A partner's execution of a Facility Agreement binds the LLP, and objections regarding authority or non-signatory status should be resolved in arbitration.

JUDGMENT

[VIA HYBRID MODE]

Sanjeev Narula, J. (Oral)--The present petition under Section 11 of the Arbitration and Conciliation Act, 1996 [hereinafter "the Act"] seeks appointment of a Sole Arbitrator for adjudication of disputes pertaining to the Facility Agreement dated 30th September, 2019 which contains an arbitration clause, produced hereunder:

"Article 6--Dispute Resolution and Jurisdiction

6.1 This Agreement shall, in all respects be governed by and construed in accordance with the laws of India.

6.2 The Parties hereto undertake to use their best efforts to resolve any dispute arising out of or in connection with this Agreement through consultation in good faith and mutual understanding, provided that such consultation shall not prejudice the exercise of any right or remedy of either Party hereto by any such Party in respect of any such dispute.

6.3 If any dispute of difference that may arise between the Parties (other than any inter se dispute among the Requesting Parties, which shall be outside the scope of this Agreement), and the same is not resolved in mutual good faith discussion, it shall be decided by way of final and binding arbitration to be held in accordance with the Arbitration and Conciliation Act, 1996 ("Arbitration Act") to be conducted by a sole Arbitrator to be nominated by Shivakirti.

6.4 The seat and venue of arbitral proceedings shall be at Delhi, India and the language of the proceedings shall be the English language.

6.5 Subject to the above provisions contained in Article 6, the Parties submit to exclusive jurisdiction of Courts at Delhi, India for any interim or such other emergency relief."

Factual Background:

2. The facts relevant for decision on the instant application are as follows:

(i) Respondent No. 1 (viz. Umaiza Infracon LLP) is an LLP wherein Respondent No. 2 (viz. Mr. Ajay Yadav) and Respondent No. 3 (viz. Ms. Lata Yadav) are partners.

(ii) Earlier, Corporate Insolvency Resolution Proceedings ["CIRP"] pertaining to Respondent No. 4 (viz. M/s. Sunstar Overseas Limited) were pending before the National Company Law Tribunal. Respondent No. 1 filed a Resolution Plan in the said proceedings, which was approved by NCLT on 12th September, 2020. In order to discharge their obligations under the Resolution Plan, Respondents No. 1 to 3 approached the Petitioner seeking financial assistance. A Facility Agreement dated 30th September, 2019, was executed, whereunder, financial assistance to the tune of Rs.130 crores was extended by the Petitioner to Respondent No. 1, which was then utilized for making payments to the creditors of Respondent No. 4.

(iii) Later in February 2020, additional facility amount of 16 crores was disbursed, and thus a total amount of Rs.146 crores presently stand paid to Respondent No. 1.

(iv) Now, the IBC proceedings against the Respondent No. 4 stand concluded and the entire shareholding of Respondent No. 4 stands transferred to Respondent No. 1.

(v) The Petitioner came to know that Respondents had breached their obligations under the Facility Agreement by attempting to create charge/encumbrances over their assets in violation of several clauses of the Facility Agreement. In these circumstances, they approached this court under section 9 of the Act [in OMP (I) (COMM.) No. 180/2021], wherein an interim order was passed in favour of the Petitioner which is continuing till date.

(vi) Since disputes had arisen due to non-payment of dues and breaches of the Facility Agreement, Petitioner vide notice dated 12th June, 2021 requested Respondents to agree for arbitration. The request was declined.

(vii) In the above background, Petitioner seeks reference of disputes between itself and Respondents No. 1 to 4 to arbitration.

OBJECTIONS OF RESPONDENTS NO. 1 AND 3:

3. Mr. O.P. Gaggar, counsel for Respondents No. 1 and 3 makes the following objections:

(i) Respondent No. 3 [viz. Mrs. Lata Yadav], who held 99% shares of Respondent No. 1 [viz. Umaiza Infracon LLP] at the rel