JUDGMENT

SANJEEV NARULA, J. (Oral):

1. The Petitioner, Aditya Birla Finance Limited, a Non-Banking Finance Company registered with the Reserve Bank of India (RBI), has extended financial facilities to Respondent No. 1 under certain agreements containing an arbitration clause. In light of disputes having arisen between the parties in connection with the said agreements, the instant petition is filed under Section 11 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), seeking appointment of an Arbitrator. The Respondent vehemently opposes the present petition, contending that arbitration is no longer a viable remedy as the disputes in question are already under adjudication before a Civil Court in CS SCJ 1534/2022. This judgment aims to address these contentions, specifically focusing on the implications of ongoing civil proceedings on the arbitration process.

THE FACTUAL MATRIX

2. The factual backdrop leading to the filing of the instant application under Section 11 of the Arbitration Act, is set out in the petition as follows:

2.1. Respondent No. 1 is an educational trust, having its registered office at 309, Sector-06, Urban Estate, Karnal, and its operational office at Stanford International School, Meerut-Sonepat Road, Near Glaxo Company, Palri, Sonepat, Delhi (NCR). Respondents No. 2 and 3 are designated as its authorized signatories. Respondent No. 3 holds an office-bearer position within the trust, while Respondents No. 4 and 5 serve as the Chairman and Vice Chairman, respectively.

2.2. The Petitioner extended financial facilities, in the nature of a term of term loan and line of credit facilities, by way of certain loan agreements to the Respondents. Notably, the Facility Agreement dated 4th August, 2020, which governs these credit facilities, stipulates arbitration as the agreed mechanism for dispute resolution at Clause 32.17 thereof, which is worded as follows:

“Clause 32.17 All claims or disputes arising out of or in relation to this Agreement shall be settled by Arbitration. That Arbitration tribunal shall consist of a sole arbitrator to be appointed by the Lender. All Parties to this Agreement hereby expressly consent to Lender being the sole appointing authority. Any vacancy created in the arbitration tribunal, for any reason whatsoever, shall also be filled only by Lender acting as the sole appointing authority. The place of arbitration shall be Delhi. Parties agree that the courts of Delhi shall have the exclusive jurisdiction to exercise all powers under the Arbitration and Conciliation Act, 1996.”

2.3. In July 2021, the Respondent sought to restructure the existing financial facilities. This request was considered and subsequently approved by the Petitioner, resulting in the restructuring of the facilities as detailed in the sanction letter dated 28th July, 2021, and loan agreement dated 29th July, 2021. This restructured arrangement included a Line of Credit for INR 1,33,00,000/- as well as two Term Loans of INR 13,80,00,000/- and INR 50,00,000/- respectively. Thus, the total sanctioned amount stood at INR 15,63,00,000/-, secured by Deeds of Guarantee dated 29th July, 2021, executed by Respondents No. 2 to 5. Another term loan of INR 1,45,85,300/- was issued in favour of the Respondent Trust in terms of Government of India’s Emergency Credit Line Guarantee Scheme (ECLGS=II), vide another sanction letter dated 28th July, 2021.

2.4. Upon Respondent No. 1 allegedly defaulting in repaying the necessary amounts in terms of the financial facilities, their account was classified as a ‘Non-Performing Asset’ (NPA) on 15th July, 2022. Subsequent thereto, on 20th July, 2022, the Petitioner issued a demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) to the Respondents. This notice, which was also published in newspapers, demanded payment of INR 20,57,08,283/-, which was claimed to be due as of 19th July, 20