Cnh Industrial Capital(India) Pvt. Ltd vs Liladhar Raghunath Borkute & Anr on 7 December, 2022

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Delhi High Court - Orders

Cnh Industrial Capital(India) Pvt. Ltd vs Liladhar Raghunath Borkute & Anr on 7 December, 2022

1. By way of this petition under Section 11 of the Arbitration and Conciliation Act, 1996 ["the Act"], the petitioner seeks appointment of an arbitrator to adjudicate disputes which have arisen between the parties under a loan cum hypothecation agreement dated 30.05.2020 ["the Agreement"]. The Agreement contains an arbitration clause [Clause 31]. New Delhi has been designated as the seat and venue of the arbitration, and courts in New Delhi have been vested with exclusive jurisdiction over the disputes arising out of the Agreement.

2. The case of the petitioner is that it loaned an amount of ₹5,56,530/- to the respondents for purchase of vehicles, which stood hypothecated to the petitioner. The respondents having failed to repay the loan in terms of the Agreement, the petitioner claims to have recalled the loan by way of a legal notice dated 04.08.2021. As the said notice did not elicit a response, Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:08.12.2022 15:38:24 ARB.P.1018/2022 Page 1 of 4 the petitioner invoked the arbitration clause by a further legal notice dated 19.02.2022, and called upon the respondents to select one of the five persons named therein as the arbitrator. Although the respondents did not reply to the aforesaid communications, the petitioner appointed an Arbitrator, who entered into the reference on 22.06.2022. However, in view of an objection filed by the respondents to the unilateral appointment of the Arbitrator, the learned Arbitrator withdrew from the proceedings by an order dated 22.06.2022, and terminated the arbitral proceedings. It is in these circumstances that the present petition under Section 11 of the Act has been filed.

3. Pursuant to the notice issued on 02.09.2022, Mr. Yash Kullarwar, learned counsel, enters appearance on behalf of the respondents. The respondents have also filed a reply to the petition. However, Mr. Kullarwar submits that the respondents have no objection to the appointment of an arbitrator, subject to their right to raise all available defences on merits of the petitioner's claim. It is also submitted that the respondents have also instituted proceedings under the Consumer Protection Act, 2019 ["CPA"] before the District Consumer Disputes Redressal Commission, Chandrapur, Maharashtra ["the District Commission"], against the petitioner herein and the seller of the vehicle in question, wherein the respondents herein have inter alia sought directions in respect of the Agreement. Mr. Kullarwar also submits that the respondents will also place the orders of the District Commission on record before the learned arbitrator, in order to determine the appropriate course in the arbitration proceedings.

4. In the course of hearing, it transpires that the claims of the Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:08.12.2022 15:38:24 ARB.P.1018/2022 Page 2 of 4 petitioner are in the region of approximately ₹ 6,00,000/-, in respect of which the proceedings before the District Commission are pending and arbitration proceedings are also sought to be instituted. At the suggestion of the Court, learned counsel for the parties agreed that they will make an attempt to resolve the disputes by mediation and seek reference to Samadhan, Delhi High Court Mediation and Conciliation Centre, Delhi High Court, Shershah Road, New Delhi ["Samadhan"], for this purpose. As the respondents are individuals resident in Maharashtra, Mr. Kullarwar requests that the Mediation Centre may be requested to permit them to participate in the mediation proceedings by video-conferencing.

5. In view of the above submissions and with the consent of learned counsel for the parties, the petition is disposed of with the following directions:-

a. The parties are referred to mediation under the aegis of Samadhan. They will appear before the learned mediator on 19.12.2022. The Mediation Centre is requested to permit the parties to appear through video-conferencing, if possible.

b. In the event the disputes are not resolved through mediation, they will be adjudicated by arbitration for which purpose, the Delhi International Arbitration Centre, Delhi High Court, Shershah Road, New Delhi ["DIAC"], is requested to nominate an arbitrator from its panel. The arbitration proceedings will be governed by the rules of the DIAC, including as to the remuneration of the learned arbitrator.

c. The DIAC is requested to defer the appointment of an arbitrator and entering into the reference until 01.02.2023, to enable the Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:08.12.2022 15:38:24 ARB.P.1018/2022 Page 3 of 4 parties to attempt a resolution through mediation. In the event the mediation proceedings are in progress and parties require further time for settlement, they may jointly approach the DIAC for further deferment of the reference. Conversely, if the mediation proceedings have been closed unsuccessfully prior to 01.02.2023, either party may approach the DIAC for nomination of the arbitrator forthwith.

d. The learned arbitrator is requested to furnish a declaration in terms of Section 12 of the Act, prior to entering upon the reference. e. It will be open to the parties to seek interim measures of protection under Section 17 of the Act before the learned arbitrator.

6. It is made clear that this Court has not adjudicated the disputes between the parties on merits and all contentions of both the parties, including as to the effect of the proceedings under CPA and orders passed therein, are left open for consideration of the learned arbitrator.

7. The petition is disposed of with the above directions.

PRATEEK JALAN, J DECEMBER 7, 2022 'vp'/ Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:08.12.2022 15:38:24 ARB.P.1018/2022 Page 4 of 4

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Delhi High Court - Orders