2022/DHC/004654

Page 1 of 17

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IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of decision: 04^thNovember, 2022

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ARB.P. 453/2021

BELL FINVEST INDIA LIMITED & ORS

..... Petitioners

Through: Mr. Sanjeev Bhandari with

Mr.Ravi Data and Mr. Kunal,

Advocates.

versus

A U SMALL FINANCE BANK LIMITED

..... Respondent

Through:

Mr. Shivam Singh, Advocate

with

Mr.

Abhinav

Singh,

Mr.Manish Kumar and Mr. Avi

Srivastava, Advocates.

CORAM:

HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI

J U D G M E N T

ANUP JAIRAM BHAMBHANI J.

By way of the present petition under section 11 of the

Arbitration & Conciliation Act, 1996 („A&CAct‟ for short), the

petitioners seek appointment of an arbitrator to adjudicate upon the

disputes that are stated to have arisen with the respondent from Rupee

Facility Agreement dated 26.04.2019 („Rupee Facility Agreement‟).

2.

Notice on this petition was issued on 07.04.2021; whereupon

counter-affidavit dated 05.07.2021 was filed by the respondent.

3.

Mr. Sanjeev Bhandari, learned counsel for the petitioner has

premised his submissions on section 11 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security

Digitally Signed

By:NEERAJ

Signing Date:04.11.2022

14:26:08

Signature Not Verified

2022/DHC/004654

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Interest Act, 2002 („SARFAESI Act‟ for short), which, counsel

submits, creates a statutory arbitration agreement between the

parties. For completeness, it may be recorded that the Rupee Facility

Agreement in itself does not contain an arbitration clause.

4.

The essential submissions made on behalf of the petitioners in

support of their petition under section 11 of the A&C Act are the

following:

4.1That petitioner No. 1 is a Non-Banking Finance Company

(„NBFC‟ for short) registered with the Reserve Bank of India,

and is accordingly a „financialinstitution‟ within the meaning

of section 2(1)(m)(iv) of the SARFAESI Act, which entitles the

petitioners to invoke arbitration under section 11 of the

SARFAESI Act, since the latter provision amounts to a

statutory arbitration agreement for settlement of disputes

“amongst … the bank, or financial institution, or asset

reconstruction company or qualified buyer…” . The

submission is that since the dispute in the present case is

between petitioner No. 1, an NBFC, and the respondent, which

is a bank, and they are both entities referred to in section 11 of

the SARFAESI Act, their inter-se disputes are amenable to

arbitration under section 11;

4.2That the proceedings filed by the respondent before the learned

Debt Recovery Tribunal, Jaipur („DRT,Jaipur‟ for short) by

way of O.A. No. 1442/2019, which were filed after declaring

petitioner No. 1‟s assets/accounts as a non-performing asset

(„NPA‟ for short) on 18.12.2019, and all other consequential

and related proceedings, including the issuance of show cause

Digitally Signed

By:NEERAJ

Signing Date:04.11.2022

14:26:08

Signature Not Verified

2022/DHC/004654

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notice for declaring petitioner No. 1 as „wilfuldefaulter‟,

cannot stand in the way of the petitioners invoking the remedy

in arbitration. It is stated that vide invocation notice dated

08.02.2021, the petitioners have invoked arbitration; and since

by its reply dated 15.02.2021 the respondent has failed to agree

to the appointment of a sole arbitrator from a panel of three

arbitrators proposed by the petitioners in the invocation notice,

the present petition seeking court intervention for seeking such

appointment is maintainable.

5.

On the other hand, opposing the appointment of an arbitrator,

Mr. Shivam Singh, learned counsel for the respondent submits, that

the petition deserves to be dismissed on the following grounds:

5.1That the respondent‟s claim against the petitioners is simply for

recovery of a debt due by petitioner No. 1 to the respondent;

and the dispute is a simple debtor-creditor dispute, with

petitioner No. 1 being a “borr