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2025 Supreme(Online)(KER) 10991
HIGH COURT OF KERALA
SYAM KUMAR V.M., J
THAKKOLKARAN HIRE PURCHASING ENTERPRISES – Appellant
Versus
Babu K L – Respondent
AR 227/2024
JITHIN VARGHESE, R.K.PRASANTH, JIJO JOSEPH, JOHN K GEORGE
The court affirmed that the existence of an arbitration agreement is undisputed and that issues of limitation should be determined by the arbitrator, not the court.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11 - Invocation of arbitration clause in loan agreement - Dispute arose after borrower defaulted on loan repayment - Petitioner invoked arbitration clause in accordance with the Act - Respondent opposed on grounds of non-production of original agreement and limitation. (Paras 1, 2, 6, 8)
(B) Arbitration Agreement - Existence of an arbitration agreement is undisputed - Court's role is to determine if the arbitration request is maintainable, not to resolve the merits of the dispute. (Paras 7, 8)
(C) Limitation - Limitation period for filing under Section 11 commences upon failure of the other party to comply with the arbitration notice - Issues of limitation should be determined by the arbitrator. (Paras 7, 8)
Facts of the case:
The petitioner, a licensed money lender, entered into a loan agreement with the respondent for Rs.1,60,000/- at 14% interest. The respondent defaulted on repayments, leading to a dispute. The petitioner invoked the arbitration clause but faced opposition regarding the maintainability of the request.
Findings of Court:
The court found merit in the petitioner's contentions and determined that the arbitration request is valid and should be allowed.
Issues: The main issues were the maintainability of the arbitration request and the applicability of limitation.
Ratio Decidendi: The court concluded that the existence of the arbitration agreement was not disputed, and the issues regarding limitation should be addressed by the arbitrator rather than the court.
Result: The Arbitration Request is allowed, and an Arbitrator is appointed.
ORDER
Dated this the 18th day of February, 2025
Petitioner has filed this Arbitration Request invoking Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) to appoint an Arbitrator to resolve the disputes that have arisen between the petitioner and the respondent.
2. Petitioner is a licenced money lender and he lends money for purchasing vehicles. The respondent availed a loan from the petitioner and entered into Annexure A3 loan agreement dated 22.05.2019. An amount of Rs.1,60,000/- at 14% interest was availed as loan by the respondent from the petitioner. Annexure A3 loan agreement contained an arbitration clause at clause 16 which stated that all disputes, differences and/ or claims arising from the load agreement shall be settled by arbitration in accordance with the provisions of the Act by an Arbitrator named therein.
3. Subsequent to the purchase of the vehicle - a Maruti Suzuki Wagon-R LXi car - the respondent allegedly defaulted in remitting the monthly installments towards the loan. The amount was not repaid within the stipulated time and thus a dispute arose between the parties under Annexure A3 loan agreement. The petitioner duly invoked the arbitration clause by issuing Annexure A4 notice. The said notice was served on the respondent as evidenced by Annexure A4 (a). Since the respondent failed to respond to the invocation of the arbitration clause and did not agree to the appointment of the Arbitrator, the petitioner has moved this application invoking Section 11 of the Act.
4. Heard Sri.Jithin Varghese, Advocate, for the petitioner and Sri.John K.George, Advocate, for the respondent.
5. It is submitted by the learned counsel for the petitioner that all the requirements for validly invoking Section 11 of the Act have been complied with and that an Arbitrator has to be appointed in terms of clause 16 of Annexure A3 loan agreement to adjudicate and resolve the disputes arising under the said agreement.
6. Per contra the learned counsel for the respondent vehemently opposed the said submission and contended that the above arbitration petition is not maintainable in law for more than one reason. Firstly, the petitioner has not produced the original agreement along with the Arbitration Request as mandated in Section 8 (2) of the Act. It is mandatory that the original arbitration agreement or a duly certified copy thereof has to be produced. The said requirement of law is not complied with. Secondly, the claim is barred by limitation since Annexure A3 loan agreement is dated 22.05.2019. Thus the cause of action is barred by limitation. The learned counsel submits that for the said reasons, the Arbitration Request is only to be dismissed.
7. The learned counsel for the petitioner, on the other hand, attempted to explain out the said objections by stating that since a duly certified copy of the loan agreement has been produced as Annexure A3, the mandates of Section 8 has been satisfied. Further, since the respondent has no case that such an agreement as Annexure A3 had not been entered into and has not filed a counter affidavit in the Arbitration Request, the said contention regarding non-production of the original agreement cannot be sustained. As regards the alleged bar by limitation, the learned counsel for the petitioner relies on the dictum laid down inArif Azim Co. Ltd. v. Aptech Ltd. [(2024) 5 SCC 313] and submits that the limitation period for filing a petition under Section 11 (6) of the Act can only commence once a valid notice invoking arbitration has been sent by the applicant to the other party, and there has been a failure or refusal on part of that other party in complying with the requirements mentioned in such notice. Reference is also placed on the dictum laid down inSBI General Insurance Co. Ltd v. Krish Spinning [(2024) SCC OnLine SC 1754] and it is contended that the issue of limitation being a mixed question of law and fact should be best left to the trib
