Mr. Rit Arora, Advocate v. SHAIK RAHMAN PROPRIETOR OF M/S RAHMAN CARS ANR

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

1. Affidavit of service reads as under:- “1. That I am the Advocate for the petitioner company in the present matter and am well conversant with the facts of the present case and competent to file this affidavit.

2. That I state that the deponent has served the copy of the notice along with the copy of the petition upon the Respondents through speed post on their last known and available addresses and the same has returned with remarks “item returned addressee left without instructions”. That the same are deemed to be served. The proof of service by post has been annexed herewith.

3. That I state that the deponent has served the copy of the notice along with the copy of the petition upon the Signature Not Verified Signed By:NEHA CHOPRA Signing Date:19.05.2025 14:40:00 1 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV the Email address of Respondents Respondent no.1 and 2 at their Whatsapp +91 8143220410, i.e. and on [email protected] . The proof of service has already been annexed herewith. The email has not bounced back.

4. That I state that the Respondents have been duly served.”

2. It is submitted by the learned counsel that the email and whatsapp number on which notice was additionally sent are forming the part of the agreement. In view thereof, the Court proceeds to decide the matter.

3. The facts of the case indicate that the petitioner that it is a Private Limited Company and a registered Non-Banking Financial Company (NBFC) under the supervision of the Reserve Bank of India. The petitioner states that it is a wholly-owned subsidiary of Cars24 Services Private Limited and is engaged in offering various lending products to its customers, including credit facilities for the purchase of used/pre-owned vehicles. It is submitted that respondent No.1 is the sole proprietor of the firm M/s Rahman Cars and is engaged in the business of dealing in used/pre-owned cars. Respondent No.2 is stated to be a co-borrower under the relevant loan transaction and also a signatory to the Credit Facility Agreement dated

24.01.2020. The respondents, who are based in Hyderabad, are collectively referred to as "the Respondents" for the purpose of these proceedings.

4. The petitioner avers that respondent No.1, through its proprietor and jointly with Respondent No.2, approached the petitioner seeking a revolving credit facility under the UNNATI scheme for the purpose of purchasing used vehicles from Cars24 Services Private Limited. It is further submitted that both respondents undertook and assured the petitioner that they would abide Signature Not Verified Signed By:NEHA CHOPRA Signing Date:19.05.2025 14:40:00 2 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV by the terms and conditions of the credit facility and maintain financial discipline. Relying on the representations, assurances, and financial credibility of the Respondents, the petitioner sanctioned the requested facility and a Credit Facility Agreement was duly executed on 24.01.2020. Pursuant to the execution of the said agreement, the petitioner disbursed funds from time to time, enabling the respondents to purchase vehicles. The credit facility was structured such that each disbursement was for a period of 60 days from the date of its respective tranche.

5. Moreover, the petitioner asserts that, at the time of execution of the agreement, the respondents had expressly assured that they would honor the terms of repayment and ensure timely settlement of all dues. However, the respondents allegedly failed to maintain the promised financial discipline, resulting in disputes between the parties regarding the default in payment obligations. Aggrieved by the default, the petitioner issued a notice dated

14.08.2024, invoking arbitration in accordance with the terms of the Credit Facility Agreement bearing no. 64855 and sought the appointment of a Sole Arbitrator. It is further stated that, as of 14.09.2024, a sum of Rs. 4,38,416/- (Rupees Four Lakhs Thirty-Eight Thousand Four Hundred and Sixteen only) remains due and payable by the respondents to the petitioner, constituting the outstanding principal and other payable amounts under the agreement. Subsequently, the instant petition was filed.

6. Clause 15.2 of the Credit Facility Agreement dated 24.01.2020 reads as under:- “Arbitration: Any dispute under this Agreement shall be settled by binding arbitration conducted in English with the Signature Not Verified Signed By:NEHA CHOPRA Signing Date:19.05.2025 14:40:00 3 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV seat of arbitration in New Delhi before a single arbitrator appointed by Lender as its sole discretion, as per the Arbitration and Conciliation Act, 1996.”

7. The Court also considers that these two plea reference – is limited to the extent of examine as to whether there exists arbitration agreement. The review petition has been cited in the following cases.

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