- Case
- SANJEEV MALHOTRA v. SBI GLOBAL FACTORS LTD (Bombay High Court, 23-12-2025)
- Law
- Arbitration and Conciliation Act, Civil Procedure Code, Indian Contract Act, Constitution of India, Principles of Natural Justice.
Facts: Sanjeev Malhotra, the petitioner, challenged an arbitral award passed against him and Rayalseema Commodities Ltd. (Respondent No. 2) in favor of SBI Global Factors Ltd. (Respondent No. 1). The award directed the petitioner and Rayalseema to jointly and severally pay Rs. 28,16,51,442.87 for a domestic factoring facility and Rs. 15,29,35,047.19 for a reverse factoring facility, both with 18% interest from April 1, 2011. The dispute arose from credit facilities sanctioned to Rayalseema, for which the petitioner acted as a guarantor. The petitioner contested the award, alleging a failure by SBI Global to prove the debt, inordinate delay in passing the award, a casual approach by the Arbitral Tribunal, and non-decision of interim applications.
Procedural Posture: The case originated from a suit filed by SBI Global in the Bombay High Court for recovery of amounts due under credit facilities. The suit was referred to arbitration following a Supreme Court order. The petitioner then filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, in the Bombay High Court, challenging the arbitral award.
Issue: Whether the arbitral award is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996, based on the grounds of failure to prove the debt, inordinate delay in passing the award, a casual approach by the Arbitral Tribunal, and non-decision of interim applications.
Holding: The Bombay High Court dismissed the petition, upholding the arbitral award.
Reasoning: The Court found that the petitioner's objections were without merit. It held that SBI Global had sufficiently proved the existence of the debt, noting that Rayalseema had "almost admitted" the claim in its Statement of Defence. The Court also found that the delay in passing the award was not inordinate and was partly attributable to the petitioner's numerous interim applications. The Court stated that the delay did not adversely affect the findings in the award. The Court further held that the Arbitral Tribunal had adequately considered the issue of novation/variation of the contract of guarantee and that the non-decision of certain interim applications did not warrant setting aside the award, especially since the petitioner had changed his stance during the proceedings by disputing the genuineness of the guarantee after initially admitting it. The court cited Lancor Holdings Limited vs. Prem Kumar Menon and Ors. and OPG Power Generation Private Limited vs. Enexio Power Cooling Solutions India Pvt. Ltd. and Another to support its reasoning on the issue of delay and adequacy of reasoning in the award.
