M/s. Shriram Finance Limited vs Abdul Rasheed

G.Girish, J

This Arbitration Request is filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) for the appointment of sole Arbitrator to adjudicate the disputes arisen between the applicant and the respondents.

The applicant claims to be a Non-Banking Finance Company, incorporated under the Companies Act, engaged in the business of loan on security of vehicles. Respondent No.1 is said to have availed a loan facility from the applicant for the purchase of a car, with the 2nd respondent as guarantor. As per Annexure-A hypothecation cum loan agreement executed in between the applicant and the respondents on 10.02.2023, the total loan amount of Rs.3,50,000/- ought to have been repaid by way of 48 monthly instalments. The applicant resorted to attachment of the vehicle by invoking Section 9 of the Act since the respondents defaulted repayment of the loan. Though the applicant issued Annexure-B lawyer’s notice to the respondents invoking Arbitration Clause of the loan agreement for the appointment of an Arbitrator, the respondents neither replied nor objected the appointment of Arbitrator even after the lapse of more than 30 days. It is under the above circumstances that the applicant has approached this Court for the appointment of an Arbitrator for the determination of disputes and differences between the parties arising out of Annexure-A agreement.

Though the respondents were duly served with notice, they did not choose to appear or to file any counter.

Heard the learned counsel for the applicant.

As per Clause 22(a) of Annexure-A loan agreement, all disputes, differences and claim arising out of or in connection with the said agreement shall be settled by arbitration in accordance with the provisions of the Act. Clause 22(b) of Annexure-A loan agreement stipulates that the venue of arbitration proceedings shall be at Calicut, and the language of arbitration shall be English. Even though Clause 22(a) empowers the applicant to nominate the sole Arbitrator, in view of the amendment to the Act, and the law laid down by the Apex Court in TRF Limited v. Energo Engineering Projects Limited [(2017) 8 SCC 377], and the subsequent decisions on that point, the right of the appointing authority in the above regard stands forfeited. It is due to the above reason that the applicant has issued Annexure-B notice to the respondents intimating them about the resolve to initiate steps for the appointment of an Arbitrator if the outstanding amount with interest is not paid within 30 days from the date of receipt of the notice. The respondents did not choose to send any reply to Annexure-B notice, and they did not even care to enter appearance in this proceedings.  Therefore, I am of the view that the applicant has validly invoked the arbitration Clause in Annexure-A agreement, and he is entitled to have an Arbitrator appointed in this matter.

In the result, the Arbitration Request stands allowed as follows:

i) Adv. Sri.E.K.Vasan, Puthiyedath Arcade, Balan K. Nair Road, Kozhikode – 673 006 is appointed as the sole Arbitrator to arbitrate upon the disputes that have arisen between the applicant and the respondents within the purview of Annexure-A agreement.

ii) The learned Arbitrator is at liberty to rule on his own jurisdiction if the parties raise such a dispute.

iii) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of ten days from today and to obtain a Statement of Disclosure from the learned Arbitrator as provided under Section 11(8) read with Section12(1) of the Act.

iv) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall issue the certified copy of this order to the learned Arbitrator, with a copy of the said statement appended to it, retaining the original of the same by this Court.

v) The fees of the learned Arbitrator shall be governed by the Fourth Schedule of the Act.

vi) The learned Arbitrator shall decide the manner in which the fees and expenses of the arbitration proceeding has to be paid by the parties.

vii) The parties will appear before the learned Arbitrator on such date and place as decided by the learned Arbitrator.

viii) As the seat of Arbitration is at Kozhikode, Kerala as per Annexure-A, the seat and venue will be at Kozhikode, as per the convenience of the Arbitrator.

ix) All contentions of the parties, including partial or full discharge of loan liability, are left open to be raised before the learned Arbitrator.