Full Judgment Text
$~6 and 8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 28.10.2024
+ ARB.P. 1006/2024
TATA CAPITAL LIMITED .....Petitioner
Through: Ms. Ekta Bhasin and Mr. Sanidhya
Sonthalia, Advocates.
versus
M/S R.K. AUTOMOBILES & ORS. .....Respondents
Through: None.
+ O.M.P.(I) (COMM.) 240/2024
TATA CAPITAL LIMITED
(TRANSFEREE OF TATA CAPITAL FINANCIAL SERVICES LTD.)
.....Petitioner
Through: Ms. Ekta Bhasin and Mr. Sanidhya
Sonthalia, Advocates.
versus
M/S. R. K. AUTOMOBILES & ORS. .....Respondents
Through: None.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
SACHIN DATTA, J. ( Oral )
ARB.P. 1006/2024
1. The present petition has been filed under section 11(6) of the
Arbitration and Conciliation Act, 1996 (hereinafter ‘the A&C Act’ ) seeking
appointment of a Sole Arbitrator to adjudicate the disputes between the
parties.
2. The petitioner vide sanction letter dated 24.04.2018 sanctioned a
Channel Finance/Inventory Funding Loan Facility to the respondents.
ARB.P. 1006/2024 & Others Page 1 of 6
Signature Not Verified
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:09.11.2024
20:41:15
Pursuant thereto, the aforesaid facility was renewed and the parties executed
a Loan cum Guarantee (Channel Finance) Agreement on 20.05.2022.
Further, the Channel Finance Facility was extended through Extension
Letters dated 25.02.2023, 23.03.2023 and 29.04.2023.
3. In terms of the aforesaid agreement and letters the respondents agreed
that the security previously executed, as provided in Schedule of the
agreement to secure the loan will remain valid and subsisting in favour of
the petitioner.
4. The disputes have arisen in the context of the Loan cum Guarantee
(Channel Finance) Agreement dated 20.05.2022. The respondent no.1 is the
borrower whereas respondent no(s) 2 and 3 are guarantors and as such,
stated to be jointly and severally liable.
5. Dispute/s have arisen between the parties on account of alleged
default on the part of the respondents in paying the requisite instalments.
The respondents failed to make the payment/s despite being granted
opportunities to clear the outstanding dues.
6. The arbitration clause in the Agreement between the parties, is in the
following terms: -
“12 ARBITRATION
If any dispute, difference or claim arises between any of the
Obligators and the Lender in connection with the Facility or as to the
interpretation, validity, implementation or effect of the Facility
Documents or as the rights and liabilities of the parties under these
T&C or alleged breach of the Facility Documents or anything done or
omitted to be pursuant to the Facility Documents, the same shall be
settled by arbitration by a sole arbitration to be appointed as per the
procedure below and to be held at such place as agreed by the Parties
in Serial No. 17 of Annexure 1 hereto of the Agreement. The Party
invoking the arbitration(“Claimant") shall address a notice to the
other Party (“Respondent") suggesting the names of not more than
ARB.P. 1006/2024 & Others Page 2 of 6
Signature Not Verified
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:09.11.2024
20:41:15
three arbitrators, all of whom shall be either retired judges of the
District Court, High Court or the Supreme Court or a lawyer having
minimum 1 0 years' relevant experience. The Respondent shall either:
(i) Confirm in writing acceptance of one amongst the
proposed names as the sole arbitrator to the Claimant within a
period of ten (10) days from the date of notice (“Notice
Period"); or
(ii) Convey objection, if any, in writing to the Claimant,
against the proposed names of the sole arbitrator within the said
Notice Period.
However, if the Claimant does not receive any response from the
Respondent within the said Notice Period, the Claimant shall be
entitled to nominate any one person from amongst the proposed three
names as the sole arbitrator and such arbitrator shall be deemed to be
appointed by both the Parties.
In the event, the Respondent conveys its objection as per (iii) above
then the sole arbitrator will be appointed by a Court having
jurisdiction. The arbitration shall be conducted under the provisions
of the Arbitration and Conciliation Act, 1996 together with its
amendments, any statutory modifications or reenactment thereof for
the time being in force. The arbitration proceeding shall be conducted
in English language. The award of the arbitrator shall be final and
binding on all parties concerned. The cost of arbitration shall be
borne by the Obligors.
13. JURISDICTION
Subject to Clause 12 above, Subject to Clause 12 above, the Parties
hereto agree that all disputes arising out of and/ or in relation to this
Agreement shall be subject to exclusive jurisdiction of the
courts/tribunals as set out in Serial No. 18 of Annexure 1 hereto. The
Lender may, however, in its absolute discretion commence any legal
action or proceedings arising out of this Agreement in any other
court, tribunal or other appropriate forum and the Obligors hereby
consents to that jurisdiction.”
7. It is apparent from a perusal of Annexure -1 of the Agreement that the
seat of arbitration is Delhi.
8. Disputes having arisen between the parties, a loan recall/termination
ARB.P. 1006/2024 & Others Page 3 of 6
Signature Not Verified
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:09.11.2024
20:41:15
notice dated 17.05.2024 was issued by the petitioner to invoke arbitration
and calling upon the respondents to make the payment of the outstanding
amount. However, the respondent is stated to have failed to respond to the
same.
9. Learned counsel for the petitioner submits that in terms of the
judgment of this Court in ‘ Overnite Express Limited v. Delhi Metro Rail
Corporation’, (2022) 294 DLT 83, it is incumbent on this Court to appoint a
Sole Arbitrator to adjudicate the disputes between the parties.
10. As such, the petitioner has approached this Court, through the present
petition, seeking the appointment of a Sole arbitrator to adjudicate the
dispute.
11. In the present proceedings, notice was issued by the Court on
12.07.2024 with a liberty to the respondent to file reply, in case they seek to
oppose the appointment of arbitrator within three weeks after the service of
notice. The learned counsel on behalf of the respondents entered appearance
on 24.09.2024 before this Court, and prayed for some time to seek
instructions and file a reply. This Court passed the order as under-
“3. Mr. Bhardwaj states that he has no instructions with regard to
the grounds upon which the respondent wish to resist the appointment
of an arbitrator. He nonetheless seeks time to file replies.
4. As this is the first extension sought, it is granted subject to
payment of costs of Rs.7,500/- in each of the arbitration petition.
Costs be paid to the petitioner within one week from today and
affidavits in reply may be filed within two weeks from today.”
12. However, neither has any reply been filed on behalf of the
respondents on record nor has anyone appeared on behalf of the respondent
today.
ARB.P. 1006/2024 & Others Page 4 of 6
Signature Not Verified
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:09.11.2024
20:41:15
13. Since the existence of the arbitration clause is evident from a perusal
of the Term Loan Agreement, there is no impediment in appointing an
independent Sole Arbitrator for adjudicating the disputes between the parties
as prayed for, and as mandated in terms of the judgments of the Supreme
Court in Perkins Eastman Architects DPC (supra ), ‘TRF Limited v.
Energo Engineering Projects Ltd’, (2017) 8 SCC 377, ‘Bharat Broadband
Network Limited v. United Telecoms Limited.’, 2019 SCC OnLine SC 547
and ‘Interplay between Arbitration Agreements under the Arbitration &
Conciliation Act, 1996 & the Indian Stamp Act, 1899 , In re’ , 2023 SCC
OnLine SC 1666.
14. Accordingly, Ms. Ruchi Agnihotri, Advocate (Mob. No.:
+91.9873691920) is appointed as the Sole Arbitrator to adjudicate the
disputes between the parties.
15. The respondent shall be at liberty to raise preliminary objection/s as
regards arbitrability/jurisdiction, if any, which shall be decided by the
arbitrator, in accordance with law.
16. The learned Sole Arbitrator may proceed with the arbitration
proceedings subject to furnishing to the parties requisite disclosure as
required under Section 12 of the A&C Act.
17. The learned Sole Arbitrator shall be entitled to fee in accordance with
th
the IV
Schedule of the A&C Act; or as may otherwise be agreed to
between the parties and the learned Sole Arbitrator.
18. Parties shall share the arbitrator’s fee and arbitral cost, equally.
19. All rights and contentions of the parties in relation to the
claims/counter claims are kept open, to be decided by the learned Sole
Arbitrator on their merits, in accordance with law.
ARB.P. 1006/2024 & Others Page 5 of 6
Signature Not Verified
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:09.11.2024
20:41:15
20. Needless to say, nothing in this order shall be construed as an
expression of opinion of this court on the merits of the case.
21. The present petition stands disposed of in the above terms.
O.M.P.(I) (COMM.) 240/2024
22. This is a petition under Section 9 of the A&C Act seeking urgent
interim orders.
23. It is averred in the petition that respondents with an intent to defeat
the claim of the petitioner, are likely to dispose-off their assets and
properties which are not mortgaged to the petitioner. It is submitted by the
learned counsel for the petitioner that they apprehended that the same will
cause grave prejudice to the petitioner since no alternate property will be
available for the satisfaction of the Award, if passed in favour of the
petitioner.
24. Since the Arbitral Tribunal has already been constituted to adjudicate
the disputes between the parties, it would be apposite if the present petition
under Section 9 of the A&C Act is treated as an application under Section
17 of the A&C Act and accordingly dealt with by the learned Sole
Arbitrator. It is directed accordingly.
25. In view of the urgency emphasized by the learned counsel, the
petitioner shall be at liberty to request the learned Sole Arbitrator for
expeditious consideration of the application under Section 17 of the A&C
Act.
26. The present petition is disposed of with the aforesaid directions. The
pending applications are also disposed of.
SACHIN DATTA, J
sl
OCTOBER 28, 2024/
ARB.P. 1006/2024 & Others Page 6 of 6
Signature Not Verified
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:09.11.2024
20:41:15