TaxTMI 
TaxTMI 
2004 (12) TMI 401
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....the time of sanction of loan, the applicant states that he opened an account bearing No. CC-220336, and one Sri T. Harinarayana, Deputy Manager in the Bank, had taken blank signed cheque book from him. Thereafter, an amount of Rs. 3,000 was debited to his loan account towards processing and stamp charges on 2-3-2002. 2. According to the applicant, as per the norms and procedures of the Bank, the loanee has to furnish the bills for withdrawing the money from the cash credit loan Account, but in the case of his cash credit loan Account, without his furnishing any bills, the Bank debited various amounts to his cash credit loan Account Rs. 10,00,000 on 8-3-2003 vide Cheque Nos. 2341651 and 2341652 for Rs. 6,00,000 and Rs. 4,00,000 respectively....
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....ion Act, to the notice of the Banking Ombudsman, the Banking Ombudsman without conducting any enquiry and without providing any opportunity of being heard, rejected the complaint stating that inasmuch as already notice under the provisions of the Securitization Act has been issued by the Bank, he may seek the remedies available to him under the Securitization Act. 5. The applicant states that he brought the above fact to the notice of the Chairman and Managing Director of the Bank, but to no avail. The applicant states that when Sri Kata Adinarayana, who took loan in the name of M/s. Sudha Enterprises, and failed to repay the loan amount, the Bank initiated recovery proceedings against M/s. Sudha Enterprises and their surety Sri K. Mastan ....
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....is approach to the Banking Ombudsman, who rejected the application. He further submitted that inasmuch as the Bank has issued notice under section 13(2) of the Securitization Act for recovery of the loan dues, having regard to the provisions of section 11 thereof, which provides for resolution of disputes by way of arbitration, the disputes raised by the applicant as regards the mis-adjustments and wrongful debits made by the Bank to his loan account, should be referred to an Arbitrator. He, thus prayed that the Arbitration Application is maintainable under section 11 of the Securitization Act. 10. A reading of the averments, as pleaded by the applicant in support of the Arbitration Application, and as set out supra, would disclose that th....
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.... an arbitration agreement between the parties, as provided under section 7 thereof, which may be either in the form of an arbitration clause in a contract or in the form of a separate agreement, and it shall be in writing. Admittedly, the applicant is a borrower and loanee of the bank, and in the loan agreement, entered into by the applicant with the bank, at the time of availing loan, there is no arbitration clause and inasmuch as there is no arbitration clause in the loan agreement entered into by the applicant and the bank, the applicant is barred from maintaining an Arbitration Application under section 11(6) of the Arbitration Act for appointment of an Arbitrator. 12. It may now be noticed, whether having regard to the provisions of s....
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.... In that, the invocation of the provisions of section 11 of the Securitization Act, for arbitration is limited only to those parties, namely the "bank" or "financial institution" or "securitization company" or "reconstruction company" or "qualified institutional buyer", and that too if any dispute arises with regard to securitization or reconstruction or non-payment of any amount due including interest amongst them, and there need not be any agreement in writing, for it is deemed that the parties to the dispute have consented in writing for determination of such dispute by conciliation or arbitration as per the provisions of the Arbitration Act. 14. Therefore, such of those parties, who fall within the definition of parties mentioned in se....