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-18
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
AP-COM/256/2025
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. Affidavit of service is 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 24th
March, 2023.
3. The petitioner claims to have extended a loan facility to the respondent
for an amount of Rs. 1,02,54,200/- . Accordingly the agreement was
executed. The loan was to be repaid in 36 monthly instalments. As a
security, two 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-
performance of any act, deed or thing as agreed under this
2Agreement 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.
3
5. All disputes were made subject to the exclusive jurisdiction of the
Courts of Pune, but such clause would not defeat the right of the lender
to take out proceedings in any other Court of competent jurisdiction.
6. It is contended by the petitioner that the respondents paid upto the
fourteenth instalments and thereafter failed to repay the amount as per
the repayment schedule. On February 1, 2025, a loan recall notice was
issued by the petitioner through its advocates, calling upon the
respondents to hand over the hypothecated machineries. The said
notice was received. Payments were not 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, appointing a
receiver, in order to take possession of the machines which were
hypothecated. The learned receiver filed a report before the competent
court, indicating that possession of the subject machines could not be
taken.
7. 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
as all communications with regard to the loan facility, loan recall notice
etc. were issued from the said office and the execution of the agreement
was concluded in the said office as well. The jurisdiction clause
permitted the petitioner to take out proceedings in a competent court
having jurisdiction. By the notice invoking arbitration dated February
1, 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 on
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the respondents. The learned advocate for the respondents replied to
the notice invoking arbitration, by a letter dated February 6, 2025 and
rejected the proposed name of the learned arbitrator. The petitioner
was advised to approach the court for appointment of a learned
Arbitrator on the ground that unilateral appointment of an arbitrator
was barred under the law.
8. The relevant portion is quoted below :-
“That in the terms of the order dated 28.01.2025, I have been
appointed as receiver to take possession of the machines. In terms of
order on 29.01.2025 I have executed a special Power of Attorney and
appointed one Nitesh Jha son of Batohi Jha residing at 45, Jatin Das
Road, Kolkata-700029 being the men and agent of the petitioner, to
comply the order dated 28.01.2025.
That in terms of order as mention herein above the said agent went to
took possession of the subject machines with the help on police on
31.01.2025 being no. 1. Wood Grain Furnace with Standard
Accessories, Manufactured by R.K. Electricals and 2. Aluminium
Anudizing Plant and Machine with Standard Accessories Manufactured
by Ship Machine Tools but the said agent could not take the physical
possession of the said machines due to the set-up of the factory.”
9. None appears for the respondents, despite service.
10. The petitioner has approached this Court for reference to arbitration
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.
11. The existence of the arbitration clause is not in dispute. 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.
12. The application is disposed of by appointing Hon’ble Justice Subrata
Talukdar, former Judge of the 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 by the learned Arbitrator. 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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