Case Note & Summary
The applicant, Mantras Green Resources Ltd., a company incorporated under the Companies Act, 1956, engaged in environmental conservation, availed a loan facility of INR 20 Crore from the respondent, Canara Bank, a body corporate under the Banking Companies (Acquisition & Transfer of Undertaking) Act. The applicant availed approximately INR 8.5 Crore and alleged that due to numerous breaches by the bank, it suffered a loss of Rs.14,20,51,051/-. The loan agreement included a common hypothecation agreement dated 19/12/2017 containing an arbitration clause for resolution of disputes. The applicant invoked arbitration by notice dated 09/04/2021, demanding payment and proposing an arbitrator. The respondent replied on 21/05/2021, raising defences and not consenting to the proposed arbitrator. The applicant then filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a Sole Arbitrator. The respondent opposed the application on grounds that the claim was barred by limitation and that the disputes involved allegations of fraud and criminal acts, which are not arbitrable. The Court, relying on Section 11(6A) of the Act, held that its examination is limited to the existence of the arbitration agreement, which was not disputed. The Court noted that issues of limitation and arbitrability are matters for the arbitrator to decide. The Court appointed a retired Judge of the Bombay High Court as the Sole Arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Existence of Arbitration Clause - The applicant sought appointment of a Sole Arbitrator based on an arbitration clause in a common hypothecation agreement dated 19/12/2017. The respondent opposed on grounds of limitation and that disputes were not arbitrable. The Court held that the existence of the arbitration agreement is not in dispute and the objections raised are matters for the arbitrator to decide. (Paras 1-13) B) Limitation - Arbitrability - Section 11(6A) Arbitration and Conciliation Act, 1996 - Preliminary Objections - The respondent argued that the claim was barred by limitation and that disputes involving fraud and criminal acts are not arbitrable. The Court held that under Section 11(6A), the Court's examination is confined to the existence of the arbitration agreement. Issues of limitation and arbitrability are to be decided by the arbitrator. (Paras 14-20) C) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Consent of Parties - The applicant invoked arbitration by notice dated 09/04/2021, proposing a name. The respondent did not consent. The Court appointed a retired Judge of this Court as Sole Arbitrator, noting that the arbitration clause provided for a panel of three arbitrators but the parties could agree to a sole arbitrator. (Paras 21-25)
Issue of Consideration
Whether the applicant is entitled to appointment of a Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, despite the respondent's objections regarding limitation and the nature of disputes being non-arbitrable.
Final Decision
The Court allowed the application and appointed a retired Judge of the Bombay High Court as the Sole Arbitrator to adjudicate the disputes between the parties.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 11(6)
- Appointment of Arbitrator
- Existence of Arbitration Agreement
- Limitation
- Arbitrability of Disputes
