The invocation of an arbitration clause is valid when the parties to a financial agreement default on obligations, allowing disputes to be referred to arbitration.

ORDER

Petitioner is a non banking financial company involved in advancing loans for various purposes. The respondents entered into Annexure P1 agreement dated 07.10.2022, when availed a personal loan of Rs.25,00,000/- (Rupees Twenty Five Lakhs Only) from the petitioner through its branch office, Kayamkulam. There was default in payment of loan. Invoking the arbitration clause in Annexure P1, the petitioner issued notice as contemplated under Section 21 of the Arbitration and Conciliation Act, 1996 . Notices were returned as unclaimed. The respondents filed a suit as O.S.No.39 of 2025 before the Sub Court, Mavelikara with a prayer for settlement of accounts. Petitioner submits that already objection has been filed in the suit pointing out the arbitration clause in the agreement. 2. As there is no consensus regarding appointing the Arbitrator to resolve the disputes as provided under Annexure P1 agreement, this Arbitration Request has been filed.

Notice was issued and respondents 1 and 2 have entered appearance through counsel.

3. Heard the learned counsel for the petitioner and the learned counsel for the respondents.

4. The learned counsel for the respondent pointed out pendency of the suit before the Sub Court, Mavelikara. However, the learned counsel for the petitioner pointed out that no third party interest is involved in this matter. In view of the arbitration clause, the dispute is to be referred to the Arbitrator.

5. On hearing the respective Counsel and perusing the pleadings and documents, I am of the view that, the petitioner has rightly invoked the arbitration clause as Annexure P1 contains a specific arbitration clause as Clause No.19.

In the facts and circumstances of the case, I am of the view that, this Arbitration Request can be allowed.

Therefore, this Arbitration Request is allowed with following directions :-

1. The Kerala High Court Arbitration Centre is directed to nominate an Arbitrator from Panel-V preferably from Ernakulam, as the sole Arbitrator to resolve the disputes that have arisen between the petitioner and the respondents under Annexure P1 agreement.

2. The learned Arbitrator may entertain all issues between the parties in connection with the said Agreements, including questions of jurisdiction and limitation, if any, raised by the parties. All contentions of the parties are left open and they are at liberty to raise their claims and counterclaims, if any, before the learned Arbitrator, in accordance with law.

3. The Registry shall communicate the substance of this order to the Kerala High Court Arbitration Centre within ten days and the Centre shall inform the learned Arbitrator within a further period of one week and shall obtain duly signed Form 3 as required under Rule 20(4) of the Kerala High Court (Arbitration Centre) Rules, 2025 and forward the same to this Court.

4. Upon receipt of the Form 3, the Registry shall issue a certified copy of this order with a copy of the Form 3 appended to the Kerala High Court Arbitration Centre. The original of the Disclosure Statement shall be retained by the Kerala High Court Arbitration Centre.

5. The fees of the learned Arbitrator of the Kerala High Court Arbitration Centre shall be governed by Rule 28 of the Kerala High Court (Arbitration Centre) Rules, 2025. The manner in which the fees and costs payable by the parties shall be governed by Rule 27 of the Kerala High Court (Arbitration Centre) Rules, 2025.