ORAL JUDGMENT:

1. Heard Mr. Maheshwari, learned counsel for the applicant. None appears for the respondent.

A) Issue for consideration:-

2. This is an application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“the Arbitration Act” for short) for an appointment of a sole arbitrator. It is to adjudicate upon the disputes and differences arising out of and in relation to the loan agreement dated 13 September 2018 which includes sanction letter dated 16 August 2018 executed between the applicant and the respondent. The pivotal issue that falls for consideration revolves around the objection taken by the respondent (borrower) on the effect/implication of invocation of the arbitration clause in the loan agreement dated 13 September 2018, in light of the pending proceedings in Debt Recovery Tribunal (“DRT” for short), in the nature of an application under Section 17 of the Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act 2002 (“the SARFAESI Act” for short) and notice issued under Section 13(2) of the said Act.

3. In the above context, the substantive prayer of the applicant is reproduced below:

“(a) That this Hon’ble Court be pleased to appoint a sole Arbitrator in terms of Section 11(6) of the Arbitration and Conciliation Act, 1996 to constitute the Arbitral Tribunal to adjudicate the dispute between the Applicant and the Respondents arising Page 2 of 20 under the Clause 23.16 of Loan Agreement dated September

13, 2018.”

B) Applicant’s case:-

The case of the Applicant is summarized as under:

4. The Applicant is a non-banking finance company registered under the Reserve Bank of India (“RBI” for short) carrying a business of providing loan facilities under various schemes to its customers. The respondent is a private limited company incorporated under the Companies Act, 1956, having its address as mentioned in the cause title. The said respondent is the borrower who had availed finances facilities from the applicant.

5. In or around August 2018, as stated by the applicant, the respondent had approached the applicant to obtain a finance facility. Accordingly, the applicant issued a sanction letter dated 16 August 2018, sanctioning loan amount to the respondent for a sum of Rs.6,75,00,000/- (Rupees Six Crores Seventy-Five Lakhs) on terms and conditions set out in the sanction letter. The rate of interest and penal interest were specifically mentioned in such sanction letter, which was duly accepted by the respondent.

6. Pursuant to issuance of the sanction letter, the applicant and the respondent executed a loan agreement on the terms and conditions stipulated thereunder. It appears that the respondent also issued a demand Page 3 of 20 promissory note, memorandum of title deeds in favour of the applicant for such loan amount alongwith other documents required for obtaining the loan. The sanction letter was a part of the loan agreement and all terms and conditions of the sanction letter formed an integral part of the loan agreement.

7. In furtherance of the loan agreement as stated by the applicant, it appears that as a part of disbursement of the finance facilities, the respondent agreed to credit an equitable mortgaged in the property which is more particularly described in the application (at page 16 paragraph ‘c’). The applicant has further stated that upon receipt of the respondent’s letter of request dated 13 September 2018, the applicant disbursed the loan amount to the respondent.

8. The applicant had also stated that it had sanctioned, disbursed various facilities to the respondent. In this regard, it appears that by a sanction letter dated 29 October 2019, the applicant had sanctioned a loan by way of credit facilities to the respondent for a sum of Rs.50,00,000/- (Rupees Fifty Lakhs). Further, the applicant had vide another sanction letter dated 10 July 2020 sanctioned an amount of Rs.1,36,00,000/- (Rupees One Crore Thirty Six Lakhs only) to the respondent under the G