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Calcutta High Court
M/S Electronica Finance Limited vs M/S G And L Profile And Equipments (P) … on 21 April, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
ocd-19
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
AP-COM/257/2025
M/S ELECTRONICA FINANCE LIMITED
VS
M/S G AND L PROFILE AND EQUIPMENTS (P) LIMITED AND ORS
BEFORE:
THE HON'BLE JUSTICE SHAMPA SARKAR
Date : 21st April 2025.
Mr. Sayan Ganguly, Adv.
Ms. Sormi Dutta, Adv. ... for the petitioner.
1. Notice of Motion and Affidavit of service are taken on record. Despite
service, none appears on behalf of the respondents.
2. This is an application for appointment of a learned arbitrator under
Clause 11.4 of the term loan cum hypothecation agreement dated 17th
January, 2023.
3. The petitioner claims to have extended a loan for an amount of Rs.
1,32,80,475/- and accordingly the business loan agreement was
executed. The loan was to be repaid in 36 monthly instalments. As a
security, seven machines were hypothecated in favour of the petitioner
by the respondents. Under the agreement, the petitioner had the right
to repossess the machines in the event of any default committed by the
respondents. Clause 11.4 is set out hereunder for convenience:-
“11.4 ARBITRATION AND JURISDICTION
Any disputes or differences arising between the parties
hereto as to the interpretation of this Agreement or in
connection with this Agreement or any covenants or
conditions thereof or as to the rights, duties, or liabilities of
any party hereunder or as to any act, performance or non-
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performance of any act, deed or thing as agreed under this
Agreement or matter or thing arising out of or relating to or
under this Agreement [even though the Agreement may have
been terminated], the same shall be referred to a sole
Arbitrator to be appointed by the Lender, according to the
provisions of Arbitration and Conciliation Act, 1996, and
rules there under and any amendment thereto from time to
time.
The Language of arbitration shall be English. All cost of
arbitration including the arbitrator’s fees, advocate fees,
travailing cost other miscellaneous expenses shall be borne
equally by the parties hereto. The award of the arbitrator
shall be a speaking award and shall be final, conclusive and
binding on all the parties whether on question of law or of
fact. In the event of death, refusal, negligence, inability,
incapability of the persons so appointed to act as a sole
arbitrator, a new arbitrator shall be appointed by the Lender.
The venue of arbitration shall be Pune or such other place
that the Lender may in the sole discretion determine and
Courts in Pune or such other place shall have exclusive
jurisdiction.
This Agreement shall be governed by and construed in all
respects with Indian laws and the parties hereto agree that
any matter or issues arising hereunder or any disputes
hereunder shall, at the discretion of the Lender be subject to
the exclusive jurisdiction of the Courts of the city of Pune or
such other place as the Lender may deem fit. This shall not
however limit the rights of the Lender to take proceedings in
any other Court of competent jurisdictions.”
4. The clause provides that all disputes and differences arising out of the
said agreement with regard to its performance, non-performance,
termination etc. shall be referred to a sole arbitrator who shall be
appointed by the petitioner. The venue of arbitration shall be at Pune
or any other place that the lender may in its sole discretion determine.
All disputes were made subject to the exclusive jurisdiction of the
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Courts of Pune but the clause would not defeat the right of the lender
to take out proceedings before any other Court of competent
jurisdiction.
5. It is contended by the petitioner that the respondents paid upto the
fifteenth instalment and thereafter failed to repay the amount as per
the repayment schedule. On January 10, 2025, a loan recall notice
was issued by the petitioner through its advocates, calling upon the
respondents to either hand over the hypothecated machines or repay
the dues. The said notice was received. The respondents did not hand
over the machines and did not pay. The petitioner approached the
learned City Civil Court at Calcutta for appointment of a Receiver and
an order was passed by the learned 12th Judge on January 28, 2025,
appointing a learned Advocate as the Receiver to take possession of the
machines which were hypothecated. The learned Receiver thereafter
filed a report before the competent court indicating that the Receiver
could take possession of the five machines with the help of the police.
The equipment has been kept at Vadodara, Gujarat. Two machines
were missing.
6. The petitioner has now approached this Court for reference of the
dispute to arbitration. The notice invoking arbitration is available. The
petitioner has specifically averred that part cause of action had taken
place within the jurisdiction of this Court i.e., at the branch office of
the petitioner at 16, Stand Road, Kolkata – 700001, inasmuch as, all
communications with regard to the loan facility, loan recall notice were
issued from the said office and the contract was concluded in the said
office. The clause also permitted the petitioner to take out proceedings
in a court of competent jurisdiction. Hence, by the notice invoking
arbitration dated February 1, 2025, the petitioner informed the
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respondents that the venue and seat of arbitration would be Kolkata.
The name of a sole arbitrator, a learned advocate, was also proposed
and the notice was delivered on the respondents. The learned advocate
for the respondents replied to the notice invoking arbitration, by a letter
dated February 6, 2025, rejecting the proposal for appointment of the
learned arbitrator as suggested by the petitioner and asked the
petitioner to file an appropriate application before the Court on the
ground that unilateral appointment of an arbitrator was barred under
the law. The relevant paragraphs are quoted below :-
” Please note that this letter is without prejudice to and/or without
impairing or affecting our client’s rights and shall not be construed as
waiver of any rights, powers or remedies which our client has now or
in future under applicable law or in respect of any legal action that
may be filed or taken by our client against your client including but
not limited to raising a counter claim under the Contract, if any.
In the meanwhile, you are requested not to take any steps in relation
to the appointment of sole Arbitrator. You can file appropriate
application before the Ld. Court for appointment of an independent
sole arbitrator”
7. None appears for the respondents despite service.
8. The petitioner has approached this Court on the ground that the
mechanism as provided under clause 11.4 of the term loan cum
hypothecation agreement has failed and unilateral appointment is no
longer permissible in law.
9. The objections with regard to admissibility of the claim, arbitrabilty of
the issues, limitation etc. that the respondents may raise, shall be
decided by the learned arbitrator.
10. The application is disposed of by appointing Hon’ble Justice Subrata
Talukdar, former Judge of this court as the learned Arbitrator, to
arbitrate upon the disputes between the parties. This appointment is
subject to compliance of Section 12 of the Arbitration and Conciliation
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Act, 1996. The learned Arbitrator shall fix his/her remuneration as per
the Schedule of the Arbitration and Conciliation Act, 1996.
(SHAMPA SARKAR, J.)
pkd.JM
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