The referral court's jurisdiction under the appointment power is strictly limited to a prima facie examination of the existence of an arbitration agreement. Objections concerning non-arbitrability, parallel proceedings, or waiver must be determined by the arbitral tribunal under its competence-competence, rather than by the court during referral.

JUDGEMENT :

1. This Application is filed under the provisions of Section 11 of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking appointment of an Arbitrator under the Arbitration Agreement contained in the Sanction Letter dated 19th August 2019 signed between the parties.

2. The case of the Applicant is as follows:

a) In 2015, Respondent No.1 approached the Applicant requesting it to grant financing facilities to Respondent No.1 to meet its daily business requirements. The Applicant and Respondent No.1 had a working business relationship and the Applicant had sanctioned in favour of Respondent No.1 various loans towards inventory funding and working capital requirements.

b) One such facility was a Working Capital Demand Loan for a sum of Rs.30 Crores (“WCDL”) in respect of which the Applicant issued a Sanction Letter dated 17th May 2017. The said Sanction Letter was signed by the Respondents. Pursuant to the said sanction, Respondent No.1 and the Applicant executed WCDL Agreement dated 17th May 2017, which was renewed from time to time. Respondent Nos.2 and 3 furnished personal guarantees in terms of the WCDL facility.

c) Thereafter, a consortium arrangement was formed for loans extended to Respondent No.1 by lenders by executing a Working Capital Consortium Agreement dated 31st August 2017 (“the Consortium Agreement”). The Consortium Agreement was executed between Union Bank of India (lead bank), Cosmos Co-operative Bank Ltd., Axis Bank Ltd., Indian Bank and PNB Investment Services Ltd. was appointed as the Trustee.

d) The sanctioned limits for the WCDL were modified from time to time. Thereafter, the Respondents issued a letter dated 29th January 2018 to the Applicant stating that all the terms and conditions in the WCDL Agreement would be binding on all of them despite such modification in limits. By a Deed of Accession dated 23rd February 2018, the Applicant was inducted into the Consortium Agreement.

e) A Supplemental Inter Se Agreement dated 30th May 2018 was executed between the Applicant and other lenders to the Consortium Agreement setting out the inter se rights between the lenders including the Applicant.

f) Thereafter, the sanctioned limits of the WCDL were modified and a renewed WCDL Agreement dated 2nd August 2018 was entered into between the Applicant and Respondent No.1. Respondent Nos.2 and 3 executed Personal Guarantees in respect of the same, which were continuing guarantees and provided liberty to the Applicant to proceed independently against Respondent Nos.2 and 3.

g) Indian Bank issued a “no dues” letter to the consortium and exited the Consortium Agreement. Resultantly, a new Deed of Accession dated 19th November 2018 was entered into between the lenders including the Applicant.

h) A letter dated 16th August 2019 was addressed by Respondent No.1 to the Applicant requesting grant of onetime ad-hoc facility of Rs.5,60,00,000/-, over and above the existing facility in respect of which the Loan Agreement existed. The Respondents confirmed that the new loan would be governed by the terms and conditions in the WCDL Agreement and the guarantees issued by Respondent Nos.2 and 3 would also cover the new loan.

i) The Ap