✦ High Court of India · 18 Feb 2025

High Court · 2025

Case Details High Court of India · 18 Feb 2025

Court

High Court of India

Decided

18 Feb 2025

Bench

Not available

Length

1,693 words

Acts & Sections

Arbitration Act §11 Arbitration Act §21 Arbitration Act §9 Arbitration Act Arbitration and Conciliation Act 1996 Financial Assets and Enforcement of Security Interest Act 2002 India and the arbitration shall be governed by the provisions of the Arbitration and Conciliation Act 1996 Recovery of Debts Due to Banks and Financial Institutions Act 1993 The Arbitrator shall conduct the arbitration in accordance with the provisions of the Arbitration and Conciliation Act 1996

Arb.O.P.(Com. Div.) No.87 of 2025IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 18.02.2025CORAMTHE HON'BLE MR. JUSTICE ABDUL QUDDHOSEArb.O.P.(Com. Div.) No.87 of 2025M/s.HDB Financial Services Limited,Having one of its branch office at:4th floor, Loyal Towers, No.68/2,Greams Road, Chennai - 600 006.Rep. by its Authorised Signatory... PetitionerVs.1.M/s.Shiva Shakti MiningRep. by its Proprietor Mr.Datla Shivaji RajuF-70, Dharmavarapadu, Jaggayyapeta,Krishna District, Andhra Pradesh - 521 457.2.Datla Shivaji Raju3.Datla Krishna Veni... RespondentsPRAYER: Petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 to appoint a sole arbitrator to adjudicate the dispute between the petitioner and the respondents under the Agreement for Loan and Guarantee dated 30.03.2023 and to direct the respondent to pay the cost.For Petitioner:Ms. B. Narmadhafor Mr.M.Arunachalam1/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025For Respondents:Mr. J. SamyukthaORDERThis petition has been filed under Section 11 of the Arbitration and Conciliation Act, seeking for appointment of an arbitrator by this Court. 2. There seems to be a dispute between the petitioner and the respondents arising out of the Agreement for Loan and Guarantee dated 30.03.2023. According to the petitioner, certain sums of money are due and payable by the respondents to the petitioner under the Agreement for Loan and Guarantee dated 30.03.2023. There exists an arbitration clause in the Agreement for Loan and Guarantee dated 30.03.2023, which is extracted hereunder:"DISPUTE RESOLUTION(a) Subject to sub-clauses (g) and (h) below, any dispute or disagreement arising out of or in connection with this Agreement ("Dispute")shall be submitted to arbitration and shall be finally resolved by arbitration in accordance with the Arbitration and Conciliation Act, 1996, with a sole arbitrator ("Arbitrator") to be 2/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025appointed by HDBFS.(b) The place of arbitration shall be Chennai, India and the arbitration shall be governed by the provisions of the Arbitration and Conciliation Act, 1996 and each of the Borrower [and the guarantors and the security providers, if any) irrevocably waive any objection it may have now or in the future to the laying of the venue of such arbitration proceedings and any claim that any such proceedings has/ have been brought in an inconvenient forum.(C) The language of the arbitration proceedings shall be English.(d) The award, including interim award(s) of the Arbitrator shall be final, conclusive and binding on all the parties concerned.(e) Unless otherwise determined by the arbitrator, the costs and expenses of the arbitration, including, without limitation, the fees of the arbitrator, shall be borne by the Borrower. If HDBFS is required 3/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025to enforce an arbitral award by initiating a legal action or proceedings of any kind, then the party against whom such legal action or proceedings are taken/initiated shall pay all reasonable costs and expenses including inter alia, the attorney fees, cost of additional litigation or any other action as deemed necessary by HDBFS under applicable law.(f) It is clarified that HDBFS shall, at its discretion, be entitled to consolidate and combine any arbitral or other legal proceedings initiated or proposed to be initiated under this Agreement with any arbitral or other legal proceeding initiated or proposed to be initiated under one or more of the other Documents.(g) With reference to all or any matters referable/ capable of being referred to/ being instituted in courts and tribunals pursuant to or in relation to the process of arbitration as set out in sub-clauses (a) to (f) above, each party submits itself to the jurisdiction of 4/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025the courts and tribunals as specified in the Schedule hereunder.(h) Notwithstanding anything to the contrary contained hereinabove, with reference to all or any other matters which are not arbitrable/capable of being arbitrated in the manner set out hereinabove and are required to be referred to/ be instituted in courts and tribunals, each Party submits itself to the jurisdiction of the courts and tribunals as specified in the Schedule hereunder.(i) Notwithstanding what has been stated in sub-clauses (g) and (h) above, (each of) the Borrower, (the guarantors and the security providers, if any,) acknowledge and agree that HDBFS may, however, in its absolute discretion, commence any legal action or proceedings arising out of this Agreement against any of the Borrower [and/or the guarantors and/or the security providers, if any,] in a court, tribunal or any other appropriate forum situated in any other part of 5/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025India and each of the Borrower (and the guarantors and the security providers, if any) irrevocably submit to and accept for itself and in respect of each of its property, generally and unconditionally, the jurisdiction of such court or tribunal, and each of the Borrower [and the guarantors and the security providers, if any] irrevocably waive any objection it may have now or in the future to the laying of the venue of any legal action or proceedings and any claim that any such legal action or proceedings has/have been brought in an inconvenient forum.(j) Subject to applicable law, nothing contained herein shall be construed as extinguishing, limiting or ousting the rights prejudicing any action undertaken by HDBFS and/ or the remedies of/ available to HDBFS, if available now or in the future as against the Borrower, [the security providers and/or the guarantors, if any and/or any other Persons, or any of their respective assets,] under the Securitisation and 6/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and/or the Insolvency and Bankruptcy Code, 2016 and the rules and regulations framed thereunder, and HDBFS shall stand absolutely entitled to exercise such rights/remedies thereunder irrespective of the initiation, pendency, or continuation of any other arbitral or other legal action or proceedings.(k) Notwithstanding anything to the contrary contained hereinabove, in the event that HDBFS, as a result of a change in Applicable Law or otherwise, becomes entitled to recover the dues owed to it or be treated as a 'financial institution' under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ("RDDBFI Act") and to exercise rights/remedies thereunder, the Borrower, [the guarantors and the security providers, if any] hereby expressly agree and consent that HDBFS shall be entitled to exercise the rights and remedies available to HDBFS under the 7/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025RDDBFI Act including to recover the outstanding amounts/ dues from the Borrower [and/or the security providers and/or the guarantors, if any], or any other Persons, by filing proceedings with any of the debt recovery tribunals constituted thereunder. In addition, the Parties agree that in the event that HDBFS is empowered to exercise rights and powers under the provisions of the DRT Act as aforesaid, the provisions of sub-clauses (a) to (f) above and the agreement to arbitrate as between HDBFS and the Borrower, (guarantors and security providers, if any) shall, at the option of HDBFS, cease to have effect.(l) The provisions of the Clause 28 above and this Clause 31, shall survive the termination of this Agreement."3. Prior to the filing of this petition, the petitioner has also invoked arbitration by issuing a notice as per Section 21 of the Arbitration and Conciliation Act to the respondents on 05.12.2024. A reply has also been 8/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025received by the petitioner from the respondents to the said notice on 17.01.2025. Since there is no consensus between the parties with regard to the name of the arbitrator, the petitioner has filed this petition under Section 11 of the Arbitration and Conciliation Act, seeking for appointment of an arbitrator by this Court. 4. Mr. J. Samyuktha, learned counsel undertakes to file vakalat on behalf of the respondents. On instructions, she would submit that the respondents do not have any objection for appointment of an arbitrator by this Court. At the same time, she would submit that in an application filed under Section 9 of the Arbitration and Conciliation Act by the respondents, this Court had passed a conditional order, directing the respondents to pay certain sums of money to the petitioner to regularize the contract. She would submit that the respondents are willing to abide by the condition as imposed by this Court under Section 9 of the Arbitration and Conciliation Act.5. However, this Court is of the considered view that when the respondents are defaulters in the repayment of the loan, the petitioner is entitled to go for arbitration as per the arbitration agreement entered into 9/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025between the petitioner and the respondents. All objections / grievances of the respondents can be redressed by the arbitrator to be appointed by this Court if the respondents are able to convince the arbitrator in regard to their contentions. Since there exists an arbitration clause in the Agreement for Loan and Guarantee dated 30.03.2023 entered into between the parties in respect of the subject matter of the dispute and since the learned counsel appearing for the respondents also does not dispute the existence of the same and there is no consensus between the parties with regard to the name of the arbitrator, this Court will have to necessarily appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act.6. Accordingly, this Arbitration Original Petition is allowed as prayed for by issuing the following directions: (a) Mr.Abishek Jenasenan, Advocate, who is having address at No.15, Old No.6, Deivasigamani Street, Royapettah, Chennai - 600 014 (Mobile No. 96000 00036) is appointed as the sole Arbitrator to decide the dispute between the petitioner and the respondents arising out of the Agreement for Loan and Guarantee dated 30.03.2023;10/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025(b) The Arbitrator shall be paid his / her remuneration / fees in accordance with the 4th schedule of the Arbitration and Conciliation Act, 1996 or as per the mutual consent of both the parties;(c) Both the parties shall equally share the arbitrator's fees;(d) The Arbitrator shall conduct the arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and shall complete the arbitration within the specified time as prescribed under the said Act.18.02.2025Index: Yes/NoSpeaking Order : Yes / NoNeutral Citation Case: Yes / Noab11/12 https://www.mhc.tn.gov.in/judis Arb.O.P.(Com. Div.) No.87 of 2025 ABDUL QUDDHOSE. J., abArb.O.P.(Com. Div.) No.87 of 202518.02.202512/12

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