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Dmi Finance Pvt Ltd vs Kandivli Balaji Investment Pvt Ltd And ... on 7 December, 2021

Author: C. Hari Shankar

Bench: C. Hari Shankar

                            $~5 (original)
                            *     IN THE HIGH COURT OF DELHI AT NEW DELHI

                            +      ARB.P. 789/2021

                                   DMI FINANCE PVT LTD                  ..... Petitioner
                                                 Through: Mr. Sumit Chander and Mr.
                                                 Gurdeep Chauhan, Adv.

                                                      versus


                                   KANDIVLI BALAJI INVESTMENT PVT LTD AND ORS.
                                                                        ..... Respondents
                                                Through: Mr. Pulkit Chaudhary, Adv.


                                   CORAM:
                                   HON'BLE MR. JUSTICE C. HARI SHANKAR

                                               O R D E R (O R A L)

% 07.12.2021

1. Despite issuance of notice, no reply has been filed to this petition. Today, Mr. Pulkit Chaudhary appears on behalf of the respondents and submits that he has no objection if an arbitrator is appointed to arbitrate on the disputes between the parties.

2. The disputes arise out of a Loan Agreement dated 6th July, 2017. In the loan agreement, the petitioner was the lender, Respondent 1 was the borrower, Respondent 2 was the corporate guarantor and Signature Not Verified ARB.P. 789/2021 Page 1 of 5 Digitally Signed By:SUNIL SINGH NEGI Signing Date:11.12.2021 07:52:29 Respondents 3 and 4 were personal guarantors. Mr. Pulkit Chaudhary submits that he appears on behalf of all the respondents.

3. Under the Loan Agreement, the petitioner disbursed a loan of ₹ 40 crores to the respondents. Article 11.1 of the Loan Agreement provides for resolution of disputes by arbitration and reads thus:

"11.1 Without prejudice to the right of the Lender to exercise any other remedy as may be available to it under law, including any action for enforcement of Security Interest under any special dispensation, including Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, any dispute, difference, claim or controversy including the matter of damages if any (collectively referred as 'Dispute') between the Parties about the validity, interpretation, implementation or alleged breach of any provision of this Agreement, or anything connected or related to or incidental to this, may be submitted for determination by either Party to arbitration to be conducted in accordance with the provisions of the Indian Arbitration and Conciliation Act 1996, as amended from time to lime. The Dispute shall be referred to a sole arbitrator to be appointed by the Lender. The seat of arbitration shall be Delhi, India. The proceedings shall be held at Delhi or such other place as may be directed by the Arbitrator. The Arbitration proceedings shall be conducted as per fast track procedure laid down in Section 29(B) of the Indian Arbitration and Conciliation Act 1996 and the award shall be rendered in the English Language. The award rendered by the arbitrator shall be final, conclusive and binding on all Parties to this Agreement and shall be subject to enforcement in any court of competent jurisdiction. The fee of Arbitrator shall be shared equally by the Parties during the arbitration. The Arbitrator shall be entitled to award costs, including legal costs."

Signature Not Verified ARB.P. 789/2021 Page 2 of 5 Digitally Signed By:SUNIL SINGH NEGI Signing Date:11.12.2021 07:52:29

4. In accordance with the covenants of the Loan Agreement, a separate Deed of Corporate Guarantee dated 6th July, 2017 was executed by Respondent 2 in favour of the petitioner and two separate Deeds of Personal Guarantee dated 6th July, 2017 were executed by Respondents 3 and 4 in favour of the petitioner. These documents are on record.

5. Further, towards security in respect of the loan advanced under the Loan Agreement, a Development Agreement dated 11th December, 2008, a Supplementary Agreement dated 13th October, 2008 and Indenture of Mortgage dated 7th July, 2017, an Unattested Memorandum of Hypothecation dated 20th July, 2017 and an Escrow Agreement dated 19th June, 2018 were also executed.

6. The petitioner alleges that there has been continuous default by the respondents in repaying the loans under the agreement. As on the date of filing the petition, the total outstanding loan from the respondents is stated to be ₹ 69,27,38,835/-.

7. In view thereof, the petition alleges that, on 30th May, 2019, the petitioner classified the loan account of Respondent 1 as a Non- Performing Asset (NPA), and, thereafter, vide notice dated 30th May, 2019, recalled the entire loan agreement and invoked the guarantees Signature Not Verified ARB.P. 789/2021 Page 3 of 5 Digitally Signed By:SUNIL SINGH NEGI Signing Date:11.12.2021 07:52:29 provided by the personal guarantors. The petitioner called upon the respondents to repay₹ 47,29,40,085/ -, vide recall notice dated 30th May, 2019. This was, however, not done.

8. The petition also alleges that the respondents have surreptitiously created charges over the properties provided as security under the aforesaid agreement. Further, a supplementary deed for additional mortgage was also executed on 13th November, 2019.

9. As on the date of filing the petition, para 25 of the petition asserts that an amount of ₹ 84,92,57,219/- is payable by the respondents to the petitioner.

10. Notice invoking arbitration was issued by the petitioner to the respondents on 8th April, 2021. The respondents having failed to respond thereto, the petitioner has approached this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 ("1996 Act").

11. As already noticed towards the commencement of this order, Mr. Pulkit Chaudhary, who represents the respondents, has no objection to reference of the disputes to arbitration.

Signature Not Verified ARB.P. 789/2021 Page 4 of 5 Digitally Signed By:SUNIL SINGH NEGI Signing Date:11.12.2021 07:52:29

12. As such, keeping all issues of fact and law alive to be contested in the arbitral proceedings, I request Hon'ble Mr. Justice Sangeet Raj Lodha (retired) (Mobile No. +917852882005) to arbitrate on the disputes between the parties.

13. The learned Arbitrator would be entitled to charge fees in accordance with the Fourth Schedule to the 1996 Act or as otherwise fixed by the learned Arbitrator in consultation with the parties.

14. The learned Arbitrator would also furnish the requisite disclosure under Section 12(2) of the 1996 Act within a week of entering on reference.

15. The petition stands disposed of in the aforesaid terms with no orders as to costs.

16. It is made clear that this Court has not expressed any opinion one way or the other on the merits of the controversy and disputes between the parties and all issues of fact and law are kept open.

C. HARI SHANKAR, J DECEMBER 7, 2021/kr Signature Not Verified ARB.P. 789/2021 Page 5 of 5 Digitally Signed By:SUNIL SINGH NEGI Signing Date:11.12.2021 07:52:29