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2020 DIGILAW 233 (TS)

Swapna Jain v. R. Sriram

2020-02-06

A.RAJASHEKER REDDY

body2020
JUDGMENT A.Rajasheker Reddy, J. - This application is filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') read with Scheme for Appointment of Arbitrator, 2000 to appoint an arbitrator to resolve the disputes between the applicant and the respondent. 2. It is the case of the applicant that the applicant entered into loan agreement with pledge of shares on 27.12.2010 with SAAG RR Infra Limited, to which, the respondent stood as a guarantor in respect of the said loan amount. Subsequently, disputes arise between the applicant and the borrower in respect of payment of loan amount. The applicant issued notice dated 30.07.2015 to the respondent demanding payment of loan amount and also invoking arbitration clause in the said loan agreement. The respondent issued reply notice dated 07.08.2015 disputing the claim of the applicant, but however, has not disputed the existence of arbitration clause. Hence, present application is filed for appointment of arbitrator. 3. Though notice is served on the respondent, no counter affidavit is filed opposing this application. 4. Learned Counsel for the Applicant submits that now the dues will be more than Rs. 1 crore. 5. The Loan Agreement dt.27.12.2010 contains the Arbitration Clause at Clause-15 which reads as follows; "15.ARBITRATION: Any claims, disputes, interpretations of whatsoever nature under this agreement shall first be given priority to be resolved through mediation and conciliation within thirty (30) days after the Party of the one part first informs the Party of the other part in writing of the existence of such issues failing which either of these Parties may refer the Dispute for resolution by sole arbitration. Such arbitration shall be governed by the provisions of the Arbitration and Conciliation Act of 1996. The arbitration shall be held in Hyderabad only. The Sole Arbitrator shall be appointed on mutual consent of both parties." 6. Invoking the aforesaid clause, the Applicant issued notice to the respondent dated 30.07.2015, which goes to show that the applicant had informed the same. Though the respondent replied through notice dated 07.08.2015 disputing the claim of the applicant and alteration of the arbitration clause, but, he did not dispute the existence of arbitration clause in the agreement. A perusal of the loan agreement dated 27.12.2010 goes to show that the averment in the reply dated 07.08.2015 is not substantiated. 7. Though the respondent replied through notice dated 07.08.2015 disputing the claim of the applicant and alteration of the arbitration clause, but, he did not dispute the existence of arbitration clause in the agreement. A perusal of the loan agreement dated 27.12.2010 goes to show that the averment in the reply dated 07.08.2015 is not substantiated. 7. The assertion made by the Applicant that there exists arbitration clause in the agreement and that they have issued notices to the respondent for payment of loan amount, is not in dispute. The respondent also have not filed any counter affidavit disputing the same. 8. Since there is exists arbitration clause in the agreement and the Applicant has invoked the same by issuing notices to the respondents this application needs to be allowed. 9. Accordingly, the Arbitration Application is allowed appointing Honourable Sri Justice Vaman Rao, former High Court Judge, as the sole Arbitrator for resolution of dispute(s) between the applicant and respondents, arising out of the Agreement dt.27.12.2010 entered into between the Applicant and the borrower, wherein the respondent stood as guarantor, in accordance with the provisions and mandate of the Act of 1996. The learned Arbitrator shall be entitled to fees as per the rates specified in the Fourth Schedule to the Act of 1996, inserted by Act 3 of 2016 with effect from 23.10.2015, which shall be borne by both parties in equal measure. No order as to costs. 10. As a sequel thereto, miscellaneous petitions, if any pending in the Arbitration Application, shall stand closed.