Ge Countrywide Consumer ... vs Kiranben Mayur Daftary And Anr.
2007 Latest Caselaw 2222 Del

JUDGMENT

Anil Kumar, J.

1. This is a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.

2. The petitioner contended that it is a company incorporated under the Indian Companies Act and is engaged in the business of providing financial/credit facilities in the form of auto loans, personal loans and home equity loans, etc. to its customers and that the petition has been filed by Ms. Shalini Saxena, Assistant Manager, D/o Mr. S.N. Saxena, R/o F-57, Bhagat Singh Market, New Delhi - 110001 who has been authorized by a power of attorney dated 5th August, 2004 to sign, verify and institute the present petition.

3. The petitioner contended that the respondent Nos. 1 and 2 applied to the petitioner for loan against immovable property and a loan of Rs. 18,50,000 along with interest @ 17% per annum was sanctioned to the respondents repayable in 120 equal monthly Installments of Rs. 32,153 each and that the first payment was due for 1st June, 2003.

4. In view of the loan granted by the petitioner various documents such as the promissory note, loan agreement, declaration and power of attorney, were executed by the respondents. Also in order to secure repayment of the loan amount along with interest and other charges an equitable mortgage was created by the respondent with respect to the immovable property bearing No. 5, First Floor, Dheeraj Appts., Ogad Bhai Lane, Ghatkopar East, Mumbai, Maharashtra and the title deeds in respect of the property were deposited by respondent with the petitioner company.

5. According to the petitioner, the respondents failed to adhere to the repayment schedule and defaulted in making payment of the Installments as the post dated cheques issued by the respondents for repayment of the loan amount with interest were returned back with the remark "insufficient funds". Resultantly, the petitioner was constrained to issue a legal notice dated 22nd February, 2006 calling upon the respondents to pay a sum of Rs. 19,95,027.82 within seven days of the receipt else the matter would be referred to an arbitrator for recovery of the aforesaid dues. The notice was received back by the petitioner with the remark 'unclaimed'. The petitioner could not send the notice at any other address as the petitioner did not have any other address of the respondents.

6. According to the petitioner, Clause 11.1 of the agreement entered into between the petitioner and the respondents contained the arbitration agreement. Clause 11.1 of the agreement is as under:

11. Arbitration, Jurisdiction and Governing Law:

11.1. All claims, disputes or differences whatsoever which may at any time hereafter arise between the parties hereto concerning this agreement or its construction or effect or as to the rights, duties obligations or liabilities of the parties hereto or either of them under or by virtue of or in connection with this agreement or any document executed or security created pursuant hereto or otherwise as to any other matter in anyway connected with or arising out of or in relation to the subject matter of this agreement (including without limitation, enforcement of the security) shall be referred to the arbitration of a sole arbitrator jointly appointed by the parties hereto. The arbitration shall be conducted in accordance with and subject to the provisions of Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof for the time being in force. The place of the arbitration shall be as mentioned in Item No. 18 of the Schedule.

7. Consequent to the arbitration agreement between the parties and the fact that disputes had arisen between the parties, on 16th March, 2006 another notice was issued by the petitioner to the respondents invoking the arbitration agreement and seeking consent/concurrence of the respondents to the appointment of Sh. Sunil Jha, Advocate as an arbitrator to adjudicate the disputes which have arisen between the parties, which notice was also returned back with the remark "unclaimed". The petitioner has produced the postal receipts in respect of both the notices dated 22nd February, 2006 and 16th March, 2006 and has contended that despite an arbitration agreement between the parties the respondents have failed to give consent for the appointment of Sh. Sunil Jha, Advocate as sole arbitrator and, therefore, has lost its right to appoint an arbitrator in terms of arbitration clause and has sought appointment for an arbitrator by this Court.

8. Notice of the petition was issued on 20th April, 2006 but since the respondents were not served by means of ordinary service, on 16th March, 2007 an order was passed to serve the respondents by substituted service by way of proclamation in newspaper "Free Press Journal" (Mumbai Edition) and also by way of affixation on the notice board of the court which order was duly complied with by the petitioner. The citation was published in 29th June, 2007 edition of the newspaper "Free Press Journal" (Mumbai Edition). Despite service of the notice by proclamation and affixation no one is present on behalf of respondent, consequently, the respondent is proceeded ex parte.

Despite the service of the notice, no one has appeared on behalf of respondent nor has any reply been filed. Therefore, it will be just and appropriate to appoint a sole arbitrator to adjudicate disputes between the parties.

9. In totality of circumstances, it is inevitable to infer that there is arbitration agreement between the parties which is reproduced hereinabove. In terms of the arbitration agreement the arbitrator was to be appointed jointly by the parties. The respondent neither gave consent to the arbitrator appointed by the petitioner nor appointed its own arbitrator within the stipulated time. No arbitrator was appointed by the respondent even before the filing of the petition.

10. A learned Single Judge in Haryana Telecom Ltd. v. Union of India and Anr. 112 (2004) DLT 339 : 2004(2) Arb. LR 364 (Del.) had held that if the respondent fails to appoint an arbitrator within the stipulated time of 30 days of the notice, and even after filing of the petition under Section 11 of the Act, it is for the court to appoint an arbitrator.

11. Consequently, I appoint Shri S.M. Chopra, Advocate (Additional District Judge, Retd.), 181, Deshbandhu Apartment, Kalkaji, New Delhi -110019 (M : 9213230349, Res.: 26484158) as the sole arbitrator to adjudicate all the disputes between the petitioner and the respondents. The fee of the arbitrator shall be Rs. 70,000. Parties shall appear before the arbitrator on 17th December, 2007 at 4:30 p.m. A copy of this order be sent to the learned arbitrator forthwith. Parties are also directed to intimate the arbitrator about the order. Copy of this order be given dusty to the parties.