Bombay High Court
Tata Capital Financial Services ... vs Rajvardhan Foods Pvt Ltd on 13 June, 2023
Bench: Bharati Dangre
2023:BHC-OS:4874
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPLICATION (L) NO. 36571 of 2022
Tata Capital Financial Services Ltd .. Applicant
Versus
Rajvardhan Foods Pvt.Ltd and anr .. Respondents
Mr. Nikhil Mehta i/b KMC Legal Venture for the applicant.
CORAM: BHARATI DANGRE, J.
DATED : 13th JUNE 2023
P.C:-
1 The Service Report dated 25/01/2023 placed before
me by the Master (Administration) Suit Board Department,
reflect that the notice of the proceedings is served upon
respondent nos.1 and 2 on 02/01/2023.
Despite the service being effected, the respondent
no.1 the borrower and respondent no.2, the co-borrower has
failed to mark their presence in the proceedings.
2 The applicant advanced a loan to the respondents in
the year 2018 and they defaulted in its payment, which
constrained the applicant to issue distinct notices calling for the
amount.
Vide notice issued on 27/11/2019, Arbitration was
invoked, as the Loan Facility Agreement provided Arbitration as
the mode of resolution for dispute arising out of the Loan
Facility Agreement.
Ashish
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3 Since there was no response to the notice invoking
arbitration, the Arbitrator was unilaterally appointed by the
applicant, who entered into the reference and passed an ex-parte
award on 15/10/2020 in Arbitration Case No. P-560/2020
directing the borrowers to pay an amount of Rs. 30,59,080/- with
interest @ 12% per annum and also the cost.
Being aggrieved, the respondents approached the
Principal District Judge, Ahmednagar through an application
under section 34 of the Arbitration and Conciliation Act, 1996
and the ground on which the award was sought to be set aside,
was the Covid-19 Pandemic, and an opportunity not being
afforded to meet the claim before the Arbitrator.
The Principal Judge, Ahmednagar, vide his judgment
dated 18/06/2022 arrived at a conclusion that no proper notice
was given, before the Arbitrator was appointed and even the
proceedings which were conducted by the Arbitrator failed to
follow the principle of natural justice. As a consequence, the
Arbitral Award dated 15/10/2020 was set aside and it was
directed that the respondent/borrower shall appear before the
learned Arbitrator on 19/07/2022 to resume the arbitral
proceedings from the stage of filing of the written statement.
After obtaining the said order on 18/06/2022, the
respondents placed an appearance before the learned Arbitrator
and objected to his appointment by relying upon the decision of
the Hon'ble Apex Court in case of Perkins Eastman Architect
DPC & Anr. Vs HSSC (India) Ltd, 2019 (9) SCC, as well as the
Ashish
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decision of this Court in case of Lite Bite Foods Pvt Ltd. Vs
Airports Authority of India where a view is taken that a
unilateral appointment of the Arbitrator is not permissible in
view of the amendment to the Arbitration and Conciliation Act,
1996.
4 The borrowers may be justified in objecting to the
appointment of Arbitrator but, since it appears that there is no
objection to the invocation of the arbitration and the remedy
invoked to approach the Arbitrator for settlement of disputes
which has arose out of the Loan Agreement executed between
the parties, in absence of the pleadings being traversed in the
present application, I deem it appropriate to exercise the power
under sub-section 6 of Section 11, to appoint a Sole Arbitrator to
enter into the reference afresh, from the stage of filing of
statement of claim. The appointment of the Arbitrator shall be
subject to the following conditions:
TERMS OF APPOINTMENT
(a) Appointment of Arbitrator :
Mr. Amrut Joshi, Advocate, is hereby appointed as a Sole
Arbitrator to decide the disputes and differences between
the parties under the documents referred to above.
(b) Communication to Arbitrator of this order :-
(i) A copy of this order will be communicated to the
learned Sole Arbitrator by the Advocates for the applicant/
petitioner within one week from the date this order is
uploaded.
Ashish
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(c) Disclosure :- The learned Arbitrator, within a
period of 15 days before entering the arbitration reference,
shall forward a Statement of disclosure as per the
requirement of Section 11(8) read with Section 12(1) of
the Arbitration and Conciliation Act, 1996, to the
Prothonotary & Senior Master of this Court, to be placed
on record of this application, with a copy to be forwarded
to both the parties.
(d) Appearance before the Arbitrator: The parties
shall appear before the Sole Arbitrator within a period of
two weeks from today and the learned Arbitrator shall fix
up a first date of hearing in the week commencing from
03/07/2023. The Arbitral Tribunal shall give all further
directions with reference to the arbitration and also as to
how it is to proceed.
(e) Contact and communication information of the
parties : Contact and communication particulars are to be
provided by both sides to the learned Sole Arbitrator.
This information shall include a valid and functional E-
mail address as well as mobile numbers of the parties,
participating in the process as well as of the Advocates.
(f) Section 16 application : The respondent is at
liberty to raise all questions of jurisdiction within the
meaning of section 16 of the Arbitration Act. All
contentions are kept open.
(g) Fees : The Sole Arbitrator shall be entitled for the
fees as per Bombay High Court (Fee Payable to
Arbitrators) Rules, 2018 and the arbitral costs and fees of
the Arbitrator shall be borne by the parties in equal portion
and shall be subject to the final Award that may be passed
by the Tribunal.
(h) Venue and seat of Arbitration : Parties agree
that the venue and seat of the arbitration will be in
Mumbai.
Ashish
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(i) Procedure : These directions are not in
derogation of the powers of the learned Sole Arbitrator to
decide and frame all matters of procedure in arbitration.
(j) All rights and contentions of the parties are kept
open.
( SMT. BHARATI DANGRE, J.)
Ashish
