Arbitration clause requirement blocks borrower from invoking statutory arbitration under the secured assets law.

An application under section 11(6) of the Arbitration and Conciliation Act, 1996 is maintainable only where an arbitration agreement exists within the meaning of section 7. In a loan dispute, the borrower could not invoke section 11 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 because that provision operates only for disputes among the entities specifically named in it, namely banks, financial institutions, securitisation companies, reconstruction companies and qualified institutional buyers. As the borrower was not within those categories and no separate written arbitration agreement existed, the statutory deeming of written consent could not be relied on.

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Issues: Whether an application under section 11(6) of the Arbitration and Conciliation Act, 1996 was maintainable at the instance of a borrower who was not a bank, financial institution, securitisation company, reconstruction company or qualified institutional buyer, by invoking section 11 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Analysis: An application under section 11(6) of the Arbitration and Conciliation Act, 1996 can be maintained only where there is an arbitration agreement within the meaning of section 7 of that Act. In the loan transaction in question, no arbitration clause or separate written arbitration agreement existed between the borrower and the bank. Section 11 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 creates a limited statutory mechanism for conciliation or arbitration only for disputes among the entities specifically mentioned in that provision, namely banks, financial institutions, securitisation companies, reconstruction companies and qualified institutional buyers. The borrower did not fall within any of those categories, nor was he a securitisation company or reconstruction company registered under section 3 of that Act. Consequently, the statutory deeming of written consent under section 11 could not be invoked by him.

Conclusion: The application under section 11(6) of the Arbitration and Conciliation Act, 1996 was not maintainable and was liable to be rejected.

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