Aditya Birla Finance Limited v. Debojyoti Paul

1. Heard Mr. Maheshwari, learned counsel for the applicant. None appears for the respondent.

2. This application which was filed along with companion Commercial Arbitration Application (Lodging) No. 25050 of 2023 was subsequently detagged in terms of the order of this Court dated 26 October 2023.

NOVEMBER 19, 2024

3. With the assistance of Mr. Maheshwari, I have perused the record. It is evident that the issues to be decided in this application, are similar to that in Commercial Arbitration Application (Lodging) No.25050 of 2023. Considering the above position, as the reasoning of this Court in deciding this application would be similar to that in companion Commercial Arbitration Application (Lodging) No.25050 of 2023, getting into nuances and details is not necessary. A) Relevant Facts:- The applicant had pursuant to issuance of sanction letter dated 16 August 2018 issued in favour of the borrower, executed a deed of guarantee dated 13 September 2018. In this regard, pertinent it is to note that it contained an arbitration clause, which read thus: “24. That all claims or disputes arising out of or in relation to this Guarantee shall be settled by arbitration. The arbitration tribunal shall consist of a sole arbitrator to be appointed by ABFL. All parties to this Guarantee hereby expressly consent to ABFL being the sole appointing authority. Any vacancy created in the arbitration tribunal, for any reason whatsoever, shall also be filled only by ABFL acting as the sole appointing authority. Only a former judge of any High Court or the Supreme Court will be eligible to act as an arbitrator under this clause. The place of arbitration shall be Mumbai. Parties agree that the Courts in Mumbai shall have the exclusive jurisdiction to Ganesh Lokhande, PA exercise all powers under the Arbitration & Conciliation Act, 1996.”

4. According to the applicant, as on 4 August 2023, a total sum of Rs.7,07,22,058.10/- (Rupees Seven Crores Seven Lakhs Twenty-Two Thousand Fifty-Eight and Ten paise only) was outstanding, due and payable by both respondent and the borrower to the applicant towards the finance facility provided by the applicant. In this context, the deed of guarantee dated 13 September 2018 becomes relevant. It is the applicant’s case that as the respondent has executed the deed of guarantee, both the borrower and the respondent are jointly and severally liable to pay such outstanding amount to the applicant.

5. In light of the above, there arose differences and disputes between the applicant and the respondent also under the deed of guarantee.

6. The applicant through its advocates addressed Notice dated 17 October 2022 invoking arbitration, in terms of the arbitration clause stipulated under such deed. The said notice also named Hon’ble Shri Dr. Justice S. Radhakrishnan (Former Judge of the Bombay High Court) as the sole arbitrator to adjudicate the differences, disputes arising between the applicant and the respondent under the deed of guarantee.

7. The respondent replied to the above notice, through its advocates by a letter dated 23 November 2022. The respondent objected to the very invocation of the arbitration clause stipulated in the deed of guarantee primarily on the ground that considering the pendency of the proceedings unsder Section 17(1) of the Securitization and Reconstruction of Financial Assets and enforcement of Security Interest Act 2002 (“the SARFAESI Act” for short) read with Section 13(2) of the said Act, before the Debt Recovery Tribunal, Mumbai, the said arbitration clause cannot be invoked by the applicant. The respondent also alleged suppression of this fact by the applicant. The respondent disputed the appointment of the learned sole arbitrator as suggested by the applicant in their advocates’ notice invoking arbitration dated 17 October 2022. It is in the above background that the present application is filed by the applicant under Section 11(6) of the Arbitration and Conciliation Act, 1996. The substantive prayer in this application is extracted below:- “(a) that this Hon'ble Court be pleased to appoint a sole Arbitrator in terms of Section 11(6) of the Arbitration and Conciliation Act, 1996 to constitute the Arbitral Tribunal to adjudicate the dispute between of the Applicant and the Respondents arising under the Clause 24 of the Deed of Guarantee dated September 13, 2018.”

8. In my opinion, a perusal of the arbitration clause read with the facts narrated above, makes it clear that this application would stand covered by the decision in the companion Commercial Arbitration Application (Lodging) No.25050 of 2023.

9. Considering all of the above, I deem it fit and proper to pass the following order:- A) Appointment of Arbitrator:- Justice Sadhna Jadhav (Former Judge, Bombay High Court) is hereby appointed as learned sole arbitrator. i. A copy of this order will be communicated to the learned Sole Arbitrator by the Advocates for the Applicant within ten (10) days from the date this order is uploaded. ii. The Advocates for the Applicant will forward an ordinary copy of this order to the learned Sole Arbitrator at the following postal and email addresses: Arbitrator/s: Justice Sadhna Jadhav (Former Judge, Bombay High Court) Address 108, Seksaria Chambers, Nagindas Master Road, Kala Ghoda, Fort, Mumbai-400 001. iii. Disclosure: The learned Sole Arbitrator is requested to forward, in hard copy, soft copy, the necessary statement of disclosure under Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996 to Advocates for the parties as soon as possible. The Advocates for the applicant will arrange to file the original statement in the Registry, within three (03) days of it being made available by the learned sole arbitrator. iv. Appearance before the Arbitrator: Parties will appear before the learned Sole Arbitrator on such date and at such place as the learned Sole Arbitrator decides to obtain appropriate directions in regard to fixing a schedule for completing pleadings, etc. v. Interim Application/s: Interim Application, if any, filed under Section 17 of the Arbitration and Conciliation Act, 1996 shall be decided by the arbitrator, if and so when referred. vi. Fees: The arbitral tribunal’s fees shall be governed by the Fourth Schedule to the Arbitration and Conciliation Act, 1996. vii. Venue and seat of arbitration: Parties agree that the venue and seat of the arbitration shall be in Mumbai. viii. Sharing of costs and fees: Parties agree that all arbitral costs and the fees of the arbitrator will be borne by the two sides in equal proportion.

10. The Application (L) No. 32948 of 2023, is allowed as per prayer clause (a) in terms of the above. No order as to costs. (ADVAIT M. SETHNA, J.)