Independent Arbitrator Appointed to Resolve Loan Dispute Despite Insolvency Petitions; Arbitration to Follow DIAC Rules.

The court appointed an independent Sole Arbitrator to resolve disputes arising from a Loan Agreement, as per Section 11 of the Arbitration and Conciliation Act, 1996. Despite pending insolvency petitions, no legal impediments were found to prevent arbitration. The court confirmed the existence of an arbitration agreement and appointed Ms. Prity Sharma as the Sole Arbitrator. The arbitration will proceed under the Delhi International Arbitration Centre (DIAC) rules, allowing the respondent to raise jurisdictional or arbitrability objections before the arbitrator under Section 16 of the A&C Act. The petition was disposed of, establishing the framework for arbitration proceedings.

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Issues:
Appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996; Existence of the arbitration agreement in a Loan Agreement; Effect of insolvency petition filed by respondents on arbitration proceedings; Scope of examination under Section 11 of the A&C Act; Appointment of an independent Sole Arbitrator; Jurisdiction and arbitrability objections; Conduct of arbitration under Delhi International Arbitration Centre (DIAC) rules.

Analysis:
The petition sought the appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 to resolve disputes arising from a Loan Agreement. The Agreement contained an arbitration clause in Clause 10.1, which mandated disputes to be referred to a sole arbitrator appointed by the Lender. The disputes arose due to alleged non-payment by the respondent of monetary dues under the Agreement, leading the petitioner to invoke arbitration through a notice under Section 21 of the A&C Act.

The respondent did not dispute the existence of the arbitration agreement but highlighted that insolvency petitions by both respondents were pending before the Civil Judge, Senior Division, Pune. However, it was clarified that there was no moratorium or order preventing the petitioner from pursuing the arbitration petition. The court referred to the case law of SBI General Insurance Co. Ltd. v. Krish Spinning to emphasize that the examination under Section 11 of the A&C Act is limited to ascertaining the existence of the arbitration agreement.

Given the clear existence of the arbitration agreement in the Loan Agreement, the court found no impediment to appointing an independent Sole Arbitrator to adjudicate the disputes, as mandated by various Supreme Court judgments. The court appointed Ms. Prity Sharma as the Sole Arbitrator and allowed the respondent to raise jurisdiction or arbitrability objections before the arbitrator under Section 16 of the A&C Act.

The parties agreed to conduct the arbitration under the rules of Delhi International Arbitration Centre (DIAC), including the payment of arbitrator's fees and arbitration costs. The court disposed of the petition, affirming the appointment of the Sole Arbitrator and setting the framework for the arbitration proceedings under the DIAC rules.

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