Calcutta High Court
Electronica Finance Limited vs M/S. G & L Profile And Equipments (P) Ltd. … on 21 April, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
ORDER OCD - 17
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
AP-COM/255/2025
ELECTRONICA FINANCE LIMITED
VERSUS
M/S. G & L PROFILE AND EQUIPMENTS (P) LTD. & ORS.
BEFORE:
THE HON'BLE JUSTICE SHAMPA SARKAR
Date : 21st April 2025.
Appearance:
Mr. Sayan Ganguly, Advocate
Ms. Sormi Dutta, Advocate
... 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 13.5 of the business loan agreement dated 27 th March, 2024.
3. The petitioner claims to have extended a loan facility to the respondents,
for an amount of Rs. 1 crore and accordingly a business loan agreement
was executed. The loan was to be repaid in 30 monthly instalments. As a
security, six 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 13.5 is set out hereunder for convenience:-
“13.5 ARBITRATION AND JURISDICTION
2All the disputes and differences arising between the parties hereto
as to the interpretation of 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-performance
of any act, deed or thing as agreed under this Agreement or matter
or thing arising out of or relating to or under Agreement (even
though the Agreement may have been terminated), the same shall
be referred to the Sole Arbitrator to be appointed by the EFL
(Lender), according to the provisions of Arbitration and Conciliation
Act, 1996, and rules thereunder 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,
Travelling 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 the Sole Arbitrator, a new Arbitrator shall be
appointed by the EFL (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 respect with Indian Laws and the parties hereto
agree that any mater or issues arising hereunder or any disputes
hereunder shall, at the option/discretion of the EFL (Lender), the
subject to the non-exclusive jurisdiction of the Courts of the city of
Pune. This shall not however limit the rights of the EFL (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,
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termination etc. shall be referred to a sole arbitrator who shall be
appointed by the petitioner. The venue of arbitration shall be Pune or any
other place that the lender may in its sole discretion determine. All
disputes were made subject to the non-exclusive jurisdiction of the Courts
at Pune, but the clause did not defeat the right of the lender to take out
proceedings in any other Court of competent jurisdiction.
5. It is contended by the petitioner that the respondents paid around three
instalments 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 handover the hypothecated machines or repay the
loan. The said notice was received by the respondents, but they continued
to keep the machines in possession and failed to repay the amount. The
petitioner approached the learned City Civil Court at Calcutta for
appointment of a Receiver and anorderwas passed on January 28, 2025,
by the learned 12th Judge. A learned Advocate was approached as the
Receiver,to take possession of the hypothecated machines. The learned
Receiver, thereafter, filed a report before the competent court indicating
that the Receiver had taken possession of the subject machines with the
help of the police. The machines have been kept at Vadodara, Gujarat.
6. The petitioner has now approached this Court for reference of the dispute
to arbitration. The notice invoking arbitration is available. The petitioner
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has specifically averred that part cause of action has 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, issuance of the recall notice and execution of
the agreement were completed 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,
2025, the petitioner informed the respondents that the venue and seat of
arbitration shall be Kolkata. The name of a sole arbitrator, a learned
advocate, was also proposed and the notice was delivered to 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 askedthe 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 portion of the letter is quoted below :-
“Please note that this letter is without prejudice to and/ or without
impairing or affecting our client’s right and shall not be construed
as waiver of any rights, powers o remedies which our client has
now or I future under applicable law or in respect of any legal
action that may be filed or taken by or 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.”
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7. None appears for the respondents despite service and the matter proceeds.
8. The petitioner has approached this Court on the ground that the
mechanism as provided under clause 13.5 of the business loan 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. may be raised by the respondents before the learned
Arbitrator.
10. The application is disposed of by appointing Hon’ble Justice Subrata
Talukdar, former Judge of the Court, to arbitrate upon the disputes
between the parties. This appointment is subject to compliance of Section
12 of the Arbitration and Conciliation Act, 1996. The learned Arbitrator
shall fix his/her remuneration as per the Schedule of the Arbitration and
Conciliation Act, 1996.
(SHAMPA SARKAR, J.)
S. Kumar / R.D. Barua
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