Point of Law: Section 7 of Act provides that arbitration agreement means an agreement by parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of defined legal relationship whether contractual or not.

ORDER :

1. In these petitions filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short) seeking appointment of a nominee arbitrator on behalf of Asset Reconstruction Company India Limited (hereinafter referred to as 'the ARCIL' for short) for resolution of dispute between the parties as per Clause 18.10 of the Facility agreements dated 27.09.2017 and 23.02.2018. For the facility of reference, facts from CMP No. 110/2022 are being referred to.

(i) BACKGROUND FACTS:

2. The petitioner is a company incorporated under the Companies Act, 1956 and is engaged in the business of development of properties (hereinafter referred to as 'the Company' for short). The respondent viz. ARCIL is an asset reconstruction company and is engaged in the business of resolution of Non Performing Assets after acquisition of Indian Banks and Financial Institutions.

3. Admittedly, vide sanction letter dated 19.07.2017, a term loan of Rs.470,00,00,000/- (Rupees Four Hundred and Seventy Crores) was sanctioned in favour of the company. Subsequently, a facility agreement dated 26.09.2017 was executed between the company and the original lender.

4. Clause 1.1(viii) of the agreement defines the expression Lender(s) to mean (a) lender(s) under the loan agreement and (b) any new lender(s) which has rights under the loan agreement. Clause 2.5 and 2.6 of the agreement provides for interest rate and interest rate reset. Clause 2.7 and 2.8 of the agreement provides for additional interest and default interest. Clause 2.10(c) deals with tenor and repayment of loan, which inter alia provides that interest rate and other charges including the additional interest and default interest shall be payable as per the terms of the agreement during the tenor of the loan including the moratorium period. Clause 13.1(i) of the agreement describes the events of default, whereas, clause 14 provides for consequence in the event of default.

5. Another loan agreement dated 23.03.2018 was executed between the company and ARCIL.

6. The company defaulted on its obligation under the loan agreement since, 2019 itself and the original lenders sent default intimation notices from June 2019 itself. Thereafter, the original lenders and the company entered into a memorandum of understanding dated 15.06.2020 under which the company undertook to furnish additional security in relation to repayment of loan under the loan agreement. The original lenders agreed to extend the moratorium under the loan agreement from March 2020 to August 2020. From August 2020 to January 2021 original lenders sent notices to the company several times, to make payment of the amount due under facility agreement.

7. On 16.03.2021, the account of the company was classified as Non Performing Asset (NPA). The original lenders entered into two assignment agreements dated 30.03.2022 with ARCIL. The company continued to default on its obligations under the loan agreements. Thereupon ARCIL by a demand notice dated 27.10.2021 recalled the entire amount due under the agreement.

8. The company thereafter filed a petition under Section 9 of the Act seeking to restrain ARCIL from transferring/selling/alienating/encashing or disposing of creating any third party rights or otherwise part with ‘any security’ under the loan documents. The company issued a notice dated 13.11.2021 seeking to invoke the arbitration agreement contained in the loan agreements. The respondent by a notice dated 06.12.2021 denied the existence of the arbitration agreement and pointed out that the dispute between the parties is non arbitrable.

9. The Commercial court by an order dated 15.12.2021 allowed the petition preferred by the company under Section 9 of the Act. The ARCIL has filed commercial appeal No. 70/2022 in which the validity of the aforesaid order passed by the commercial court has been assailed. The company thereafter, filed a petition under Section 11 of the Act seeking appointment of an appropri