Delhi High Court - Orders
Kadam Developers Private Limited vs Indiabulls Housing Finance Limited on 2 August, 2021
Author: Vibhu Bakhru
Bench: Vibhu Bakhru
$~13
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 515/2021 & I.A. 8468/2021
KADAM DEVELOPERS PRIVATE LIMITED ..... Petitioner
Through: Mr Ankur Chawla along with Ms
Gauri Rishi, Ms Srishti Juneja and
Mr Sanampreet Singh, Advocates.
versus
INDIABULLS HOUSING FINANCE LIMITED ..... Respondent
Through : Mr Rajiv Nayar, Senior Advocate
with Mr Manish K. Jha and Ms
Vishrutyi Sahni, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 02.08.2021 [Hearing Held Through Videoconferencing]
1. The petitioner has filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereafter „A&C Act‟), inter alia, praying that a sole arbitrator be appointed to adjudicate the petitioner‟s claim against the respondent.
2. The petitioner is a part of the Group of Companies which includes Shipra Hotels Limited, Shipra Leasing Private Limited and Shipra Estate Limited. The said companies had availed financial assistance from the respondent company aggregating ₹1,686.10 crores. In order to secure the respondent against the repayment obligations, the shareholders of the petitioner company, namely, Shipra Estates Limited, Ms Bindu Singh and Mr Mohit Singh had pledged the shares held by them in the petitioner company with the respondent in terms of an agreement dated 06.04.2018 Signature Not Verified Digitally signed by:DUSHYANT RAWAL (the Pledge Agreement). The petitioner was also a party to the Pledge Agreement.
3. Certain disputes have arisen between the respondent and the borrower companies (Shipra Hotels Limited, Shipra Leasing Private Limited and Shipra Estate Limited). The respondent also claims that it has invoked the pledge of the equity shares of the petitioner that were pledged with it in terms of the Pledge Agreement dated 06.04.2018. The Pledge Agreement has not been placed on record in these proceedings. However, the counsel for the petitioner had shared the same on screen and has also pointed out that the said agreement is in one of the documents annexed in a petition filed by Shipra Estates Limited under Section 9 of the A&C Act (being OMP(I) (COMM) 213/2021 captioned Shipra Estates Limited v. Indiabulls Housing Finance Limited and Anr.) which is also listed today.
4. The said Pledge Agreement includes an arbitration clause. The relevant extract of the said clause reads as under:
"20. ARBITRATION 20.1(a) Notwithstanding anything to the contrary in the Loan Documents (including this Agreement) but subject to Clause 20.1(b) below, the Parties and the Confirming Party agree that if any dispute/ disagreement/differences ("Dispute") arise between
(a) the Lender and (b) the Pledgor(s) and/or the Confirming Party during the subsistence of the Loan Documents (including this Agreement), and/or thereafter, in connection with, inter alia, the validity, interpretation, implementation and/or alleged breach of any provision of the Loan Documents (including this Agreement), jurisdiction Signature Not Verified Digitally signed by:DUSHYANT RAWAL or existence/appointment of the arbitrator or of any nature whatsoever, then, such Dispute shall be resolved through arbitration by a sole arbitrator and the arbitration clause as mentioned in the Loan Agreement(s) shall mutatis mutandis apply.
20.1(b) Notwithstanding anything to the contrary contained in Clause 20.1 (a) of this Agreement, unless the Lendor otherwise agrees/informs in writing, the Pledgors(s) and the Confirming Party agree that in case the sole arbitrator has been nominated/ appointed in terms of the provisions of the Loan Agreement(s) or steps have been initiated for the nomination/appointment of the Sole Arbitrator in terms of the provisions of the Loan Agreement(s), then the same sole arbitrator shall adjudicate the Dispute, if any, between the Lender, the Pledgor(s) and/or the Confirming Party (and the dispute(s) between the Lender and the Borrower(s) and/or the other Obligor(s)) and it shall be deemed that the said sole arbitrator (who has been nominated / appointed in terms of the provisions of the Loan Agreement(s)) has been nominated/ appointed as the sole arbitrator under this Agreement"
5. The petitioner had invoked the agreement to refer the disputes to arbitration in terms of a notice dated 14.04.2021 and had called upon the respondent to suggest names of proposed arbitrators within a period of forty- eight hours. The petitioner filed the present petition on 15.04.2021.
6. The above petition was taken up by this Court along with petitions filed by the other Group Companies (Shipra Hotels Limited, Shipra Leasing Private Limited and Shipra Estate Limited) on 22.04.2021. On that date, a Coordinate Bench of this Court had allowed the petitions and by a common order appointed a Former Chief Justice of India as the Sole Arbitrator to Signature Not Verified Digitally signed by:DUSHYANT RAWAL adjudicate the disputes between the parties.
7. The said order was set aside by the Supreme Court on an appeal preferred by the respondent.
8. By an order dated 06.05.2021, the Supreme Court remitted this matter to this Court to decide afresh after the respondent had filed a reply and after hearing the parties.
9. Mr Nayar, learned Senior Counsel appearing for the respondent has opposed the present petition on, essentially, two fronts. First, he submits that the petition is premature as it was filed even before thirty days had expired after issuance of the notice dated 14.04.2021 invoking the arbitration. Second, he submits that the petitioner is not a party to the Pledge Agreement since it is not one of the pledgors. He submits that the petitioner had signed the Pledge Agreement in his capacity as a confirming party.
10. Insofar as Mr Nayar‟s contention that the present petition is premature, the same is unpersuasive and this Court has also rejected a similar plea in other connected matters (ARB.P. Nos. 513/2021, 514/2021 and 516/2021) by a separate order passed today.
11. The contention that the petitioner is not a party to the Pledge Agreement dated 06.04.2018 is also unmerited. A plain reading of the Pledge Agreement indicates that the petitioner is a party to the said Agreement. The Arbitration Clause as set out above also indicates that the parties had also contemplated the confirming party to refer the disputes arising in connection with the Pledge Agreement to arbitration.Signature Not Verified Digitally signed by:DUSHYANT RAWAL
12. Mr Nayar had also submitted that the notice issued by the petitioner was defective inasmuch as it had mentioned the Loan Agreement entered into between the Petitioner‟s Group Companies and the respondent and, had not mentioned the Pledge Agreement. Although it is correct that the notice dated 14.04.2021 issued by the petitioner invoking the arbitration clause mentions that the parties had agreed to resolve the disputes in terms of Clause 20 of the Loan Agreements; however, the subject of the notice clearly indicates that it was a notice for invocation of arbitration under the Pledge Agreement dated 06.04.2018. The extract of the Arbitration Clause as quoted in the said notice is the Arbitration Clause in the Pledge Agreement. It is also important to note that the Arbitration Clause also provides that the disputes would be referred to the same arbitrator as nominated/appointed in terms of the Loan Agreements with the borrowing companies (Shipra Hotels Limited, Shipra Leasing Private Limited and Shipra Estate Limited). This Court is unable to accept that there is any ambiguity in the notice invoking the Agreement to refer the disputes to arbitration.
13. This Court has by a separate order passed in connected matters (ARB.P. Nos. 513/2021, 514/2021 and 516/2021) proposed that Justice Vikramajit Sen, a former Judge of the Supreme Court (Mobile No. 8447333366) be appointed as the Sole Arbitrator to adjudicate the disputes between the said parties. In these circumstances, this Court considers it apposite to allow the present petition and proposes to appoint Justice Vikramajit Sen, a former Judge of the Supreme Court (Mobile No. 8447333366) as the Sole Arbitrator to adjudicate the disputes falling within Signature Not Verified Digitally signed by:DUSHYANT RAWAL the scope of the Arbitration Clause as set out above.
14. The parties are at liberty to approach the learned Arbitrator for eliciting his consent and the necessary disclosure under Section 12(1) of the A&C Act. Let the same be furnished to this Court before the next date of hearing.
15. List on 17.08.2021.
VIBHU BAKHRU, J AUGUST 02, 2021 RK Signature Not Verified Digitally signed by:DUSHYANT RAWAL