Mr.Zakir Hussain and Mr.Rashid Ali v. HARSH DODEJA

Through: Mr.Amrendra Ray, Advocate. HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV JUDGEMENT PURUSHAINDRA KUMAR KAURAV, J. (ORAL)

1. The present petition has been filed under Section 11 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 30.09.2022.

2. The facts of the case would indicate that the petitioner is a Non- Banking Financial Company (NBFC) carrying out its business of granting various types of loans to the customer in the territory of India. The respondent has availed a short term on Demand Loan for one day from petitioner-Company vide agreement dated 30.09.2022 for balance transfer of Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:05.05.2025 19:38:59 1 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV his existing Gold Loan. The petitioner-Company had transferred the loan amount of ₹7,63,801/- in the account of the respondent.

3. As per the agreement dated 30.09.2022, respondent was bound to make the repayment within one day or maximum within 15 days since the date of execution of Agreement and disbursal of loan.

4. Learned counsel for the petitioner submits that the respondent has defaulted in repayment of the said loan. It is further stated that the petitioner has invoked the arbitration clause 10 in terms of the Agreement dated

30.09.2022 and initiated the arbitration proceedings within the meaning of Section 21 of the 1996 Act.

6. Heard learned counsel appearing on behalf of the parties. The Court takes note of Clause 10 of the Agreement dated 30.09.2022 reads as under:- “10. That both the parties explicitly agree that the disputes between the parties arising or relating to this agreement and payment/re-payment shall be settled through arbitration in accordance with Arbitration and conciliation Act 1996, and same shall be referred to the sole arbitrator mutually appointed by the parties. The arbitrator proposed by the aggrieved party (firm or the second party as the case may be), shall be deemed to be mutually appointed and will be entitled to enter into the reference and decide the dispute, if the proposal of his name is not disputed by tl1e other party within 15 days of receipt of notice of invocation of arbitration clause. The seat of arbitral tribunal shall be at Delhi and language shall be English. The cost of arbitration shall be borne by the party against whom the arbitration award is passed. The award of the sole arbitrator shall be binding on both the parties. The parties agree to submit to the exclusive jurisdiction of the Courts at Delhi. It is further agreed that District court of South Distt –Delhi or Delhi High Court as the case may be, shall be the Principal Civil Court the Arbitration and conciliation Act 1996. The notices to the parties sent through any of the modes Viz post/email/ WhatsApp/Courier and same shall be deemed to be valid service of notice or other communications under this agreement.” the purpose of any proceedings under Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:05.05.2025 19:38:59 2 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

7. Learned counsel for the respondents submits that though the reply has been filed in the instant petition, however, the Court may consider appointing an Arbitrator reserving all rights and contentions of the respondents.

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