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IN THE HIGH COURT OF DELHI AT NEW DELHI
Sanjeev Sachdeva, J.
IIFL Finance Limited - Appellant
Versus
Vinay Jain - Respondent
Arbitration Petition No. 1147, 1170 of 2021, I. A. No. 4687 of 2022
Decided On : 05-04-2022
Arbitration - Appointment of Arbitral Tribunal - Credit Facility Agreement, Deed of Guarantee - Securitisation and Reconstruction of Financial assets and Enforcement of Security Interest act, 2002 - The court discussed the validity of the agreements, the allegations of fraud, and the arbitrability of fraud. The court found that the agreements were valid, the fraud allegations were not substantiated, and the disputes should be referred to an arbitral tribunal. The court appointed an arbitrator to adjudicate the claims and counterclaims.
Fact of the Case:
The petitioner sought appointment of an arbitral Tribunal pursuant to a Credit Facility agreement and a Deed of Guarantee. The respondent objected to the appointment, contending that the agreements were vitiated by fraud due to the signatory being in judicial custody at the time of signing.
Finding of the Court:
The court found that the agreements were valid and the fraud allegations were not substantiated. It held that the disputes should be referred to an arbitral tribunal and appointed an arbitrator to adjudicate the claims and counterclaims.
Issues: Validity of agreements, allegations of fraud, arbitrability of fraud
Ratio Decidendi: The court found that the agreements were valid, the fraud allegations were not substantiated, and the disputes should be referred to an arbitral tribunal. It also held that serious allegations of fraud are arbitrable and appointed an arbitrator to adjudicate the claims and counterclaims.
Final Decision: The court allowed the petitions, imposed costs on the respondents, and appointed an arbitrator to adjudicate the claims and counterclaims.
JUDGMENT
Sanjeev Sachdeva, J. - In arbitration petition 1147/2021, petitioner seeks appointment of arbitral Tribunal pursuant to a Credit Facility agreement dated 01.11.2017 and in arbitration petition 1170/2021, petitioner seeks appointment of arbitral Tribunal pursuant to the Deed of Guarantee dated 01.11.2017.
2. Both the documents are alleged to have signed by Mr. Vinay Jain, respondent in arbitration petition 1147/2021 and the director of the respondent in arbitration petition 1170/2021.
3. as per the there was a loan transaction between aVJ Developers India Private Ltd. which had availed of three term loans of Rs. 25 crores on 09.01.2015, Rs. 75 crores on 13.01.2015 and Rs. 35 crores on 29.04.2016 respectively. In respect of the said term loan of Rs.35 crores, it is alleged that only Rs.23 crores were disbursed. The total amount disbursed as per the petitioner to the said debtor, aVJ Developers India Private Ltd. was Rs.123 crores. The three loans had become irregular in the month of august, 2017.
4. as per the petitioner, as the management of the said borrower wanted to regularize the three loan accounts, petitioners were approached by the Directors of aVJ Developers India Private Limited, Smt. asha Jain and Smt. Sakshi aggarwal. Smt. asha Jain is the wife of Mr. Vinay Jain and Smt. Sakshi aggarwal is the wife of Mr. Vipin aggarwal.
5. They are alleged to have approached the petitioner for sanction of new credit facility in favour of Mr. Vinay Jain so that adjustment could be made to avoid the three loan accounts becoming irregular.
6. as per the petitioner, petitioner sanctioned the loan on 28.09.2017 in the sum of Rs. 85 crores in favour of Mr. Vijay Jain backed by the guarantee of the M/s. aVJ Developers India Private Ltd. and M/s Best View Properties Ltd.
7. as per the petitioner, the said loan amount of Rs. 85 crores was disbursed to the escrow account of aVJ Developers India Private Ltd. Out of the said amount, for the purposes of regularising the three accounts, aVJ Developers India Private Ltd. deposited various amounts to the three term loan accounts which were then regularised and the liability of the three existing loan accounts with the petitioner were reduced.
8. It is further contended that for the three loans they had mortgaged a property at aVJ Heights in Greater Noida as also a property in Community Centre, anand Vihar, Delhi.
9. It is contended that the property at anand Vihar was sold and the said amount of Rs. 85 crores and the sale proceeds of anand Vihar property were first appropriated towards the three loan accounts and the balance surplus left after the sale of anand Vihar property was adjusted towards the subject loan amount of Rs.85 crores.
10. It is contended since the disputes have arisen, the petitioners have invoked arbitration under the respective agreements referred to hereinabove.
11. Objections have been filed only by Mr. Vinay Jain in arbitration petition No.1147/2021. No objections have been filed to the arbitration Petition No. 1170/2021.
12. Learned counsel appearing for Mr. Vipin Jain submits that since the grounds being raised are legal, no separate objections have been filed and the objections filed in arbitration petition No.1147/2021 be read as objections to the arbitration Petition No.1170/2021.
13. Respondents have objected to the appointment of the arbitral Tribunal contending that the agreements are vitiated by fraud for the reason that Mr. Vinay Jain who is alleged to have signed the agreements was in judicial custody from 03.03.2017 to 24.10.2017.
14. Learned counsel for the respondent contends that as per the petitioners the sanction of the loan of Rs.85 crores was done on 28.09.2017 and the disbursement has been done on 04.10.2017 when Mr. Vinay Jain was in judicial custody and as such he could not have signed any document. It is submitted that no financial institution would sanction any loan without any document being signed. It is further contended that the alleged agree
AI
The court established that serious allegations of fraud are arbitrable and appointed an arbitrator to adjudicate the claims and counterclaims.
Allegations of fraud do not inherently preclude arbitration unless substantiated by evidence; agreements signed after release from custody uphold their validity.
Disputes related to Joint Venture Agreement must be resolved via arbitration, affirming validity of the arbitration clause despite claims of termination.
Allegations of fraud and forgery do not inherently preclude the jurisdiction of an arbitral tribunal unless they directly impinge upon the arbitration agreement itself.
A unilateral right of appointment for an arbitrator in an arbitration agreement is impermissible; however, notice of intent to arbitrate, even when lacking technical precision, can suffice for procee....
The scope of enquiry under Section 11 of the Arbitration and Conciliation Act, 1996, is restricted to the examination of the existence of the arbitration agreement. The burden lies on the party resis....
A party does not have to name an Arbitrator unless mutual consent exists, emphasizing the validity of the Trigger Notice in seeking arbitration and the appointment of a Sole Arbitrator.
The arbitration agreement binds all parties, including non-signatories, and disputes must be referred to arbitration despite objections on limitation and jurisdiction.
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