JUDGMENT :

1. The applicant, a company incorporated under the provisions of the Companies Act, 1956 and engaged in an activity of conservation of environment at it’s core so as to ensure eco-friendly plans and solutions, has approached this Court, seeking appointment of a Sole Arbitrator to adjudicate the disputes that have arisen with the respondent-Canara Bank, a body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertaking) Act.

The aforesaid relief is sought in the wake of an arbitration clause comprised in the common hypothecation Agreement executed between the applicant and the respondent on 19/12/2017, where it was agreed, to refer any dispute arising in connection with the Agreement to an Arbitrator or if there is no agreement reached, then to be referred to a panel of three Arbitrators, one appointed by each party and third selected by two Arbitrators.

2. It is not in dispute that the applicant, in the wake of it’s activity, availed facility from the respondent bank and as per the applicant, it has availed approximately INR 8.5 Crore from the respondent bank out of the total sanctioning facility of INR 20 Crore. Though the application proceed to disclose the manner in which the amount was expended, I need not delve deep into the same. The applicant has alleged that on account of numerous breaches committed by the respondent bank, it suffered a huge loss amounting to Rs.14,20,51,051/-.

In any case, according to the applicant, it is entitled for the benefit of making over the reference to the Arbitrator and, therefore, it had invoked arbitration vide it’s notice forwarded to the respondent on 09/04/2021, when it demanded arbitration by clearly setting out the dispute and claimed that the sum of Rs.14,20,51,051/- with further interest at the rate of 12% is payable to it.

3. Despite the notice being duly received by the respondent on 15/04/2021, since it did not accord any consent to the proposed name of the Arbitrator and forwarded a reply on 21/05/2021, where it is accused of raising sham defences and untenable contentions, the applicant has approached this Court, seeking appointment of a Sole Arbitrator in terms of the clause contained in the common hypothecation Agreement to that effect.

4. The learned counsel Mr.Gajendra Rajput, appearing for the respondent bank, vehemently opposed the relief sought in the application by submitting that in the wake of the decision of the Hon’ble Apex Court in the case of Vidya Drolia & Ors. Vs. Durga Trading Corporation, (2021) 2 SCC 1, the dispute is non-arbitrable and he would specifically rely upon paragraph 58 of the said decision, where it has been held as under :

“58. Consistent with the above, observations in Transcore on the power of the DRT conferred by the DRT Act and the principle enunciated in the present judgment, we must overrule the judgment of the Full Bench of the Delhi High Court in HDFC Bank Ltd. v. Satpal Singh Bakshi, which holds that matters covered under the DRT Act are arbitrable. It is necessary to overrule this decision and clarify the legal position as the decision in HDFC Bank Ltd. has been referred to in M.D.Frozen Foods Exports (P) Ltd., but not examined in light of the legal principles relating to non-arbitrability. The decision in HDFC Bank Ltd. holds that only actions in rem are non-arbitrable, which as elucidated above is the correct legal position. However, non-arbitrability may arise in case of the implicit prohibition in the statute, conferring and creating special rights to be adjudicated by the courts/public fora, which right including enforcement of order/provisions cannot be enforced and applied in case of arbitration. To hold that the claims of banks and financial institutions covered under the DRT Act are arbitrable would deprive and deny these institutions of the specifc rights including the modes of recovery specified in the DRT Act. Therefore, the claims covered by the DRT Act are non-arbitrable as there is a proh