Allowed

Indiabulls Housing Finance Ltd. v. Aarti Gupta and Anr.

Delhi HC9 Dec 2024ARB.P./604/2024

Case brief

AI extract

What is this about?

Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for constitution of a sole arbitrator. Court validated the arbitration clause and appointed Mr. Prateek Badhwar as the Sole Arbitrator.

What did the court decide?

Appointment of Mr. Prateek Badhwar as Sole Arbitrator to adjudicate disputes.

What the court decided

Indiabulls Housing Finance Ltd. Vs Aarti Gupta and Anr. — Arbitration | Delhi HC (2024)

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$~5

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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% Date of Decision : 09.12.2024

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- ARB.P. 604/2024 INDIABULLS HOUSING FINANCE LTD. .....Petitioner Through: Mr. Raghav Khanna, Advocate.

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versus

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AARTI GUPTA AND ANR. .....Respondents Through: None. CORAM: HON'BLE MR. JUSTICE SACHIN DATTA

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SACHIN DATTA, J. ( Oral )

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The petitioner has filed an amended memo of parties bringing on record the change in its company name. The same is taken on record. 2. The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the A&C Act’ ) seeking constitution of an Arbitral Tribunal to adjudicate the disputes between the parties. The disputes between the parties have arisen in the context of a Loan Agreement dated 24.09.2016 (hereinafter “the agreement” ) entered into between the petitioner and the respondents.

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The said Agreement contains an arbitration clause which reads as under:-

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“The Loan Document is/shall be governed by Indian laws and the courts at New Delhi shall have exclusive jurisdiction relating to any matter/issue under or pursuant to the Loan Documents. Notwithstanding anything to the contrary, it any dispute/ disagreement/ differences (“Dispute”) arise between the parties (including any Borrower(s) during the subsistence of the Loan Documents and/or thereafter, in connection with, inter alia, the validity, interpretation, implementation and/or alleged breach of any

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Signature Not Verified

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ARB.P. 604/2024 Page 1 of 4

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Digitally Signed By:ROHIT KUMAR PATEL Signing Dat e:2 4.12.2024 10:27:28

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provision of the Loan Documents, jurisdiction or existence/ appointment of the arbitrator or of any nature whatsoever, then, the Dispute shall be referred to a sole arbitration who shall be appointed by IHFL only. In any circumstance, the appointment of the sole arbitrator by IHFL shall be and shall always deemed to be the sole means for securing the appointment/nomination of the sole arbitration, without recourse to any other alternative mode of appointment of the sole arbitrator. The place of the arbitration shall be New Delhi or such other place as may be notified by IHFL and the arbitration proceedings shall be governed by the Arbitration and Conciliation Act, 1996 (or any statutory re-enactment thereof, for the time being in force) and shall be in the English language. The award shall be binding on the Parties subject to the applicable laws in force and the award shall be enforceable in any competent court of law.”

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Disputes have arisen between the parties in view of the respondents’ alleged default in making the requisite payment in terms of the Agreement. It is stated that in view of the defaults on the part of the respondents, the loan facility was recalled and the loan account of the respondents were classified as a non-performing asset (NPA) on 11.11.2021 and a notice under Section 13(2) of the SARFAESI ACT, 2002 was issued by the petitioner to the respondents on 29.11.2021.

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Subsequently, the mortgaged property was auctioned and certain amount was realised by the petitioner. However, upon adjusting the amount recovered by way of auctioning the mortgaged property against the outstanding amount under the agreement, payable to the petitioner, some further amount remained unpaid on account of ‘loss on sale’ by the respondents. It is for recovery of this amount that the present arbitral proceedings have been sought to be initiated.

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The petitioner issued an invocation notice on 27.03.2024, seeking constitution of arbitral tribunal to adjudicate the disputes between the parties, however, the parties could not mutually agree upon constitution of

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Signature Not Verified

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ARB.P. 604/2024 Page 2 of 4

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Digitally Signed By:ROHIT KUMAR PATEL Signing Dat e:2 4.12.2024 10:27:28

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an arbitral tribunal, hence the present petition has been filed.

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None appears for the respondents.

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Vide order dated 08.08.2024, passed by the learned Joint Registrar (Judicial), it was noticed that the notice could not be served through ordinary mode, speed post and email. As it was noticed that the petitioner does not have any other address to serve the respondents, liberty was granted to the petitioner to make an application for effecting service by publication. The said application was consequently filed by the petitioner.

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It is submitted by the petitioner that the requisite publication has already been made and the affidavit of service dated 22.11.2024 has already been filed in this regard. The said affidavit records that the required notice was duly published in the national daily newspapers i.e. Times of India and Dainik Jagran (Delhi Edition) on 20.11.2024. 10. In the aforesaid circumstances, the present petition has been taken up for hearing despite non-appearance of the respondent. 11. Since the existence of the arbitration agreement is evident from a perusal of the Clause 14 of the Agreement, there is no impediment to constituting an Arbitral Tribunal as mandated in terms of law laid down by the Supreme Court in In Re: Interplay between Arbitration Agreement under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 , 2023 SCC OnLine SC 1666 and SBI General Insurance Co. Ltd. v. Krish Spinning , 2024 INSC 532.

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Further, in terms of the judgment of the Supreme Court in Perkins Eastman Architects DPC (supra), TRF Limited v. Energo Engineering Projects Ltd , (supra), Bharat Broadband Network Limited v. United Telecoms Limited . (supra), it is incumbent on this Court to appoint an

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Signature Not Verified

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ARB.P. 604/2024 Page 3 of 4

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Digitally Signed By:ROHIT KUMAR PATEL Signing Dat e:2 4.12.2024 10:27:28

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independent sole arbitrator to adjudicate the disputes between the parties. 13. Accordingly, Mr. Prateek Badhwar, Advocate (Mob. No.: +91 9711528528) is appointed as the Sole Arbitrator to adjudicate the disputes between the parties.

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The respondents shall be entitled to take appropriate objections, if any, as regards jurisdiction/arbitrability, before the learned Sole Arbitrator, which shall be decided by the learned Sole Arbitrator on merits and in accordance with law.

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The respondents shall be at liberty raise counter-claims, which shall be dealt with and adjudicated by the learned Sole Arbitrator, in accordance with law.

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The learned Sole Arbitrator may proceed with the arbitration proceedings subject to furnishing to the parties the requisite disclosures as required under Section 12 of the A&C Act.

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The learned Sole Arbitrator shall be entitled to fee in accordance with IVth Schedule to the A&C Act; or as may otherwise be agreed to between the parties and the learned Sole Arbitrator.

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