The court's role in arbitration proceedings is limited, and interference with the arbitrator's decision is only warranted if the arbitrator's view is not reasonable or plausible.

JUDGMENT :

SANJEEV SACHDEVA, J.

CM APPL. 19754/2023

1. Allowed, subject to all just exceptions.

FAO(OS) (COMM) 71/2023 & CM APPL. 19753/202

2. Appellants impugns order dated 16.02.2023. whereby the petition filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) has been dismissed.

3. Appellant had challenged the Arbitral Award dated 22.09.2022. passed by Sole Arbitrator.

4. Respondent had sanctioned a term loan for an aggregate amount of Rs. 10 crores to the appellant no. 1 by sanctioned letter dated 26.07.2018..

5. Along with the sanction of the loan, a Term Loan Agreement dated 28.07.2018. was executed by appellant no. 1 besides execution of Letter of Guarantees dated 28.07.2018. by appellant nos. 2 & 3 and a Deed of Hypothecation also dated 28.07.2018. by appellant no. 1

6. Appellant no. 1 defaulted in making payment of the installments and, accordingly, respondent issued a loan recall notice dated 09.12.2019. and invoked the arbitration agreement contained in Clause 19.4 of the Term Loan Agreement.

7. Another notice was issued invoking arbitration under clause 29 of the Letter of Guarantee dated 28.07.2018. in addition to invocation under Clause 19.4 of the Term of Loan Agreement.

8. Since the appellant did not concur in appointment of the Arbitral Tribunal, respondent filed an application under Section 11 of the Act before this Court and consequently by order dated 03.02.2021., the subject Arbitral Tribunal was constituted as the Sole Member Tribunal.

9. Consequent to the appointment of the Tribunal, the statement of claim was filed by the respondent inter alia claiming an outstanding of Rs. 7,91,46,873/-. The Arbitral Tribunal initially passed an order under Section 17 of the Act on 07.12.2021. and, thereafter, rendered the award dated 22.09.2022. which became subject matter of the petition under Section 34 of the Act filed by the appellants.

10. By way of the order dated 07.12.2021. passed under Section 17 of the Act, the Arbitral Tribunal, inter alia, directed the appellant to furnish a bank guarantee in favour of the respondent in the sum of Rs. 7,91,46,873/- and also restrained the appellant from creating third party rights in the properties that were not mortgaged with the respondent.

11. It may be noticed that the appellant had on 10.09.2021. given an undertaking that they shall not deal with the mortgage assets.

12. With regard to the direction to the appellant to furnish a bank guarantee, appellants filed an application before the Arbitral Tribunal contending that they were not in a position to furnish the bank guarantee in view of the freezing of all their accounts by the Debts Recovery Tribunal, Jaipur in proceedings initiated by a third party.

13. As noticed above, the Arbitral Tribunal rendered its final award on 22.09.2022. directing the appellant to pay the outstanding amount of Rs. 7,91,46,873/- as on 09.04.2021. together with applicable and additional interest from 10.04.2021. till actual realization.

14. Learned senior counsel for the appellant submits that the Arbitral Tribunal seems to have been prejudiced on the ground that the appellant failed to furnish the bank guarantee as directed by the Tribunal in the order passed under Section 17 of the Act. He further submits that the Tribunal seemed to be in a tearing hurry as the Tribunal did not grant an adjournment to the appellant when the same was sought on the ground of illness of the counsel. He further submits that the Arbitral Tribunal did not permit the appellant to address on the application seeking to cross examine the witnesses of the respondent and even no opportunity was granted to cross-examine them.

15. Learned senior counsel for the appellant submits that the Arbitral Tribunal also erred in not making correct and true disclosure in terms of Section 12 in the format prescribed in the Sixth Schedule of the Act.

16. He further submits that the Arbitral Tribunal has erred in recording that the