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2025 Supreme(Online)(Mad) 57336
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. Anand Venkatesh, J
Five Star Business Finance Limited – Appellant
Versus
Kumaresan P – Respondent
Arb O.P(COM.DIV.) No. 377 of 2025
For the Appellants/Petitioners: M/s.P.H.Vinodh Pandian
For the Respondents: No appearance
A valid arbitration clause allows for the appointment of an arbitrator despite one party's lack of response, as per statutory provisions.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(5) - Appointment of Arbitrator - Petition filed under Section 11(5) for appointing an Arbitrator under the Loan Agreement dated 26.12.2022 - Valid arbitration clause exists - Notice issued to respondents, no appearance made - Sole Arbitrator appointed - Petition disposed of. (Paras 1, 2, 6)
(B) Legal Agreement - Validity - The court held that a valid agreement exists between the parties under Section 7 of the Act which includes an arbitration clause, thus entitling the appointment of an Arbitrator. (Paras 5, 6)
Facts of the case:
The petitioner filed for arbitration based on a Loan Agreement dated 26.12.2022 due to disputes arising from the agreement, with respondents failing to respond to a prior notice.
Findings of Court:
The court appointed a sole Arbitrator after confirming the existence of an arbitration clause within the agreement and recognizing the absence of representation from the respondents.
Issues: The primary issue is whether the court can appoint an arbitrator in the absence of a consensus on the name among the parties given the valid arbitration clause in the agreement.
Ratio Decidendi: The court concluded that due to a valid arbitration clause and lack of response from respondents, it is appropriate to proceed with appointing an arbitrator to resolve the disputes as per the Loan Agreement.
Result: Arb. OP is disposed of in the above terms.
| Table of Content |
|---|
| 1. presence of disputes warrants arbitration. (Para 1 , 3) |
| 2. court addresses the lack of representation and orders appointing an arbitrator. (Para 2 , 4) |
| 3. valid arbitration agreement leads to appointment of arbitrator. (Para 5 , 6) |
ORDER
This petition has been filed under Section 11 (5) of the Arbitration and Conciliation Act, 1996 [hereinafter referred as 'the Act] for appointment of an Arbitrator to decide the disputes/differences between the petitioner and the respondents in terms of the Loan Agreement dated 26.12.2022.
2.When the matter came up for hearing on 09.07.2025, this Court passed the following order:
This petition has been filed under Section 11 of the Arbitration and Conciliation Act seeking for appointment of an Arbitrator by this Court.
2.There seems to be a dispute between the petitioner and the respondents arising out of the Loan Agreement dated 26.12.2022. There exists an arbitration clause in the Loan Agreement dated
26.12.2022. The same is extracted hereunder:
'ARTICLE 10: ARBITRATION GOVERNING LAW, DISPUTE RESOLUTION AND JURISIDICTION: (Art 10 existing agreement) 1. This Agreement shall be governed by and construed in accordance with the laws of India.
2. Any and all dispute(s), difference(s) and/or claim(s) arising out or touching upon this Agreement or in relating to this Agreement, whether during its subsistence or thereafter, shall be referred to the Arbitration by a Sole Arbitrator to be appointed by any one of the below mentioned 'arbitral institution' in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof from time to time.
a. Council for National and International Commercial Arbitration (CNICA) currently having its office at Unit No.208, 2nd Floor, Beta Wing, Raheja Towers, Nos.113-134, Anna Salai, Chennai600 002, or b. Southern India Chamber of Commerce and Industry (SICCI), currently having its Office at Indian Chamber Bulidings, P.B. No. 1208, Esplanade, Chennal-600 108, or c. Kovise Foundation Conflict Resolution International (KFCRI), currently having its Office at G-2, Plot No.108, Majestic Colony, Valasarawakkam, Chennal 600 087, or d. Any arbitral institution designated under the provisions of the Arbitration and Conciliation Act, 1996 (the act) or any panel of arbitrators maintained under the provisions of the act.
The entire arbitral proceedings shall be conducted by the Arbitrator in the manner he/she considers appropriate, and the award rendered by the Arbitrator shall be final and binding on all the parties to this agreement. The arbitral institution shall provide administrative assistance to the Arbitrator to facilitate the conduct of the arbitral proceedings, if he/she chooses to avail such assistance from the institution.
3. The Arbitrator shall be entitled to, at his/her discretion conduct the proceeding in-person and/or through exchange of mall, email and/or any other mode of electronic communication including video conferencing (VC), online, virtual hearing etc., using an external application or platform, if necessary. The parties to the arbitration proceeding shall be bound by the decision of the arbitrator in this regard.
4. The parties hereby consent to have the arbitral proceeding conducted by a written pleading, documents, written submissions and/or any other electronic mode of communication-based arbitration as may be determined by the arbitrator.
5. The parties herein agree not to insist on in-person and/or oral hearing except in certain exceptional circumstances as the Arbitrator may deem fit.
6. The Parties herein agree that the venue and seat of the arbitration proceeding shall be usually at Chennai or in exceptional circumstances any other place as deemed fit by the Arbitrator.
7. The language of arbitral proceedings shall be English.
8. The parties herein agree that in the event of death of the Arbitrator to whom the matter has been originally referred or the Arbitrator being unable or unwilling to
