Arbitration – Non-signatory party but Respondent Nos.3 to 5 are vertical party to the loan agreement and connected with loan documents & transaction –

Master Loan Agreement dated 1.5.2019 between the petitioner and the respondent no.1.   The respondent No.2 signed the said agreement as guarantor.

Clause 27 of the Loan Agreement provides for dispute resolution through arbitration.

On 27.4.2023, the petitioner issued loan recall notice to the respondents and invoked arbitration.  Respondent nos.3 to 5 were impleaded to the arbitration proceedings since they are signatories to the loan agreement.

HELD that the respondent nos.1 and 2 are signatories to the loan agreement.  The respondent Nos.3 to 5 are veritable party to the loan agreement as they are connected with the loan documents and form part of the loan transaction, they have assued the petitioner for execution of loan documents and provided security to the petitioner for the loan transaction.   However, the question whether the respondent nos.3 to 5 can be bound by the loan agreement and can be impleaded as parties to the arbitral proceedings is left open to the Arbitrator for decision.  

Judgment dated 26.2.2024 in ARB.P.No.702/2023 of M/s. Moneywise Financial Services Pvt Ltd Vs. Dilip Jain and others