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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADVAIT M.SETHNA
Mangal Credit and Fincorp Limited – Appellant
Versus
Ulka Chandrshekhar Nair – Respondent
JUDGMENT:
ADVAIT M. SETHNA, J.
1. This is an Application under Section 11 of the Arbitration and Conciliation Act, 1996 (“ACA” for short) praying for an appointment of a sole arbitrator under Section 11 of the ACA. This is to adjudicate disputes between the Applicant and the Respondent, arising out of the Mortgage Deed dated 28 December 2020 (“The said Mortgage Deed” for short) which entails an Arbitration Clause.
Issue:-
2. The intriguing Issue that falls for determination in these proceedings revolves around the existence, maintainability and entertainability of the arbitration clause/agreement contained in the said Mortgage Deeds, given the Respondent’s contention that on account of criminality, fraud touching upon the underlying Mortgage Deeds the disputes are ipso facto non arbitrable.
Factual Matrix:-
3. The Applicant is a Non-Banking Financial Company incorporated under the Companies Act, 1956 and the Respondent is the borrower who has allegedly secured a loan under the said Mortgage Deed.
4. According to the Applicant, the genesis of the dispute revolves around the said Mortgage Deed, in respect of the immovable property i.e., the Bungalow (“subject property” for short) as describ
Arbitration agreements remain enforceable despite allegations of fraud unless serious fraud is established, which requires evidential assessment outside arbitration proceedings.
Suits involving the enforcement of mortgages constitute non-arbitrable rights in rem, necessitating resolution through public courts rather than arbitration.
The court affirmed that objections regarding non-arbitrability of disputes are not to be considered at the pre-referral stage under Section 11(6) of the Arbitration and Conciliation Act, 1996.
The court established that serious allegations of criminality do not automatically render partnership disputes non-arbitrable unless they permeate the entire arbitration agreement.
Disputes covered by special laws, creating special rights to be adjudicated and enforced by special forums, are non-arbitrable.
The main legal point established in the judgment is that serious allegations of fraud and the pending criminal case against a party may make it improper to refer disputes to arbitration, leading to t....
Appellant is within the purview of the SARFAESI Act even though it was not on the date of entering into the agreement containing the arbitration clause.
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