O R D E R

This Arbitration Original Petition had been filed under Section 11 read with Section 15 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator by this Court to resolve the dispute that had arisen between the parties, pursuant to the loan agreement dated

30.06.2021.

2. Heard Mr.S.Namasivayam, learned counsel for the petitioner and Mr.K.Tyagi, learned counsel appearing for Mr.N.Nithiyanandam, learned counsel for the respondents 1, 2 & 4.

3. The learned counsel appearing for the petitioner would submit that a loan agreement had been entered into between the parties under which the respondents have been granted a loan, which had not been repaid by the respondents and that as on 3rd May 2023, the respondents are liable to pay a sum of Rs.1,96,86,078/-. Inspite of repeated demands, the respondents have not paid the amount which was demanded by the petitioner by its notice dated 03.05.2023. He would submit that as per clause 26 of the Agreement, the dispute if any which arise between the parties would have to be resolved through Arbitration and that Clause 27 of the Agreement also indicates that the Courts, Chennai shall alone have the exclusive jurisdiction. He would submit that as on 10.01.2024, the respondents jointly and severally were liable to pay a sum of Rs.2,16,75,751/-. Since inspite of notice sent to the respondents, they have not given their consent for appointment of an Arbitrator on 20.06.2023, an Arbitrator was duly appointed. On the objection made by the respondents, the learned Arbitrator had recused himself leading to no other option to the petitioner except to approach this Court. Hence, he would seek appointment of an Arbitrator.

4. Countering his arguments, the learned counsel appearing for the respondents at the out set would submit that the dispute cannot be arbitrated and the petitioner being the financial institution can only seek recovery of the amount by invoking the Recovery of Debt and Bankruptcy Act, 1993 (hereinafter referred to “RDB Act”) and the SARFAESI Act for recovery of the alleged dues. He would also contend that the petitioner is a recognised financial institution by the RBI and they have also been empowered to invoke the provisions of SARFAESI Act by a notification issued by the Central Government. When that being so, the only remedy available to the petitioner is to invoke the SARFAESI proceedings. He would further contend that originally a SARFAESI proceedings was initiated under Section 13(2) of the said Act. But however, the same had not been proceeded further. Without withdrawing the SARFAESI proceedings, the petitioner is now seeking to invoke the arbitration clause under the agreement which according to him cannot be allowed to be proceeded with. He would rely upon the judgment of the Hon'ble Apex Court in the case of Vidya Drolia & Ors., vs. Durga Trading Corporation reported in (2021) 2 SCC 1, and also the judgments of the Delhi High Court in the cases of S.S.Con-Build Pvt., Ltd., vs. Delhi Development Authority reported in 2023 SCC Online Del 2633 and Bell Finvest India Ltd & Ors., vs. A.U.Small Finance Bank Ltd., reported in 2022 SCC Online Del 3632 to support his contentions.

5. Referring to the judgment of the Hon'ble Apex Court referred supra, he would contend that the dispute raised by the petitioner is non arbitrable in view of the implicit prohibition in the statute conferring and creating a special right only to be adjudicated by the Debts Recovery Tribunal. He would submit that when claims of the banks and the financial institution like that of the petitioner can only be covered under the RDB Act and any arbitration would deprive and deny the specific rights of the applicant. Since the claim of the petitioner is covered only by the said Act, the dispute raised by the petitioner is non-arbitrable. He would vehemently rely upon the law laid down by the Hon'ble Apex Court on that aspect and contend that the legislation namely the RDB Act had overtu