Arbitration clause in loan agreement upheld, defaulting parties compelled to arbitration.

O R D E R

Applicant is a non-banking finance company engaged in the business of granting loan on security for purchasing vehicles. The 1^st respondent availed a loan from the petitioner for an amount of Rs.3,50,000/-. Respondents 2 and 3 are the guarantors. Respondents agreed to repay an amount of Rs.4,84,551/- in 36 monthly installments and a hypothecation cum loan agreement was executed on 30.07.2022. A copy of the agreement has been produced as Annexure A. It contains an arbitration clause.

2. The respondents defaulted repayment and the applicant invoked the arbitration clause. A petition under Section 9 of the Arbitration and Conciliation Act was filed before the District Court, Kozhikode which was allowed and the vehicle in question was taken possession. A copy of the order passed by the Additional District Judge – V, Kozikode on 18.06.2025 in M.A (Arb)No.69 of 2025 is produced as Annexure B.

3. Thereafter on 22.04.2025, notices invoking the arbitration clause was issued by the applicant to the respondents. Notices were received by respondents 1 and 3. However notice issued to the 2^nd respondent was returned with endorsement “absent”. In view of Section 3 of the Arbitration and Conciliation Act , I am of the view that with respect to the 2^nd respondent also there is compliance of the provisions of Section 21 of the

4. In this Arbitration Request, notices were issued to the respondents. Service is complete. However there is no appearance for them.

5. Heard the learned counsel for the petitioner and perused the memorandum of arbitration request as well as the documents.

6. Clause 22(a) of Annexure A agreement provides for arbitration to resolve the disputes and differences that may arise between the parties. Venue of arbitration proceedings has been fixed at Calicut.

7. In view of the above, I find that this arbitration request can be allowed. Hence the following directions are issued:

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

6. If the learned Arbitrator needs the assistance of an expert, then he is at liberty to seek such assistance in the course of the arbitration proceedings.

Sd/-

S.MANU JUDGE