Delhi High Court held that Petitioner’s prayer seeking reference of disputes to arbitration, especially when such disputes were already subject matter of proceedings before the DRT and DRAT was therefore, wholly misconceived.
The Single Judge Bench of Delhi High Court comprising Justice Anup Jairam Bhambhani was hearing a Petition where the Petitioner was seeking reference of disputes to arbitration. The High Court held that Petitioner’s prayer seeking reference of disputes to arbitration, especially when such disputes were already subject matter of proceedings before the DRT and DRAT was therefore, wholly misconceived.
By way of the present petition under section 11 of the Arbitration and Conciliation Act, 1996 the petitioners was seeking appointment of an arbitrator to adjudicate upon the disputes that are stated to have arisen with the respondent from Rupee Facility Agreement dated 26.04.2019.
That petitioner No. 1 was a Non-Banking Finance Company registered with the Reserve Bank of India, and was accordingly a “financial institution” within the meaning of section 2(1)(m)(iv) of the SARFAESI Act, which entitles the petitioners to invoke arbitration under section 11 of the SARFAESI Act. The submission was that since the dispute in the present case was between petitioner No. 1, an NBFC, and the respondent, which was a bank, and they were both entities referred to in section 11 of the SARFAESI Act, their inter-se disputes were amenable to arbitration under section 11.
That the proceedings filed by the respondent before the learned Debt Recovery Tribunal, Jaipur by way of O.A. No. 1442/2019, which were filed after declaring petitioner No.1’s assets/accounts as a non-performing asset on 18.12.2019, and all other consequential and related proceedings, including the issuance of show cause notice for declaring petitioner No. 1 as “wilful defaulter‟, cannot stand in the way of the petitioners invoking the remedy in arbitration. It was stated that vide invocation notice dated 08.02.2021, the petitioners have invoked arbitration; and since by its reply dated 15.02.2021 the respondent has failed to agree to the appointment of a sole arbitrator from a panel of three arbitrators proposed by the petitioners in the invocation notice, the present petition seeking court intervention for seeking such appointment is maintainable.
On the other hand, opposing the appointment of an arbitrator, learned counsel for the respondent submitted, that the petition deserves to be dismissed.
The High Court observed that the borrower required to have a remedy against any unlawful crystallisation of a debt or wrongful enforcement of a security interest under the provisions of the SARFAESI Act and the RDB Act.
The High Court in the present case noted that the prayer seeking reference of disputes to arbitration, especially when such disputes were already subject matter of proceedings before the DRT, Jaipur and the DRAT, New Delhi, was therefore, wholly misconceived.
The Petition was dismissed.
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