Allowed

M/s.Cholamandalam Investment and Finance Company Limited, v. Veeramma

Madras HC3 Aug 2023Arb O.P(COM.DIV.)/131/2023

Case brief

AI extract

What is this about?

This is an application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of a sole arbitrator in a loan dispute. The invoking arbitration clause was held impermissible as it allowed unilateral appointment. The Court appointed Dr. V. Suresh as the sole arbitrator.

What did the court decide?

The petitioner is allowed. The Court appoints Dr. V. Suresh as the sole arbitrator to adjudicate the dispute.

M/s.Cholamandalam Investment and Finance Company Limited, Vs… — Arbitration | Madras HC (2023)

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Arb.OP.(comdiv) No.131 of 2023

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 03.08.2023

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CORAM

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THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE

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Arb.O.P.(Comm.Div.) No.131 of 2023

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M/s.Cholamandalam Investments and Finance Company Limited, (formerly known as Cholamandalam DBS Finance Ltd.), Rep. By Mr.R.Sivakumar Manager Legal, Dare House, No.2, NSC Bose Road, Chennai – 1.

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.. Petitioner

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-vs-

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1.Mrs.Veeramma 2.Mr.Venkatappa Muniyappan 3.Mr.Nagan

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.. Respondents

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Petition under Section 11 of the Arbitration and Conciliation Act, 1996, has been filed seeking to appoint a sole arbitrator to adjudicate the dispute between the petitioner and the respondents.

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For Petitioner : Mr.Ranjith for Mr.S.Namasivayam

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For Respondents : Ex-parte

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https://www.mhc.tn.gov.in/judis

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Arb.OP.(comdiv) No.131 of 2023

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ORDER

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This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996, seeking for appointment of an Arbitrator.

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The petitioner is a non-banking finance institution. The respondents had availed a loan from the petitioner under the loan agreement dated 31.03.2021. According to the petitioner, the respondents had committed default in the repayment of the loan. A demand legal notice was also sent by the petitioner to the respondents on 15.07.2022 calling upon the respondents to pay the outstanding dues. Thereafter, the petitioner initiated arbitration in accordance with the arbitration clause contained in the loan agreement dated 31.03.2021 by appointing a sole arbitrator.

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In the arbitration, the respondents had filed an application under Section 12 of the Arbitration and Conciliation Act, 1996, challenging the appointment of the sole arbitrator. Thereafter, the sole arbitrator has recused himself from the arbitration on 09.02.2023. Only under those circumstances, the petitioner has now filed this petition under Section 11 of

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https://www.mhc.tn.gov.in/judis

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arbitrator.

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Arb.OP.(comdiv) No.131 of 2023

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the Arbitration and Conciliation Act, 1996, seeking for appointment of an arbitrator.

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As directed by this Court on 06.07.2023, the petitioner has effected

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the paper publication in one issue of “Malai Murasu” for today's hearing. Despite the paper publication, no one has entered appearance on behalf of the respondents. The names of the respondents are also printed in the cause list today. Therefore, they are set ex-parte in this petition.

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The arbitration clause available in the loan agreement dated

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31.03.2021, which is the subject matte of dispute, is extracted hereunder:-

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“26. Arbitration:

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All disputes, differences and/or claims

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arising out of this agreement whether during its subsistence or thereafter shall be settled by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and or any statutory amendments thereof and shall be referred to the sole arbitration of an arbitrator nominated by the Company. The award given by such

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https://www.mhc.tn.gov.in/judis

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Arb.OP.(comdiv) No.131 of 2023

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arbitrator shall be final and binding on all parties to this agreement. In the event of an appointed arbitrator dying or being unable unwilling to act as arbitrator for any reason, the Company, on such death of the arbitrator or his inability or unwillingness to act as arbitrator, shall appoint another person to act as arbitrator. Such person shall be entitled to proceed with the reference from the stage it is left by his predecessor. The venue of arbitration proceedings shall be at Chennai at the Registered office of the company which is presently at 'DARE HOUSE', No.2 (old No.234), NSC Bose Road, Parrys, Chennai – 1.”

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Since there is a valid arbitration clause and in view of the fact that

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the arbitration clause enables the petitioner to appoint an arbitrator unilaterally, which is not legally permissible, this Court will have to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. Accordingly, this petition is allowed with the following directions:-

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(a) This Court hereby appoints Dr.V.Suresh, Advocate, having Office at Hussaina Manzil, 3rd floor, No.255, (Old No.123), Angappan Naicker

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https://www.mhc.tn.gov.in/judis

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Arb.OP.(comdiv) No.131 of 2023

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Street, Chennai 600 001 (Mobile No.9444231497) as the sole arbitrator to adjudicate the dispute between the petitioner and the respondents arising out the loan agreement dated 31.03.2021.

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(b) The Sole Arbitrator appointed by this Court shall be paid

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remuneration as per the Fourth Schedule of the Arbitration and Conciliation Act, 1996.

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Conciliation Act, 1996.

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(d) The Arbitrator shall also pass the arbitral award within the stipulated period as prescribed under the Arbitration and Conciliation Act, 1996.

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(e) Both the parties shall share equally the fees payable to the sole

arbitrator.

03.08.2023

rkm

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Arb.OP.(comdiv) No.131 of 2023

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ABDUL QUDDHOSE, J.

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rkm

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Arb.O.P.(Comm.Div.) No.131 of 2023

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03.08.2023

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https://www.mhc.tn.gov.in/judis

M/s.Cholamandalam Investment and Finance Company Limited, v. Veeramma

Case brief

What is this about?

What did the court decide?

M/s.Cholamandalam Investment and Finance Company Limited, v. Veeramma

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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