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-20
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
AP-COM/259/2025
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. The notice of Motion and the 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
March, 2023.
3. The petitioner claims to have extended a loan facility to the
respondents for an amount of Rs. 1,59,83,088/- and accordingly the
business loan agreement was executed. The loan was to be repaid in 36
monthly instalments. As a security, 11 machines were hypothecated in
favour of the petitioner by the respondents. Under the agreement, the
petitioner had the right to repossess the machineries 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 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 Courts
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of Pune but such clause would 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 upto the
thirteenth 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 to make
payment. The notice was received by the respondents but no payment
was made. The petitioner approached the learned City Civil Court at
Calcutta for appointment of a Receiver. An order was passed by the
learned 12th Judge on January 28, 2025, appointing a learned Advocate
as the Receiver, in order to take possession of the hypothecated
machines. The learned Receiver filed a report before the competent
court indicating that possession of 6 of the 11 machines could be taken
with the help of the police. Five machines could not be located. The
machines were kept at Vadodara, Gujarat. The petitioner unilaterally
approached one Mr. Singh to act as the arbitrator, but recalled such
request.
6. The petitioner has now approached this Court for reference of the
dispute to arbitration. The notice invoking arbitration is available on
record. 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
all communications with regard to the loan facility, issuance of the loan
recall-cum-termination notice etc. were done from the said office. The
jurisdiction clause also permitted the petitioner to take out proceedings
in a court of competent jurisdiction. By a notice invoking arbitration
dated February 1, 2025, the petitioner informed the respondents that
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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 to the respondents. The learned advocates for the
respondents replied to the notice invoking arbitration, by a letter dated
February 6, 2025, rejecting the name of learned arbitrator as proposed
by the petitioner on the ground that unilateral appointment of an
arbitrator was barred under the law. The petitioner was asked to
approach the court for appointment of an independent learned
arbitrator. The contents 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 or remedies which
our client has not 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. Despite service, none appears on behalf of the respondents. 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.
8. The objections with regard to admissibility of the claim, arbitrabilty of
the issues, limitation etc. which the respondents may raise, shall be
decided by the learned arbitrator.
9. 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