Arbitration of bank-borrower money claims upheld despite pending recovery proceedings and statutory objections.

A bank-borrower money dispute covered by an arbitration clause remains arbitrable despite pending recovery proceedings before the DRT and the asserted statutory bar under the recovery laws. The recovery statutes were read as restricting civil courts and other public authorities exercising statutory jurisdiction, not a private arbitral forum chosen by contract. Because the claim was a right in personam, it could be resolved by arbitration, and the pendency of recovery proceedings did not extinguish the arbitration agreement. The request for appointment of an arbitrator was therefore allowed.

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Issues: Whether a dispute arising out of a loan agreement and covered by an arbitration clause remains arbitrable and can be referred to arbitration despite the pendency of recovery proceedings before the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the asserted bar under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Analysis: The arbitration agreement was held to be enforceable because the statutory bar under the recovery legislation was construed as operating against civil courts and other public authorities exercising statutory jurisdiction, not against a consensual arbitral forum chosen by the parties. The claim for recovery of money was treated as a right in personam and therefore capable of adjudication by arbitration. The Court followed the earlier view that the recovery statutes create a special forum for banks and financial institutions but do not, by necessary implication, exclude arbitration where the parties have contractually agreed to that mode of dispute resolution. The pendency of recovery proceedings did not extinguish the arbitration clause, and the bank's participation in prior proceedings was also treated as a relevant circumstance against its objection.

Conclusion: The dispute was held arbitrable and the request for appointment of an arbitrator was allowed.

Ratio Decidendi: A consensual arbitration agreement covering a bank-borrower money claim is not excluded by the bar in the recovery statutes, because such bar does not extend to a private arbitral forum and the dispute remains a right in personam.

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