Baid Finserv Ltd. , (Formerly Known As Baid Leasing And Finance Company), through its Authorized Representative Dinesh Sharma v. Ramchandra Yadav, S/o Durgalal Yadav
2025-01-24
ANOOP KUMAR DHAND
body2025
DigiLaw.ai
Order : (ANOOP KUMAR DHAND, J.) 1. The instant arbitration application has been submitted by the applicant-company under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short ‘Act of 1996’) seeking appointment of Sole Arbitrator to resolve/settle the dispute arose between the parties. 2. Learned counsel for the applicant submits that there is an arbitration clause in the loan agreement i.e. Clause 12 executed between the parties. Counsel submits that in terms of the said clause, appropriate orders be passed. Clause 12 of the loan agreement reads as under:- “ 12. Arbitration, Jurisdiction & Governing Law: 12.1 All claims, disputes or differences whatsoever which may at any time hereafter arise between the parties hereto concerning this agreement or its construction of effect or as to the rights, duties, obligations of liabilities of the parties hereto or either or them under or by virtue of or in connection with this agreement or any document executed or security created pursuant thereto or otherwise as to any other manner in any way connected with or arising out of or in relation to the subject matter to this agreement (including, without limitation, enforcement of security) shall be referred to the arbitration of a sole arbitrator appointed by the company. The arbitration shall be conducted in accordance with and subject to the provisions of the arbitration & conciliation act, 1996 or any statutory modification or re- enactment thereof for the time being in force. The place of arbitration shall be as mentioned in serial no (15) of the schedule 12.2 The provision of this agreement relating to arbitration shall not prejudice the companys rights to take criminal proceedings against the borrower and/or any other proceedings which would by their nature not be subject to the arbitration provisions of this agreement. 12.3 This agreement and the relationship between the parties shall be governed by and interpreted in accordance with the laws of India.” 3. Counsel for the respondents has no objection if the dispute is referred to the Sole Arbitrator. 4. Heard counsel for the parties and perused the material available on the record. 5.
12.3 This agreement and the relationship between the parties shall be governed by and interpreted in accordance with the laws of India.” 3. Counsel for the respondents has no objection if the dispute is referred to the Sole Arbitrator. 4. Heard counsel for the parties and perused the material available on the record. 5. It is the case of the applicant that both the applicant and non-applicant entered into a loan agreement on 14.09.2017 and accordingly, a sum of Rs.1,65,00,000/- was provided to the non- applicant and the same was supposed to be repaid in 84 months installments of Rs.4,95,000/- commencing from October, 2017. It is pleaded in the application that, default was made by the non- applicant in payment of the installments. Hence, dispute has arose between the parties which may be referred to the Arbitrator. This Court being a referral court while dealing with application of Arbitrator, exercises its jurisdiction in a narrow compass in the light of the provisions contained under Section 11(6)A of the Act of 1996 which reads as under: “The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” 6. The scope of this Court, while dealing with arbitration application under Section 11(6)(A) of the Act of 1996 is confined to the examination of existence of an arbitration agreement in terms of Section 7 of the Act of 1996. Hon’ble Apex Court in the case of SBI General Insurance Company Ltd. vs. Krish Spinning while deciding Civil Appeal No.7821/2024 arising out of the SLP Civil No.3792/2024 has dealt with the scope and, jurisdiction of High Court while dealing with the arbitration application in context of Section 11(6)A clause of the Act of 1996 and it has been held by the Hon’ble Apex Court in Para No. 100 to114:- “110. The scope of examination under Section11(6-A) is confined to the existence of an arbitration agreement on the basis of Section 7. The examination of validity of the arbitration agreement is also limited to the requirement of formal validity such as the requirement that the agreement should be in writing. 111.
The scope of examination under Section11(6-A) is confined to the existence of an arbitration agreement on the basis of Section 7. The examination of validity of the arbitration agreement is also limited to the requirement of formal validity such as the requirement that the agreement should be in writing. 111. The use of the term examination under Section 11(6-A) as distinguished from the use of the term rule under Section 16 implies that the scope of enquiry under Section 11(6-A) is limited to a prima facie scrutiny of the existence of the arbitration agreement, and does not include a contested or laborious enquiry, which is left for the arbitral tribunal to rule under Section 16. The prima facie view on existence of the arbitration agreement taken by the referral court does not bind either the arbitral tribunal or the court enforcing the arbitral award. 112. The aforesaid approach serves a two-fold purpose – firstly, it allows the referral court to weed out non-existent arbitration agreements, and secondly, it protects the jurisdictional competence of the arbitral tribunal to rule on the issue of existence of the arbitration agreement in depth. 113. Referring to the Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Act, 2015, it was observed in In Re: Interplay (supra) that the High Court and the Supreme Court at the stage of appointment of arbitrator shall examine the existence of a prima facie arbitration agreement and not any other issues. The relevant observations are extracted hereinbelow: “209. The above extract indicates that the Supreme Court or High Court at the stage of appointment of an arbitrator shall “examine the existence of a prima facie arbitration agreement and not other issues”. These other issues not only pertain to the validity of the arbitration agreement, but also include any other issues which are a consequence of unnecessary judicial interference in the arbitration proceedings. Accordingly, the “other issues” also include examination and impounding of an unstamped instrument by the referral court at the Section 8 or Section 11 stage. The process of examination, impounding, and dealing with an unstamped instrument under the Stamp Act is not a timebound process, and therefore does not align with the stated goal of the Arbitration Act to ensure expeditious and time-bound appointment of arbitrators. 114.
The process of examination, impounding, and dealing with an unstamped instrument under the Stamp Act is not a timebound process, and therefore does not align with the stated goal of the Arbitration Act to ensure expeditious and time-bound appointment of arbitrators. 114. In view of the observations made by this Court in In Re: Interplay (supra), it is clear that the scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else. For this reason, we find it difficult to hold that the observations made in Vidya Drolia (supra) and adopted in NTPC v. SPML (supra) 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 continue to apply despite the subsequent decision in In Re: Interplay (supra).” 7. Considering the contents of the application and the clause mentioned in the loan agreement, the application stands allowed. This Court directs appointment of Mr. Purushottam Lal Hissaria, resident of 14-61 Malviya Nagar, Jaipur as Sole Arbitrator to adjudicate the dispute between the parties in the provisions of the Act of 1996. Appointment of the Sole Arbitrator is subject to the declaration being made under Section 12 of 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. 8. 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 with4 th schedule appended to the Act of 1996. 9. Office is directed to intimate Arbitrator Mr. Purushottam Lal Hissaria, Former District Judge for his approval and consent to act as Arbitrator. 10. All other issues may be raised by the parties before the Arbitrator and the same be considered in accordance with law. 11. It has been observed that the arbitration proceedings may be concluded as per the mandate of timline contained in Section 29A of the Act of 1996.
10. All other issues may be raised by the parties before the Arbitrator and the same be considered in accordance with law. 11. It has been observed that the arbitration proceedings may be concluded as per the mandate of timline contained in Section 29A of the Act of 1996. Further the party may provide their respective E-mail/contact number/mobile number as also their authorised representatives/lawyers appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send the information to the parties, whenever required. The information sent by the Arbitrator, on such address/E-mail/cellphone of the parties, their authorized representatives/lawyers, shall be treated as sufficient unless same is not changed. 12. Accordingly, the instant petition stands disposed of. 13. All pending application(s), if any, also stand disposed of.