S. Muralidhar, J.

1. This suit for declaration and perpetual injunction is by seven plaintiffs. There are nineteen defendants in the suit. Defendant No.1 as well as Defendants 2 to 19 entered appearance through counsel at the first hearing of the suit. Defendants 2 to 19 support the Plaintiff. Defendant No.1 opposed even the issuance of summons. It was submitted on behalf of Defendant No.1 that its plea for the rejection of the plaint should be considered as being under Order VII Rule 11 of the Code of Civil Procedure 1908 (CPC).

Background Facts

2. The background to the present suit is that the Plaintiff Companies borrowed loans from Defendant No.1 on various dates between 13th June 2005 and 4th May 2007. Each entered into a separate agreement with Defendant No.1. Each of the Plaintiff companies provided security by way of deposit of shares including shares of Gujarat Heavy Chemicals Ltd. (GHCL) and Golden Tobacco Ltd. (GTL). The seven agreements by the Plaintiff Companies with Defendant No.1 contained an identical clause concerning jurisdiction and arbitration which reads as under: “Clause 57 Jurisdiction and Arbitration Any dispute of difference arising under, or in connection with, this agreement, or any breach thereof, which cannot be settled by friendly negotiation and agreement between the parties, shall be referred to sole arbitration at (New) Delhi, conducted in accordance with the provisions of Arbitration and Conciliation Act, 1996. The decision of the sole arbitrator, to be appointed by the lender, shall be final and binding on the parties.”

3. According to the Plaintiffs, they serviced the loans without default and periodically repaid Defendant No.1. It is claimed that between October 2005 and March 2008 approximately Rs.125 crores was paid by the Plaintiffs to Defendant No.1. It is alleged that without informing the Plaintiffs or giving them notice of recall of the loans, Defendant No.1 sold 136.52 lakh shares of GHCL to the tune of around Rs.155 crores. It is mentioned that in this interregnum, seven other companies not concerned with the loan agreement provided the security to Defendant No.1 by mortgage of title documents in relation to immoveable properties in Village Bijwasan, Tehsil Mehrauli, New Delhi and at Connaught Place, New Delhi. On 18th July 2008, Defendant No.1 wrote a letter seeking recall of the loan amounting to Rs.225.45 crores within two days. It is alleged that within two days thereafter Defendant No.1 requested the Plaintiffs to enter into a joint development agreement for a property in Mumbai. The Plaintiffs state that they were coerced into signing a letter dated 24th July 2008 agreeing that a joint development agreement with the developer would be entered into and that the money earned thereby would be paid to Defendant No.1.

4. According to the Plaintiffs, they came to know through Defendants 2 to 19 companies on one of whom a copy of a claim petition was served that Defendant No.1 had by a letter dated 17th July 2009 addressed to the Plaintiffs as well as Defendant Nos.2 to 19 invoked the arbitration clause and initiated proceedings against them by appointing Justice (Retd.) R.C. Chopra as the Sole Arbitrator. A copy of the said letter was also sent to Justice R.C. Chopra. The Plaintiffs claim that they never received the said letter dated 17th July 2009. A letter dated 20th July 2009 stated to have been written by Defendant No.1 to Justice R.C. Chopra informing him of his appointment as Sole Arbitrator for adjudication of the disputes between Defendant No.1 on the one hand and the Plaintiffs and Defendant Nos.2 to 19 on the other. By a letter dated 22nd July 2009, Justice R.C. Chopra issued a notice to the Plaintiffs as well as Defendants 2 to 19 informing them of his appointment as Sole Arbitrator and calling upon them to enter appearance through counsel or an authorized representative on 24th August 2009 at 4.30 pm. 5. The Plaintiffs state that while they never received the l