Notice dated 21.10.2024 to the respondents, demanding payment of Rs. 28,62,894/- as of that date. Subsequently, the petitioner was compelled to issue a Legal Notice dated 16.04.2025, calling upon the respondents to pay the outstanding amount of Rs. 32,49,669/- and invoking the arbitration clause (Clause 37) of the Loan Agreement dated 22.11.2021, seeking the appointment of a sole arbitrator.

6. The Court takes note of Clause 37 of the Loan Agreement dated Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:55:52 3 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

21.07.2023, which reads as under:- “"37. ARBITRATION i) Any and all disputes, claims, dierences arising out of or in connection with the Finance Documents and the Schedulers) of Terms/Repayment Schedulers) attached thereto or compliance with the provisions of the Finance Documents shall be settled by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof and shall be referred to a sole arbitrator to be appointed by the Lender. The seat for such arbitration shall be Mumbai and/ or Delhi, as may be determined by the lender. The costs of such arbitration shall be borne by the Borrouierts}. The language of the arbitration proceedings shall be English. The award given by the arbitrator shall be final and binding upon all the parties to the Finance Documents. The provisions of this Clause shall continue to be in force in respect of any question, dispute or claim as mentioned in this Clause notwithstanding the repayment of all dues under the Facility. ii)Thefinal costs of such arbitration shall be borne by the losing party or othenuise as determined in the arbitration auiard. If a party is required to enforce an arbitral award by legal action of any kind, the party against whom such legal action is taken shall pay all reasonable costs and expenses and attorneys' fees, including any cost of additional litigation or arbitration taken by the party seeking to enforce the award. The provision of arbitration clause contained herein shall continue in force in respect of any question, dispute or claim as mentioned in clause above notwithstanding the repayment of Facilitu. iii) The terms offacility shall be governed by the laws a/India and shall be subject>to the exclusive jurisdiction of courts and tribunals in Mumbai and/ or Delhi. Nothingcontained in this Clause shall limitany right of the Lender to take any proceedings in any court or tribunal of competent jurisdiction, nor shall the taking ofproceedings in one or morejurisdictions preclude the taking of proceedings in any other jurisdiction whether concurrently or not and the Borrower(s) irrevocably submits to, and accepts, generally and unconditionally, the jurisdiction of such courts and tribunals, and the Borrower(s) irrevocably waives any objectionit may have now or in the future an the ground of an inconvenient forum. IV) The borrower(s)hereby expressly acknowledges, agrees, confirms and admits that the borrower(s)has fully read, verified, understood and irrevocably agreed to and accepted and delivered all the terms, Signature Not Verified Signed By:NEHA CHOPRA Signing Date:20.08.2025 11:55:52 4 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV conditions and provisions contained herein and the schedule of terms of facility by signing the facility agreement.”

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 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 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 facie existence of