Decided on April 17,2006

Heera Laxmi Contractor Pvt. Ltd. And Ors. Respondents


S.S.Parkar, J. (Chairperson) - (1.) THE main legal question that arises for consideration in this appeal is whether mandatory provisions of the Arbitration Act would be applicable in a proceeding initiated under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "The SRFAESI Act").
(2.) THIS appeal has been filed against the order dated 2nd February, 2006 passed by the In -charge Presiding Officer of D.R.T., Nagpur rejecting the application made on behalf of the appellant Bank to refer the dispute between the parties for arbitration by virtue of Section 8 of the Arbitration and Conciliation Act, 1996 in the following circumstances. The appellant Bank had put property mortgaged to it by one of its borrowers for auction. The respondent No. 1 was a successful bidder, who had offered to buy the said property for Rs. 10.40 crores. As the respondent No. 1 failed to pay the balance amount within stipulated period, the deposit paid by him was forfeited and the Bank sold the property for a sum of Rs. 12 crores to the respondent No. 2 privately. The respondent No. 1 challenged the action of the appellant Bank by filing writ petition being Writ Petition No. 40/2006 in the High Court of Bombay at Nagpur, seeking direction against the Bank to complete the sale of the mortgaged property in favour of the respondent No. 1.
(3.) IN the said writ petition, written submissions were filed on behalf of the appellant Bank and preliminary objection was raised about maintainability of the petition submitting that since the appeal has been provided under the SRFAESI Act against the action of the authorised officer, an appeal would lie to the D.R.T., Reliance was placed on the judgment of the Supreme Court in the case of Mardia Chemicals Ltd. v. Union of India II . Upholding the objection the High Court by its order dated 12th January, 2006, allowed the respondent No, 1. to withdraw the petition and prefer tin appeal before the D.R.T. under the provisions of the SRFAESI Act. Accordingly, the respondent No. 1 filed appeal before the D.R.T., Nagpur. In the said appeal, in view of the arbitration clause, the appellant Bank filed an application for referring the mailer to arbitration by virtue of Section 8 of the Arbitration Act. That application was resisted on behalf of the respondent No. 1. The D.R.T. by the impugned order took a view that there was no clear, unequivocal and written agreement for arbitration between the parties and, therefore, the application made on behalf of the appellant Bank under Section 8 of the Arbitration Act was rejected. Hence, the present appeal is filed by the Bank.;

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