The mere filing of the proceedings under Section 7 of the IBC did not preclude the Court from exercising its jurisdiction under Section 11 of the aCa, as the proceedings under Section 7 of the IBC were yet to reach a stage of the NCLT passing an order admitting the said proceedings.

JUDGMENT

G.S.Kulkarni, J. - a short but interesting question arises for consideration in this application filed under Section 11 of the arbitration and Conciliation act,1996 (for short 'the aCa'). The question being, whether mere filing of a proceeding under Section 7 of the Insolvency and Bankruptcy Code, 2016, would amount to any embargo on the Court considering an application under Section 11 of the arbitration and Conciliation act,1996, to appoint an arbitral tribunal?

2. Briefly the facts are:

It is the case of the applicant that the respondent in the usual course of its business provided financial assistance to the applicant of an amount of Rs.4,50,00,000/- for which a loan agreement dated 23 april 2015 was entered between the applicant and the respondent referred as 'agreement No.1'.

3. as contended by the applicant, the business scenario had undergone a change and created a negative impact during the subsistence of agreement No.1. In such situation, another agreement dated 5 July 2016 referred to as 'agreement No.2' was executed between the parties, under which, the date of repayment of the borrowing was extended from 30 June 2015 to 31 March 2017. Except for such variation, it is contended that the terms and conditions in such agreement are similar to the ones as contained in 'agreement No.1'.

4. Nonetheless, there were defaults on the part of the applicant in the payment of the loan installments. It is the case of the applicant that in discharge of its liability towards the respondent under such agreements, the applicant issued a cheque dated 7 September 2021 to the respondent, of an amount of Rs.31,08,33,457/- being the repayment of the respondent's dues upto 31 august 2021, which according to the respondent, was in accordance with the terms and conditions of the loan agreement dated 5 July 2016. It is not in dispute that such cheque was dishonoured when presented for payment. In these circumstances, the respondent approached the National Company Law Tribunal (for short 'the NCLT') by intiating proceedings against the applicant under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short 'the IBC'). Such proceedings were filed on 12 October 2021. The applicant has appeared in such proceedings and at its instance adjournments were also sought. So far no order has been passed by the NCLT admitting the petition as per the provisions of sub-section (5) of Section 7 of the IBC.

5. In the proceedings before the NCLT, it is the case of the applicant that both the agreements entered between the parties dated 23 april 2015 and 5 July 2016 being interconnected, when read together, contain an arbitration agreement between the parties, as contained in Clause 16. The Court's attention is drawn to such arbitration clause, which reads thus :-

'16. arbitration

any claim, dispute or difference between the Parties hereto arising out of this agreement and which cannot be settled by mutual agreement and shall be decided by arbitration in accordance with the provisions of the arbitration and Conciliation act,1996 and the rules made thereunder. The place of arbitration shall be Mumbai, and Indian law shall apply.'

6. On the above backdrop, the applicant by its advocate's notice dated 10 December 2021, issued to the respondent, invoked the arbitration agreement and called upon the respondent to agree to appoint an arbitral tribunal to adjudicate the disputes and differences between the parties under the said loan agreements. The applicant also suggested the name of the proposed sole arbitrator as set out in paragraph 23 of the said notice. as the respondent failed to agree to appoint an arbitral tribunal, the present application has been filed under Section 11(6) of the arbitration and Conciliation act,1996 (for short 'the aCa') praying, that an arbitral tribunal be appointed.

7. a reply affidavit has been filed on behalf of the respondent opposing the petition. at the outset, an objection is raised to the maintainability of the present a