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2025 Supreme(Online)(Mad) 60447
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. Anand Venkatesh, J
Inderchand Kochar – Appellant
Versus
Praveen Kumar – Respondent
Arb O.P(COM.DIV.) No. 45 of 2025
For the Appellants/Petitioners: Mr.Anirudh A Sriram
For the Respondents: Mr.Joseph
The court established that the existence of an arbitration clause is sufficient to proceed with arbitration, irrespective of disputes over the document's authenticity.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11 - Appointment of arbitrator - Petition seeking appointment of arbitrator to adjudicate disputes arising from Memorandum of Understanding dated 22.10.2021 - First respondent disputed authenticity of agreement - Interim injunction granted under Section 9 to restrain respondents from alienating property - Court affirms arbitration clause is valid and appoints arbitrator despite disputes over genuineness. (Paras 1, 2, 8, 20)
Facts of the case:
The petitioner claims a loan agreement and a Memorandum of Understanding with the first respondent. Disputes over loan repayments and property security led to the current petition for arbitration as the first respondent denied the transaction's validity. (Paras 2, 5)
Findings of Court:
The court found a prima facie case for appointing an arbitrator since the arbitration clause was present and original documents in possession of the petitioner supported his claims. (Paras 10, 31)
Issues: The main issues involved the genuineness of the Memorandum of Understanding and whether the arbitration clause could be invoked given the disputes raised by the respondents regarding forging and fabrication. (Paras 8, 18)
Ratio Decidendi: The court held that the existence of an arbitration clause is sufficient for proceeding under Section 11, and the genuineness of documents can be examined during arbitration. (Paras 9, 12)
Result: Petition allowed; arbitrator appointed.
| Table of Content |
|---|
| 1. petition for arbitration due to financial dispute. (Para 1 , 2) |
| 2. prior injunction to secure property related to arbitration. (Para 3 , 4) |
| 3. dispute over genuineness of mou affects arbitration. (Para 5 , 8 , 10) |
| 4. existence of arbitration clause suffices for court's action. (Para 7 , 9) |
| 5. jurisdiction remains with arbitrator over document authenticity. (Para 11 , 12 , 15 , 16) |
| 6. non-signatories treated separately in arbitration. (Para 18 , 19) |
| 7. arbitrator appointed to resolve disputes. (Para 20 , 21) |
ORDER
This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 ('the Act' for the sake of brevity) for appointment of an Arbitrator to adjudicate the dispute between the petitioner and the respondents in terms of Memorandum of Understanding dated 22.10.2021.
2.The case of the petitioner is that in the year 2025, the 1st respondent approached the petitioner for financial assistance for his business needs. The 1st respondent also informed the petitioner that he is the absolute owner of an immovable property. He promised that he will offer that property as a security for the financial assistance and will also handover the original documents to the petitioner. Pursuant to the same, the petitioner paid a sum of Rs.30 Lakhs on 13.06.2005 to the 1st respondent and the 1st respondent had also deposited the original deeds of the subject property. Promisory Notes were also executed by the 1st respondent, in which, the receipt of the loan and creation of the equitable mortgage was acknowledged. The 1st respondent once again approached the petitioner and sought for further financial assistance. The petitioner agreed for the same and the moneys were repaid by the 1st respondent during the period from 2005 till 2016. In furtherance of the same, the parties also entered into Memorandum of Understanding dated 22.10.2021. As per this Memorandum of Understanding, the 1st respondent acknowledged the fact that a total a sum of Rs.2,56,00,000/- (Rupees Two Crores and Fifty Six Lakhs) is due and payable by the 1st respondent along with interest. Since this amount was not paid, a dispute arose between the parties.
3.The petitioner filed an application before this Court under Section 9 of the Act in O.A.No.810 of 2024 to restrain the respondents from in any manner alienating/encumbering the property that was given as a security. This application was heard on merits and a final orders came to be passed on 21.12.2024, making the interim injunction absolute.
4.The Trigger Notice under Section 21 of the Act dated 06.12.2024, was issued by the petitioner by nominating a retired Judge of this Court as the Arbitrator to adjudicate the dispute. Since there was no response from the side of the respondents, the present petition has been filed before this Court seeking for appointment of an Arbitrator.
5.The 1st respondent has filed a detailed counter affidavit. The 1st respondent has denied having any transaction with the petitioner and has questioned the very genuineness/authenticity of the Memorandum of Understanding dated 22.10.2021, which is the basis for filing the present petition. That apart, the respondents has also filed a suit before this Court in C.S.No.28 of 2025 for a declaration to declare that the Memorandum of Understanding dated 22.10.2021 as null and void and non est in the eye of law and for other consequential reliefs. Accordingly, the respondents have sought for the dismissal of this petition.
6.Heard Mr.Anirudh A Sriram, learned counsel appearing on behalf of the petitioner and Mr.Joseph, learned counsel appearing on behalf of the respondents.
7.The relevant clause in the Memorandum of Understanding dated 22.10.2021 is extracted hereunder:
a. All the disputes, differences and/or claims arising out of this agreement whether during Its subsistence or thereafter shall be settled by Arbitration in accordance with the provision of the arbitration and conciliation act, 1996 or any statutory amendm
