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2025 Supreme(Online)(Mad) 64310
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. Anand Venkatesh, J
TVS Credit Services Limited – Appellant
Versus
M/s S.J.P Transports – Respondent
Arb Appln No. 1331 of 2025 | Arb O.P(Com.Div.) No. 501 of 2025
For the Appellants/Petitioners: Mr.M.Arunachalam
For the Respondents: No appearance
The existence of an arbitration clause in an Invoice Based Financing Agreement enables the appointment of a sole arbitrator for dispute resolution.
Headnote:The judgment relates to an arbitration application filed under Section 9 of the Arbitration and Conciliation Act, 1996 for security and an original petition under Section 11 for appointing a sole arbitrator. The court determined the existence of an arbitration clause and the need for security due to defaults in payment under an Invoice Based Financing Facility Agreement. The arbitrator was appointed to resolve disputes between the parties. The court concludes with the disposal of both applications without costs.
| Table of Content |
|---|
| 1. details of the arbitration application and reasons for seeking security. (Para 2 , 6 , 8) |
| 2. court's procedure and notice to the respondents. (Para 3) |
| 3. court's observations on service completion and need for security. (Para 4 , 5 , 9) |
| 4. appointment of sole arbitrator for dispute resolution. (Para 10) |
| 5. conclusion of the application and original petition without costs. (Para 11) |
COMMON ORDER
1.1. Arbitration Application No.1331 of 2025 has been filed under Section
9 of the Arbitration and Conciliation Act, 1996 for a direction to the respondents to furnish security to the tune of Rs.67,53,182/- and on failure to do so, to order attachment of the property, morefully described in the schedule to the Judges summons, as second charge.
1.2. Arb O.P.(Com.Div.)No.501 of 2025 has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of a sole Arbitrator to adjudicate upon the differences and disputes that have arisen between the parties under the Invoice Based Financing Facility Agreement dated 23.09.2022 and the subsequent renewal dated 16.11.2023.
2. When the Arb O.P.(Com.Div.)No.501 of 2025 came up for hearing on
25.08.2025, this Court passed the following order:-
“This petition has been filed under Section 11 of the Arbitration and Conciliation Act, seeking for the appointment of an arbitrator by this Court.
2. There seems to be a dispute between the petitioner and the respondents, arising out of the Invoice based Financing Facility Agreement dated 23.09.2022. There exists an arbitration clause in the Invoice based Financing Facility agreement dated 23.09.2022 and the same is reproduced hereunder:
“30. Arbitration All 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 provisions of the Arbitration and Conciliation Act, 1996 and shall be referred to the sole arbitration of an arbitrator nominated by the Lender. The award given by such an arbitrator shall be final and binding on the parties to this Agreement. In the event of an appointed arbitrator dying or being unable or unwilling to act as arbitrator for any reason, the Lender, on such death of the arbitrator or his inability or unwillingness to act as arbitrator, shall appoint another person to act as arbitrator. Such person shall be entitled to proceed with the reference from the stage it is left by his predecessor. The venue of arbitration proceedings shall be at Chennai. The Borrower agrees to a fast track arbitration to be disposed of within 90 days from the date of reference.”
3. The petitioner has invoked arbitration in accordance with the arbitration clause by issuing notice to the respondents on 05.05.2025 to comply with the requirements of Section 21 of the Arbitration and Conciliation Act, 1996 . The respondents have not sent any reply to the arbitration invocation notice dated 29.04.2025.
4. Since there exists an arbitration clause in the contract, which is the subject matter of the dispute between the parties and since the petitioner has invoked arbitration in accordance with the arbitration clause by complying with the requirements of Section 21 of the Arbitration and Conciliation Act, 1996 and since there is no consensus between the parties with regard to the name of the arbitrator, this Court is issuing notice to the respondents, returnable by 22.09.2025. Private notice is also permitted.
5. Post the matter on 22.09.2025.”
3. Subsequently, Arbitration Application No.1331 of 2025 came up for hearing before this Court on 26.09.2025 and this Court ordered notice and private notice to the respondents.
4. Notice has been served on the respondents and the names of the respondents have also been printed in the cause list, insofar as the application is concerned. In the original petition, counsel has filed Vakalat on behalf of the respondents, but the Vakalat has been returned by the Registry. Hence, service
