My dear friends, 

One of my friends had availed a term loan from a NBFC and regularly paying EMIs, with a delay ranging from 2 to 15 days as against its schedule date of payment.  As per the loan agreement, in case borrower fails to make EMIs beyond a month, then lender has an option to appoint a sole arbitrator at their discretio.  Suddenly, that NBFC invoked arbitration clause and appointed a sole arbitrator for which no notices were received.  Secondly, this case cannot be maintainable in Arbitration, as the delay in paying EMIs were not even in the range of wee or two.  

Apart from the above, that lender regularly presenting the signed cheques and issuing notice U/s.138 to the borrower and to their guarantors (upon cheque bounces) and suffacating.  Despite, we mentioned to the lender that as the case is in arbitratio, and requested them not to collect the EMIs and also requested them not to present the cheques.  But still collecting the EMIs in couple of days later the cheques were dishonoured. 

First of all,

(a). We didn't receive arbitration appointment notice

(b). Basing on the merits of the case, this case cannot be maintanable in Arbitration

(c). When the case is in Arbitation, the lender is presenting the cheques.

(d). Despite, the case is in Arbitration, they are collecting EMIs either by one way or the other.

Meanwhile, we have given a proposal to the Lender to reschedule our loan amount and further requested to grant us payment holiday for a period of 9 - 12 months, by which time, we can consolidate our financial strenghts to close the loan account by making 100% dues.

Request your valueble suggestions for wayforward please.



Lawyer in Hyderabad.wats app no.9989324294

if any injustice done by arbitrator, give complaint to banking ombudsmen. They will enquire and try to give you justice. 


legal assistance for victims of system.

The arbitration case has very interesting provisions some we are using and for some others we are seeking information.


1) In your case stop making any written correspondence, it will go against you.

2) Cheque case u/s 138 you have to defend properly. It can be won.

3) For arbitration once the award is passed they will apply for exeution at loal court. At that stage also you can contest the award.

Award given by a regular ARBITRATOR  of the NBFC  will be set aside.


Hi Sir,

First of all its not a  bar that EMI may not be collected since arbitration proceeding is on going for that its has to be seen from their claim statment if they have forclosed the loan and have sought for the entire amount. Secondly the main question is have you recoieved any notice from the arbitrator and if not how are you aware of such appointment. If the arbitrator has been appointed and he has given you notice it is better to go and defend . Arbitration Act is welll clear that onces notcies has been given by the arbitrator you cannot challange it saying that the appointment of arbitrator notice has not been served upon on that will not hold good in law. Kindly give us the complete history of the case so that proper suggestion can be give to you.


Saurendra Rautray

Rautray& Co

New delhi






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