SREI Equipment Finance Limited Vs Kitply Industries Limited (Calcutta High Court)
The Calcutta High Court, in the matter of SREI Equipment Finance Limited Vs Kitply Industries Limited, has allowed an application for the appointment of a sole arbitrator, ruling that the pendency of proceedings under the Insolvency and Bankruptcy Code (IBC) before the National Company Law Tribunal (NCLT) does not automatically preclude the invocation of a valid contractual arbitration clause for debt recovery.
The Loan and Default
The petitioner, SREI Equipment Finance Limited (a non-banking finance company), sought the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The application stemmed from a default on a Rupee Loan Agreement dated January 24, 2019, under which the petitioner had extended a facility of Rs.130 crores to the respondent, Kitply Industries Limited.
The loan had a five-year tenure, expiring in January 2024. The petitioner asserted that the respondent failed to service a substantial portion of the interest and subsequently defaulted on the principal amount. To secure the loan, the agreements were backed by a Deed of Hypothecation (dated June 4, 2019) over the respondent’s assets, including its bank accounts and the well-known trademark/brand “Kitply.” Furthermore, the borrower’s holding company had pledged 100% of the respondent’s equity share capital.
