At Basement Floor, Siroya Centre, Sahara Airport Road v. SMFG India Credit Company Limited

Judgment

1. SMFG India Credit Company Limited, (Formerly, Fullerton India Credit Company Limited), A Company Incorporated Under The Companies Act 1956, And Presently Being Governed Under The Companies Act 2013, Having Corporate Indentification No. U65191Tn1994Plc079235, And Having Its Registered Office At Floor-6, B Wing, Supreme It Park, Supreme City, Behind Lake Castle, Powai, Mumbai-400 076, Maharashtra.

2. Catalyst Trusteeship Limited, A Company Incorporated Under The Companies Act 1956, And Presently Being Governed Under The Companies Act 2013, Having Its Registered Office At Gda House, Plot No. 85, Bhusari Colony, (Right), Paud Road, Pune-411038, India. ----Respondents For Petitioner(s)

: Mr. Jatin Agarwal with Mr. Anita Goyal For Respondent(s) : Mr. Jaideep Sharma, Mr. Rajneesh Sharma, Mr. Ankit Jain, Ms. Astha Sharma and Mr. Vimal Khurana JUSTICE ANOOP KUMAR DHAND Order 17/07/2025 (2 of 6) [ARBAP-42/2025]

1. The instant arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act of 1996’), has been submitted by the petitioner for appointment of Arbitrator to adjudicate/resolve the dispute between the parties arising out of the service agreement dated 08.11.2019 containing arbitration clause 12.2, which reads as under: “12.2 Arbitration and Jurisdiction (a) Any dispute, controversy or claims arising out of or relating to this Agreement or the breach, termination or invalidity thereof, shall be settled by arbitration of a sole arbitrator jointly appointed by the Parties, or if the Parties are unable to agree upon an arbitrator, to the arbitration of 3 (Three) arbitrators, 1 (one) to be appointed by each disputing Party and the third to be appointed by the 2 (Two) arbitrators so appointed. The arbitration shall be governed by the Arbitration and Conciliation Act, 1996 or any modification, amendment, consolidation or re- enactment thereof. The arbitrator/s will have power to regulate their own procedure, including summary powers.”

2. Learned counsel for the applicant submits that a loan portfolio was purchased by the petitioner by way of Deed of Assignment dated 08.11.2019 and the respondent No.1 was kept as a service provider and for which a deed of assignment as well as servicer agreement was executed between the parties. Counsel submits that as per the terms and conditions of the said agreement, the respondent No.1 was supposed to collect the due amount from the borrowers and issue receipts and take all possible endeavours to recover the amount from (3 of 6) [ARBAP-42/2025] the borrowers. Counsel submits that in various cases, the received amount was not refunded by the respondent No.1 and delays were caused and unreasonable leniency was shown by the respondent No.1 in recovering the due amount from the borrowers, which caused dispute between the parties, for which a notice was sent to the respondent for settlement of dispute through arbitration in terms of Clause 12.2 of the servicer agreement dated 08.11.2019. Counsel submits that the dispute is required to be settled by way of arbitration.

3. Per contra, learned counsel for the respondent opposed the arguments raised by the counsel for the petitioner and submitted that as per Clause 2.4 of the deed of assignment of receivables, there was no liability on the part of the respondent No.1 for the risks suffered by the petitioner due to non-receipt of receivables. Counsel submits that the respondent No.1 is simply a service provider, if at all, the petitioner is not satisfied with the service of the respondent No.1, then, the service agreement can be dissolved, but in any case, the dispute raised by the petitioner is not arbitrable, and the same is not required to be sent to the Arbitrator. Counsel submits that if at all, if the matter is referred to the Arbitrator, the Arbitrator would not be in a position to resolve the dispute, which has in fact not arisen between the parties. Counsel submits that the petitioner is bound by condition No.2.4 of the deed of assignment, hence, under these circumstances, interference of this Court is not warranted and the arbitration application submitted by the applicant is liable to be rejected. (4 of 6) [ARBAP-42/2025]

4. Heard and considered the submissions made at the Bar and perused the material available on the record.

5. This fact is not in dispute that after purchase of loan portfolio, two different deeds/agreements were executed between the parties:

1. The deed of assignments of receivables dated

08.11.2019, whereby loan portfolio was purchased by petitioner from respondent No.1.

2. Service agreement dated 08.11.2019, whereby respondent No.1 was appointed as servicer to manage, collect and receive payments and recoverables.

6. This fact is not in dispute that an arbitration clause was incorporated in the service agreement i.e. clause 12.2 which provides that, in case, any dispute occurs between the parties, the same would be resolved by the Arbitrator under the provisions of the Act of 1996. The documents placed on the record, containing certain letters and mails exchanged between the parties, indicate that some allegations have been levelled by the petitioner against the respondent No.1, that in some of the matters, the recovered amount was retained by the respondent No.1 and the same was not returned to the petitioner and lack of recovery efforts were there on the part of the respondent No.1 and prolonged delays have been caused by showing unreasonable leniency in favour of the borrowers, which reveals that the dispute has arisen between the parties, which is required to be adjudicated by the Arbitrator. Whether the respondent is liable for any liability or not, this fact would be adjudicated by the Arbitrator. (5 of 6) [ARBAP-42/2025]

7. Keeping in view the above facts and circumstances of the case, the instant arbitration application stands allowed. This Court appoints Justice Mohammad Rafiq (Retd. Chief Justice), resident of R/0-7, Bhagat Vatika, Civil Lines, Jaipur, as Sole Arbitrator to adjudicate/resolve the dispute between the parties.

8. The appointment of the Sole Arbitrator is subject to the declaration being made under Section 12 of the Arbitration and Conciliation Act, 1996 (for short 'the Act of 1996') with respect to the independence and impartiality and ability to devote sufficient time to complete the arbitration proceedings within the prescribed period.

9. The arbitration fee of the Sole Arbitrator shall be payable in accordance with the provisions contained in the Manual of Procedure of Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Dispute Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4th schedule appended to the Act of 1996 or as determined by the Arbitrator with consensus of parties.

10. The Registry is directed to intimate the Arbitrator- Justice Mohammad Rafiq (Retd. Chief Justice), resident of R/0-7, Bhagat Vatika, Civil Lines, Jaipur, for his approval and declaration in terms of Section 11(8) read with Section 12(1) of the Act of 1996.

11. All issues raised by the parties before the Arbitrator shall be considered in accordance with law.

12. Since as per Section 29A of the Act of 1996, the arbitration proceedings are required to be concluded within the (6 of 6) [ARBAP-42/2025] scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on 06.08.2025 or on any other date as informed by the Arbitrator subject to agreement by the parties. Furthermore, the parties shall provide their respective E-mail/ contact number/ mobile number and/or also of their authorized representatives/ Lawyers appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information/communication to the parties, whenever required. The information send by the Arbitrator, on such address/ E- mail/ cellphone of the parties or to their authorized representatives/ Lawyers, shall be treated as sufficient communication unless same is not changed. (ANOOP KUMAR DHAND),J KuD//227

: Mr. Jatin Agarwal with Mr. Anita Goyal For Respondent(s) : Mr. Jaideep Sharma, Mr. Rajneesh Sharma, Mr. Ankit Jain, Ms. Astha Sharma and Mr. Vimal Khurana JUSTICE ANOOP KUMAR DHAND Order 17/07/2025 (2 of 6) [ARBAP-42/2025]

1. The instant arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act of 1996’), has been submitted by the petitioner for appointment of Arbitrator to adjudicate/resolve the dispute between the parties arising out of the service agreement dated 08.11.2019 containing arbitration clause 12.2, which reads as under: “12.2 Arbitration and Jurisdiction (a) Any dispute, controversy or claims arising out of or relating to this Agreement or the breach, termination or invalidity thereof, shall be settled by arbitration of a sole arbitrator jointly appointed by the Parties, or if the Parties are unable to agree upon an arbitrator, to the arbitration of 3 (Three) arbitrators, 1 (one) to be appointed by each disputing Party and the third to be appointed by the 2 (Two) arbitrators so appointed. The arbitration shall be governed by the Arbitration and Conciliation Act, 1996 or any modification, amendment, consolidation or re- enactment thereof. The arbitrator/s will have power to regulate their own procedure, including summary powers.”

2. Learned counsel for the applicant submits that a loan portfolio was purchased by the petitioner by way of Deed of Assignment dated 08.11.2019 and the respondent No.1 was kept as a service provider and for which a deed of assignment as well as servicer agreement was executed between the parties. Counsel submits that as per the terms and conditions of the said agreement, the respondent No.1 was supposed to collect the due amount from the borrowers and issue receipts and take all possible endeavours to recover the amount from (3 of 6) [ARBAP-42/2025] the borrowers. Counsel submits that in various cases, the received amount was not refunded by the respondent No.1 and delays were caused and unreasonable leniency was shown by the respondent No.1 in recovering the due amount from the borrowers, which caused dispute between the parties, for which a notice was sent to the respondent for settlement of dispute through arbitration in terms of Clause 12.2 of the servicer agreement dated 08.11.2019. Counsel submits that the dispute is required to be settled by way of arbitration.

3. Per contra, learned counsel for the respondent opposed the arguments raised by the counsel for the petitioner and submitted that as per Clause 2.4 of the deed of assignment of receivables, there was no liability on the part of the respondent No.1 for the risks suffered by the petitioner due to non-receipt of receivables. Counsel submits that the respondent No.1 is simply a service provider, if at all, the petitioner is not satisfied with the service of the respondent No.1, then, the service agreement can be dissolved, but in any case, the dispute raised by the petitioner is not arbitrable, and the same is not required to be sent to the Arbitrator. Counsel submits that if at all, if the matter is referred to the Arbitrator, the Arbitrator would not be in a position to resolve the dispute, which has in fact not arisen between the parties. Counsel submits that the petitioner is bound by condition No.2.4 of the deed of assignment, hence, under these circumstances, interference of this Court is not warranted and the arbitration application submitted by the applicant is liable to be rejected. (4 of 6) [ARBAP-42/2025]

4. Heard and considered the submissions made at the Bar and perused the material available on the record.

5. This fact is not in dispute that after purchase of loan portfolio, two different deeds/agreements were executed between the parties:

1. The deed of assignments of receivables dated

08.11.2019, whereby loan portfolio was purchased by petitioner from respondent No.1.

2. Service agreement dated 08.11.2019, whereby respondent No.1 was appointed as servicer to manage, collect and receive payments and recoverables.

6. This fact is not in dispute that an arbitration clause was incorporated in the service agreement i.e. clause 12.2 which provides that, in case, any dispute occurs between the parties, the same would be resolved by the Arbitrator under the provisions of the Act of 1996. The documents placed on the record, containing certain letters and mails exchanged between the parties, indicate that some allegations have been levelled by the petitioner against the respondent No.1, that in some of the matters, the recovered amount was retained by the respondent No.1 and the same was not returned to the petitioner and lack of recovery efforts were there on the part of the respondent No.1 and prolonged delays have been caused by showing unreasonable leniency in favour of the borrowers, which reveals that the dispute has arisen between the parties, which is required to be adjudicated by the Arbitrator. Whether the respondent is liable for any liability or not, this fact would be adjudicated by the Arbitrator. (5 of 6) [ARBAP-42/2025]

7. Keeping in view the above facts and circumstances of the case, the instant arbitration application stands allowed. This Court appoints Justice Mohammad Rafiq (Retd. Chief Justice), resident of R/0-7, Bhagat Vatika, Civil Lines, Jaipur, as Sole Arbitrator to adjudicate/resolve the dispute between the parties.

8. The appointment of the Sole Arbitrator is subject to the declaration being made under Section 12 of the Arbitration and Conciliation Act, 1996 (for short 'the Act of 1996') with respect to the independence and impartiality and ability to devote sufficient time to complete the arbitration proceedings within the prescribed period.

9. The arbitration fee of the Sole Arbitrator shall be payable in accordance with the provisions contained in the Manual of Procedure of Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Dispute Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4th schedule appended to the Act of 1996 or as determined by the Arbitrator with consensus of parties.

10. The Registry is directed to intimate the Arbitrator- Justice Mohammad Rafiq (Retd. Chief Justice), resident of R/0-7, Bhagat Vatika, Civil Lines, Jaipur, for his approval and declaration in terms of Section 11(8) read with Section 12(1) of the Act of 1996.

11. All issues raised by the parties before the Arbitrator shall be considered in accordance with law.

12. Since as per Section 29A of the Act of 1996, the arbitration proceedings are required to be concluded within the (6 of 6) [ARBAP-42/2025] scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on 06.08.2025 or on any other date as informed by the Arbitrator subject to agreement by the parties. Furthermore, the parties shall provide their respective E-mail/ contact number/ mobile number and/or also of their authorized representatives/ Lawyers appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information/communication to the parties, whenever required. The information send by the Arbitrator, on such address/ E- mail/ cellphone of the parties or to their authorized representatives/ Lawyers, shall be treated as sufficient communication unless same is not changed. (ANOOP KUMAR DHAND),J KuD//227