The court upheld the validity of the arbitral award, affirming the necessity for evidence of debt and reaffirming the co-extensive liability of the guarantor with that of the principal debtor, despite claims of procedural flaws and delays.

JUDGMENT :

SANDEEP V. MARNE, J.

1) The Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking invalidation of the Arbitral Award dated 4 April 2024 passed by the learned sole Arbitrator. By the impugned Award, the Arbitral Tribunal has allowed the claims of Respondent No.1 in the sum of Rs.28,16,51,442.87/- in respect of domestic factoring facility alongwith interest @ 18% p.a. w.e.f. 1 April 2011. The Arbitral Tribunal has further directed Petitioner and Respondent No.2 to jointly and severally pay to Respondent No.1 amount of Rs.15,29,35,047.19/- towards reverse factoring facility alongwith interest @ 18% p.a. w.e.f. 1 April 2011. Petitioner and Respondent No.2 are further ordered and directed to specifically perform the obligations in sanction letter dated 21 June 2007. The Arbitral Tribunal has also awarded costs of arbitration in favour of Respondent No.1.

FACTS

2) Petitioner was a Director and shareholder of Respondent No.2-Company- M/s. Rayalseema Commodities Ltd., which is currently under liquidation and which used to carry on business inter alia of export, purchase, sale, distribution, stocking, dealing with, and importing of flowers, agricultural products, rice, wheat, pulses, sugarcane, oil seeds, spices, alcohol, beverages, tea, coffee etc. The name of Respondent No.2-Company was formerly Sudarshan Overseas Limited. By Certificate of Incorporation consequent upon change of name dated 4 March 2010, Respondent No.2 is now known as M/s. Rayalseema Commodities Limited (Rayalseema).

3) Respondent No.1 was formerly known as Global Trade Finance Ltd which is a subsidiary of State Bank of India. On 15 January 2010, Global Trade Finance Ltd amalgamated with SBI Factors and Commercial Services Private Limited, and the resultant Company is known as SBI Global Factors Ltd. They are collectively referred to as SBI Global.

4) By letter of sanction dated 21 June 2007, SBI Global sanctioned to Rayalseema trade finance facilities upto the limit of Rs.15 crores subject to the condition of Petitioner alongwith Mr. Sudarshan Malhotra and Sunayana Malhotra, giving their personal guarantees. Petitioner as Director of Rayalseema was authorised to seek revision/enhancement of the trade finance facilities sanctioned vide letter dated 21 June 2007. Rayalseema executed Global Accounts Receivable Management Agreement (GARMA) and Import Factoring Agreement with SBI Global on 3 July 2007. Petitioner executed Deed of Guarantee date