Mr. Justice Manish Pitale

When an Institution or a NBFC is notified as a Financial Institution u/s Sec. 2(1)(m)(iv) of SARFAESI Act, 2002, it is only for the purposes of SARFAESI Act and not for RDB Act, 1993 | Arbitration is an adjudicatory process and proceedings under SARFAESI Act are enforcement proceedings | Reference to SARFAESI Act in an agreement cannot be a bar to invoke Arbitration – Tata Motors Finance Solutions Ltd. Vs. Naushad Khan c/o. Nazbul Hoda Khan – Bombay High Court

In this important judgment on Arbitration and SARFAESI, Hon’ble High Court of Bombay High Court:
(i) Section 2(1)(m)(iv) of the SARFAESI Act specifies that an institution, which is notified by the central government, shall be a ‘financial institution for the purposes of this Act’. The words used in the aforesaid provision make it very clear that when an institution or a non-banking financial company like the petitioner is notified as a financial institution, it is only for the purposes of the SARFAESI Act.
(ii) This is distinct from the definition of ‘financial institution’ under Section 2(h) of the RDDB Act. It is undisputed that the petitioner is not notified as a financial institution by the central government upon exercising power under Section 2(h)(ii) of the RDDB Act.
(iii) The petitioner is notified as a ‘financial institution’, only under Section 2(1)(m)(iv) of the SARFAESI Act, for the purposes of the said Act and only in that context, can the petitioner approach the DRT for the purposes of enforcement. While arbitration is an adjudicatory process, the proceedings under the SARFAESI Act are enforcement proceedings. It is only after the adjudicatory process of arbitration in the present case leads to determination and crystallization of the debt due to the petitioner, that the petitioner would be able to resort to the enforcement process under the SARFAESI Act.

When an Institution or a NBFC is notified as a Financial Institution u/s Sec. 2(1)(m)(iv) of SARFAESI Act, 2002, it is only for the purposes of SARFAESI Act and not for RDB Act, 1993 | Arbitration is an adjudicatory process and proceedings under SARFAESI Act are enforcement proceedings | Reference to SARFAESI Act in an agreement cannot be a bar to invoke Arbitration – Tata Motors Finance Solutions Ltd. Vs. Naushad Khan c/o. Nazbul Hoda Khan – Bombay High Court Read Post »

The disputes pertaining to oppression and mismanagement under Indian law, are not arbitrable and only the NCLT has exclusive jurisdiction to decide such disputes – Anupam Mittal Vs. People Interactive (India) Pvt. Ltd. and others – Bombay High Court

Hon’ble High Court of Bombay held that:
(i) When the subject matter of dispute, as in this case pertaining to oppression and mismanagement, is incapable of settlement through arbitration under the law of India, the Court cannot have any discretion in such matters and enforcement of such a foreign award becomes an impossibility.
(ii) Even a bare look at the petition itself shows that mere filing of the same before the NCLT cannot ipso facto lead to the plaintiff claiming anti-enforcement order against the defendants herein.
(iii) Only the NCLT has the jurisdiction to decide the question as to whether it has jurisdiction to entertain and decide the petition filed by the plaintiff and/ or whether the disputes being contractual in nature, are arbitrable and the parties are to be referred to arbitration
(iv) If the defendants choose to file an application under Section 45 of the Arbitration Act, to claim that in the real sense, the grievances and disputes raised by the plaintiff are purely contractual in nature, due to which the parties must be referred to arbitration, such detailed arguments would also have to be advanced before the NCLT itself. High Court cannot cross the line and trench upon the exclusive jurisdiction of the NCLT in such matters.

The disputes pertaining to oppression and mismanagement under Indian law, are not arbitrable and only the NCLT has exclusive jurisdiction to decide such disputes – Anupam Mittal Vs. People Interactive (India) Pvt. Ltd. and others – Bombay High Court Read Post »

Scroll to Top