TATA CAPITAL LIMITED v. M/S. AADINATH STEEL

1. The present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter as ‘the A&C Act’) seeks constitution of an arbitral tribunal to adjudicate the disputes between the parties.

SACHIN DATTA, J. (ORAL)

2. Disputes between the parties have arisen in context of an Agreement for Term Loan (Term-Loan Facility) dated 16.09.2020 (hereinafter as ‘the loan agreement’), in terms of which, the respondent availed a term loan facility of Rs. 2.39 Crores.

3. Disputes between the parties have arisen on account of alleged nonpayment by the respondent no.1 of its monetary dues/instalments under the loan agreement.

4. Clause 12 of the loan agreement contains an arbitration clause as under:-

5. Disputes having arisen between the parties, a legal notice for ‘Recall of loan and invoking of arbitration’ dated 22.07.2024 was issued by the petitioner. It was, inter alia, stated therein as under:- “In the event You Nos. 1 and 2 fail to comply with your payment obligations, it shall be presumed that disputes, differences, claims etc., have arisen between You Nos. 1 and 2 and our Client and this notice may be treated as notice invoking Arbitration under Clause 12 of Agreement for Term Loan dated September 16, 2020.”

6. No response to the aforesaid notice was sent by the respondent to the petitioner. In the above circumstances, the present petition has been filed seeking the appointment of a Sole Arbitrator to adjudicate the disputes between the parties.

7. Notice was issued by the Court on 04.10.2024. As none appeared for the respondent, a fresh notice was issued by the Court on 29.10.2024. An affidavit of service dated 26.11.2024 has been filed by the petitioner wherein it has been stated that the petitioner has taken the requisite steps to serve the respondent at its known address/es. It has been brought out that the respondent has been duly served via speed post, courier and email.

8. In these circumstances, the present petition is taken up for disposal despite non-appearance of the respondent.

9. Since the existence of the arbitration clause is evident from a perusal of the Term Loan Agreement, there is no impediment to constituting an arbitral tribunal for adjudicating the disputes between the parties, as mandated in terms of the judgments of the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 INSC 532 and Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, 2023 SCC OnLine SC 1666.

10. Further, in terms of the judgments of the Supreme Court in Perkins Eastman Architects DPC v. HSCC (India) Ltd (2020) 20 SCC 760, TRF Limited v. Energo Engineering Projects Ltd, (2017) 8 SCC 377 and Bharat Broadband Network Limited v. United Telecoms Limited, 2019 SCC OnLine SC 547, it is incumbent on this Court to appoint an independent sole arbitrator to adjudicate the disputes between the parties.

11. Accordingly, Mr. Abhinav Garg, Advocate (Mob.: 9810196968) is appointed as the Sole Arbitrator to adjudicate the disputes between the parties.

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

13. The learned Sole Arbitrator shall be entitled to fee in accordance with the IVth