The court must appoint an arbitrator when parties do not reach consensus despite an existing arbitration clause as stipulated under the Arbitration and Conciliation Act, 1996.

ORDER :

1. These petitions have been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (in short “the Act”) seeking for appointment of an Arbitrator by this Court.

2. There seems to be a dispute between the petitioner and the respondents arising out of the following loan contracts:-

a) Working Capital Facility Agreement; and Guarantee Deed, both dated 26.04.2023.

b) Working Capital Facility Agreement; and Guarantee Deed, both dated 09.05.2023.

3. The arbitration clause contained in the aforesaid contracts is reproduced hereunder:-

“15.17. Dispute Resolution:

(a) All disputes, differences and/or claim, arising out of this Agreement, whether during its subsistence or thereafter shall be settled by Arbitration in accordance with the provisions of The Arbitration and Conciliation Act, 1996, or any statutory amendments thereof and shall be referred to the Sole Arbitration of an Arbitrator nominated by the Managing Director of SFL. It is agreed that Sole Arbitrator nominated under this clause shall adjudicate the disputes, differences and/or claims on the basis of the written pleadings, documents and submissions filed by the parties, dispensing with oral evidence and technical formalities. The award given by such an Arbitrator shall be final and binding on the borrower. It is a term of this agreement that in the event of such an Arbitrator to whom the matter has been originally referred is dying or being unable to act for any reason, the Managing Director of SFL at the time of such death of the Arbitrator or of his inability to act as Arbitrator, shall appoint another person to act as Arbitrator. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor.

(b) The Arbitrator so appointed hereinabove, shall also be entitled to pass an award on the Hypothecated Asset/s and on any other securities furnished by or on behalf of the Borrower.

(c) It is agreed that within 45 days from the date of receipt of the Arbitral Award, any party, with notice to the other party may request the Sole Arbitrator to correct any computation errors, any clerical or typographical errors or any other errors occurring in the Award or to give an interpretation of a specific point or part of the award.

(d) It is agreed that within 45 days from the date of receipt of Arbitral Award any party, with the notice to the other party, may request the Sole Arbitrator to make an additional Arbitral Award as to the claims presented before the Sole Arbitrator but omitted from the Arbitral Award.

(e) It is further agreed that the Sole Arbitrator is entitled to correct errors on his or her own initiative or at the request of any one of the parties, and/or to give an interpretation of a specific point or part of the Award, or to make an additional Arbitral Award including the claims that have been omitted from the original Arbitral Award without notice to the parties within the time limit mentioned under the Act, provided such errors, interpretation, or inclusion do not affect the merits and interest of the parties.

(f) The venue of Arbitration shall be Chennai, 15.18. Jurisdiction: This Agreement shall be governed by and construed in accordance with the laws of India. Subject to the provisions of Clause 15.17, the courts at Chennai shall have exclusive jurisdiction in relation to all matters arising out of this Agreement.”

4. The petitioner has invoked arbitration in respect of the above said contracts by issuing notice to the respondents on 12.12.2024 in compliance with Section 21 of the Act. No reply has been sent by the respondents for the same. Therefore, it became necessary for the petitioner to file these petitions under Section 11 of t