AXIS FINANCE LIMITEDversusINSPIRA ENTERPRISE INDIA LIMITED

                                                                         carap531-2026-J.doc


                   Shabnoor

                          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                              ORDINARY ORIGINAL CIVIL JURISDICTION
                                   IN ITS COMMERCIAL DIVISION

                         COMM ARBITRATION APPLICATION NO.531 OF 2026

                   Axis Finance Limited                            … Applicant

                                          Vs.

                   Inspira Enterprise India Limited                … Respondent



SHABNOOR           Mr. Karl Tamboly with Mr. Gaurav Jangle, and Mr.
AYUB
PATHAN             Tanmay Bidkar i/by I.V. Merchant & Co., for the
Digitally signed   Applicant.
by SHABNOOR
AYUB PATHAN
Date: 2026.09.29
11:17:40 +0530
                   Mr. Harsh Moorjani with Mr. Samsher Gaud, Ms.
                   Dhwani Parekh and Ms. Chaitali Kamble i/by Jayakar &
                   Partners for the Respondent.


                                     CORAM                  : AMIT BORKAR, J.

                                     RESERVED ON            : SEPTEMBER 23, 2026

                                     PRONOUNCED ON          : SEPTEMBER 29, 2026

                   JUDGMENT:

                   1.    The present Application has been filed under Section 11 of
                   the Arbitration and Conciliation Act, 1996. By this Application, the
                   Applicant seeks appointment of an Arbitrator to decide the
                   disputes, differences, and claims arising out of the Term Loan
                   Agreement dated 22 November 2022, the Indenture of Mortgage
                   dated 24 November 2022 and the other facility documents
                   executed between the parties.



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2.    According to the Applicant, the facts leading to the filing of
the present Application are as follows. The Applicant is a company
incorporated under the Companies Act, 1956 and is engaged in
providing financial assistance for purchase of vehicles. On 18
November 2022, the Applicant issued Sanction Letter bearing No.
AFL/CO/2022-23/November/1453 and sanctioned a Rupee Term
Loan Facility of Rs.100 Crores. Thereafter, on 22 November 2022,
the Applicant and the Respondent executed the Term Loan
Agreement. On 24 November 2022, the Respondent executed the
Indenture of Mortgage in favour of the Applicant. By an email
dated 15 March 2023, the Applicant demanded an amount of
Rs.11,36,987/- from the Respondent on account of non-
compliance with the post-disbursement conditions. After receiving
the amount remitted by the Respondent, the Applicant issued a No
Dues Certificate bearing Reference No. AFL/GOR/2026-27/
April/081.

3.    On 8 May 2026, the Respondent issued a demand notice
claiming repayment of the proportionate processing fee and
additional interest. According to the Applicant, the total amount
claimed by the Respondent was Rs.5 Crores. Thereafter, on 22
June 2026, the Applicant issued a demand notice calling upon the
Respondent to pay Rs.1,15,85,747/-, being the amount claimed
towards penal interest for non-compliance with the terms and
conditions of the Agreement. It is in these circumstances that the
Applicant has filed the present Application.

4.    Mr. Tamboly, learned Advocate for the Applicant, submits
that, in view of the aforesaid conduct of the Respondent, disputes,



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and differences have arisen between the parties under Clause 14.5
of the Agreement.

5.    The Applicant submits that, by its communication dated 16
March 2023, the Respondent, through its Vice President
(Investments), Mr. Ajay Joshi, admitted that the No Objection
Certificates from the existing lenders had not been obtained. The
Respondent requested time up to September 2023 to complete this
requirement.     The    Applicant       submits   that,   by      another
communication dated 25 May 2023, the Respondent again
admitted that the requirements had not been complied with and
requested a period of at least three months to complete the
pending requirements.

6.    According to the Applicant, these communications amount to
clear and unequivocal written admissions by the Respondent
regarding its continuing obligations and defaults under the Facility.
The Applicant seeks permission to rely upon the communications
dated 16 March 2023 and 25 May 2023 when the same are
produced before the Court.

7.    The Applicant submits that thereafter, in or around March
2026, the Respondent approached the Applicant for foreclosure of
the loan account relating to the Facility. Accordingly, the
Respondent paid the entire outstanding principal amount of
Rs.50,00,00,000/- in different instalments between 6 March 2026
and 12 March 2026, along with interest. Thereafter, the loan
account bearing LAN No. SPCO0002990 was closed in the books of
the Applicant.




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8.    The Applicant submits that, at no stage, either while
requesting foreclosure of the Facility or at any other time, did the
Respondent obtain any waiver, remission, or discharge from the
Applicant in respect of the penal charges which had accrued or
were continuing to accrue because of the Respondent's alleged
non-compliance with the terms of the Facility. According to the
Applicant, there was no express or implied waiver of these charges.

9.    The Applicant submits that after receiving the amounts paid
by the Respondent towards foreclosure of the Facility, the
Applicant issued a No Dues Certificate dated 28 April 2026 bearing
Reference   No.   AFL/GOR/2026-27/April/081.          The   Applicant
released the title documents relating to the mortgaged property in
favour of the Respondent.

10.   The Applicant submits that the No Dues Certificate states
that it was issued "subject to receipt of TDS certificate" in respect
of an amount of Rs.5,52,729/-, which was recoverable as on 31
March 2026. Therefore, according to the Applicant, the No Dues
Certificate was not an absolute or unconditional document. It was
issued subject to the stated condition. The Applicant submits that,
for this reason, the certificate cannot be treated as an
unconditional discharge or as an accord and satisfaction of all the
obligations between the parties under the Facility.

11.   Mr. Tamboly, learned Advocate appearing for the Applicant,
relying upon Clause 14.5 of the Loan Agreement, submits that the
said clause contains an arbitration agreement between the parties.
He submits that the definition of the expression "Legal




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Proceedings" specifically includes arbitral proceedings. He relies
upon Serial No. 29 of Schedule I to the Agreement, which forms
part of the terms and conditions of the Loan Agreement and
specifically states that the place of arbitration shall be Mumbai.

12.   In reply to the submissions made on behalf of the
Respondent, Mr. Tamboly submits that the words "the Borrower
agrees" appearing in Clause 14.5(b) would cover the Applicant. He
relies upon the judgment of the Supreme Court in Visa
International Ltd. v. Continental Resources (USA) Ltd. , (2009) 2
SCC 55. According to him, while deciding whether an arbitration
agreement exists, the Court has to consider the intention of the
parties. For this purpose, the Court can consider the surrounding
circumstances, including the conduct of the parties and the
material available on record, such as the correspondence
exchanged between them.

13.   Mr.   Moorjani,    learned       Advocate   appearing   for     the
Respondent, submits that, in the present case, there is no
agreement between the parties by which the disputes are required
to be referred to arbitration. The Sanction Letter dated 18
November 2022 specifically provides for the jurisdiction of the
courts and tribunals at Mumbai, but it does not contain any
arbitration clause. The Term Loan Agreement dated 22 November
2022 is a standard form agreement and does not contain any
provision for referring disputes to arbitration. Clause 14.5, which
is the Governing Law and Jurisdiction clause of the Term Loan
Agreement, only provides that the courts or tribunals mentioned in
Schedule I shall have exclusive jurisdiction.



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14. It is submitted that the word "tribunals" used in Clause 14.5
cannot be understood to mean a private arbitral tribunal. This is
clear from Clause 1 of the Term Loan Agreement, where the
expression "Government Authority" refers to any court, tribunal or
judicial body in India., Serial No. 29 of Schedule I only mentions
the Place for Arbitration as Mumbai. Schedule I, however, is only a
table containing certain particulars. It does not by create any
operative obligation. It is submitted that there is no provision in
the Term Loan Agreement which incorporates Serial No. 29 of
Schedule I into an arbitration agreement or gives it any
independent effect. There is no provision stating that disputes
between the parties are required to be referred to arbitration.
Merely mentioning a place of arbitration in a standard form
schedule cannot, by, create an arbitration agreement when the
operative provisions of the contract do not contain any such
agreement. Such an entry cannot take the place of the essential
agreement between the parties that their disputes would be
decided by arbitration.

15. It is submitted that Clause 14.5(d) gives the Applicant a right
to initiate Legal Proceedings before any other court or tribunal
having competent jurisdiction. According to the Respondent, such
a provision is inconsistent with the case now made by the
Applicant that the parties had agreed to refer their disputes to
arbitration.

16. It is submitted that, even according to the Applicant's own
pleadings, the alleged defaults and breaches took place between
January and March 2023. The Applicant raised a demand for



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penal charges by its email dated 15 March 2023. The amount
demanded was Rs.11,36,987/-, stated to have accrued from 7
January 2023 at the rate of Rs.13,699/- per day. It is submitted
that the alleged breaches were, therefore, completed and were
within the Applicant's own knowledge in the year 2023. The
Respondent furnished the renewed commencement certificate on
16 March 2023. After that, the Applicant did not raise any
demand or claim any penal charges for more than three years.
According to the Respondent, the Applicant's right, if any, to take
proceedings in respect of the alleged defaults arose, at the latest,
in March 2023. Therefore, considering the provisions of the
Limitation Act, the limitation period for such a claim expired by
March 2026. The monetary claim now sought to be made by the
Applicant is consequently, on the face of the record, barred by
limitation.

17. It is submitted that the communications dated 16 March
2023 and 25 May 2023 cannot be treated as acknowledgments of
liability towards the alleged penal charges. Even if the contents of
those communications are considered, they only show that the
Respondent sought some additional time to furnish the lender
NOCs and other required documents. The Respondent never
admitted any liability towards the alleged penal charges in those
communications. Therefore, according to the Respondent, the said
communications cannot be relied upon by the Applicant to
contend that there was an acknowledgment of liability which
could extend or restart the limitation period for the alleged claim
towards penal charges.



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18. While denying the Applicant's claim, it is submitted that the
alleged claim had become clear, at the latest, on 25 May 2023.
Even on that basis, the period of limitation expired in May 2026.
The alleged invocation made by the Applicant on 22 June 2026
was, therefore, beyond the prescribed period of limitation. It is
submitted that the Applicant cannot create a fresh cause of action
merely by issuing demands or correspondence in the year 2026.
Subsequent correspondence between the parties does not, by,
extend or restart the limitation period. According to the
Respondent, the fact that the Applicant chose to postpone
recovery of a claim which had already arisen cannot amount to a
disability recognised under the Limitation Act. It cannot revive a
claim which had already become barred by limitation.

19. It is submitted that the alleged defaults related to obligations
which were required to be performed on specified dates. They
were one-time obligations. They cannot be treated as continuing
breaches only for the purpose of extending the limitation period
indefinitely. Once the alleged breaches took place and the
Applicant became aware of them, the cause of action, if any, arose
in favour of the Applicant and limitation began to run. The
subsequent correspondence or demands between the parties
cannot, in law, revive a claim which has already become time-
barred.

20. In support of these submissions, Mr. Moorjani relies upon the
following judgments:

      (i)   South Delhi Municipal Corpn. v. SMS Ltd. , (2026) 1




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      SCC 545, particularly paragraphs 46 to 48;

      (ii) Alchemist Hospitals Ltd. v. ICT Health Technology
      Services India Pvt. Ltd., 2025 12 S.C.R. 24, particularly
      paragraphs 11 to 18, 22 to 25 and 31;

      (iii) Karnataka Power Transmission Corpn. Ltd. v. Deepak
      Cables (India) Ltd., (2014) 11 SCC 148, particularly
      paragraphs 25 and 26;

      (iv) BGM and M-RPL-JMCT (JV) v. Eastern Coalfields
      Limited, 2025 7 S.C.R. 1275, particularly paragraphs 20 to
      26;

      (v) Mahanadi Coalfields Ltd. v. IVRCL AMR Joint Venture ,
      (2022) 20 SCC 636, particularly paragraphs 8 to 12;

      (vi) Jagdish Chander v. Ramesh Chander, (2007) 5 SCC
      719, particularly paragraph 8;

      (vii) State of West Bengal & Ors. v. M/s B.B.M. Enterprises ,
      2026 5 S.C.R. 154, particularly paragraphs 3 to 7; and

      (viii) Arif Azim Co. Ltd. v. Aptech Ltd. , (2024) 5 SCC 313,
      particularly paragraph 68.

REASONS AND FINDINGS:

21. I have considered the submissions made by the learned
Advocates for both sides. From the Indenture of Mortgage, it is
seen that the Facility was given on the terms of the Term Loan
Agreement and other Finance Documents. Therefore, the question
which arises at this stage is whether the parties had in fact agreed




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that their disputes will be referred to arbitration. The Respondent
has raised the issue of limitation. Both these issues require
consideration.

22. The Applicant depends upon Clause 14.5 of the Term Loan
Agreement and Serial No. 29 of Schedule I. Clause 14.5 is having
the title “Governing Law and Jurisdiction”. In Schedule I, there is
separate mention of “Place of Jurisdiction” and “Place for
Arbitration”, where Mumbai is shown as the place for arbitration.
Therefore, both the Clause and Schedule are required to be read
together. The issue cannot be decided only from the heading of
Clause 14.5 or only from the entry at Serial No. 29.

23. Clause 14.5 on which the Applicant relies reads as follows:

     “14.5 Governing Law and Jurisdiction
     (a) This Agreement shall be governed by and construed in
     accordance with Indian law.
     (b) The Borrower agrees that the courts and tribunals as
     specified under Schedule I shall have exclusive jurisdiction
     to settle any disputes which may arise out of or in
     connection with the Financing Documents and that,
     accordingly, any Legal Proceedings arising out of or in
     connection with the Financing Documents shall be brought
     in such courts or tribunals, and the Borrower irrevocably
     submits to and accepts for and with respect to its property,
     generally and unconditionally, the jurisdiction of those
     courts or tribunals.
     (c) The Borrower irrevocably waives any objection, now or
     in future, to the venue of any Legal Proceedings and any
     claim that any such Legal Proceedings have been brought in
     an inconvenient forum.



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      (d) Nothing contained in this Clause shall limit any right of
      the Lender to initiate Legal Proceedings in any other court
      or tribunal of competent jurisdiction, nor shall the taking of
      Legal Proceedings in one or more jurisdictions preclude the
      taking of Legal Proceedings in any other competent
      jurisdiction, whether concurrently or not, and the Borrower
      irrevocably submits to and accepts for and with respect to its
      property, generally and unconditionally, the jurisdiction of
      such court or tribunal, and the Borrower irrevocably waives
      any objection it may have now or in the future to the laying
      of the venue of any Legal Proceedings and any claim that
      any such Legal Proceedings have been brought in an
      inconvenient forum.”
24. The first submission of the Respondent is that Clause 14.5 is
only relating to jurisdiction, and it is not an arbitration clause. On
considering this submission, I find that there is substance in it.
Clause 14.5(a) is regarding governing law. Clause 14.5(b) speaks
about the courts and tribunals having jurisdiction. Clause 14.5(c)
is regarding objection to the venue. Clause 14.5(d) keeps the right
of the Lender to start Legal Proceedings before any other
competent court or tribunal. Therefore, when all these provisions
are seen together, there is no clear statement that the disputes
between the parties shall be referred to arbitration. This becomes
important because an arbitration agreement cannot be said to be
there only because the word “tribunal” is used in the agreement or
because there is a reference to arbitration in the Schedule. The
parties must have agreed that their dispute will be decided by a
private arbitral tribunal and that the decision given by such
tribunal will bind the parties.




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25. The Supreme Court in South Delhi Municipal Corpn., while
considering what is required for an arbitration agreement, has
held in paragraph 46 that there must be a “Clear intent to
arbitrate”. The Supreme Court has held in paragraph 47 that these
requirements have to exist together. In paragraph 48, the Supreme
Court has explained that a dispute resolution clause becomes an
arbitration agreement only when it shows clear intention to
arbitrate, provides a binding adjudicatory process and satisfies the
general requirements of arbitration.

26. In my view, Clause 14.5 does not satisfy this requirement.
The Clause does not say that the disputes “shall be referred to
arbitration”. It does not say that an arbitral tribunal will be
constituted for deciding the dispute. It does not say that the
decision of such arbitral tribunal will be final and binding upon
the parties. Therefore, the basic words which create an obligation
to go for arbitration are not found in the Clause.

27. The Applicant has relied upon the definition of “Legal
Proceedings”. It may be that under the Term Loan Agreement this
expression includes arbitral proceedings. But this definition cannot
create an arbitration agreement. A definition clause only explains
what a particular expression means wherever it is used in the
agreement. It does not by make an obligation upon the parties
that every dispute between them has to be referred to arbitration.
If Clause 14.5 had stated that all disputes resulting in “Legal
Proceedings”, including arbitral proceedings, “shall be referred to
arbitration”, then the position may have been different. But such
words have not been used by the parties. Clause 14.5(b), in



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substance, says that the courts and tribunals mentioned in
Schedule I shall have exclusive jurisdiction to settle disputes and
that Legal Proceedings shall be brought before such courts or
tribunals. Therefore, the reference to arbitral proceedings in the
definition clause cannot be used for putting additional words into
the operative part of the Clause which the parties themselves have
not written.

28. The Applicant next relies upon Serial No. 29 of Schedule I,
where the “Place for Arbitration” is stated to be Mumbai. I have
considered this submission. This entry does show that the word
“arbitration” has been used in the documents. It shows that
Mumbai has been mentioned as the place for arbitration.
Therefore, it cannot be said that the word has no meaning at all.
But the question before the Court is not only whether the word
“arbitration” is found in the documents. The actual question is
whether the parties agreed to submit their disputes to arbitration.
The Supreme Court has made this difference in several decisions.
In Alchemist Hospitals Ltd., paragraph 17, the Court held that
“mere use of the word ‘arbitration’ in a clause” is not enough. The
contents and the substance of the agreement must show what was
intended by the parties. The same principle was considered by the
Supreme Court in Mahanadi Coalfields Ltd. In paragraph 8, the
Supreme Court relied upon Jagdish Chander and explained that
the words in the agreement must show determination and
obligation to go to arbitration. In paragraph 9, the Court
considered     a   clause   having   the   title   “Settlement        of
Disputes/Arbitration”. Even though the word arbitration was there



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in the title, the substantive part of the clause did not create an
arbitration agreement. Therefore, the Court considered what the
clause required the parties to do and did not decide the matter
only from the heading.

29. The same thing applies to the present case. The part of
Clause 14.5 does not direct the parties to go before an arbitral
tribunal. It refers to courts and tribunals having jurisdiction. Serial
No. 29 mentions a place for arbitration. But it does not say who
will conduct the arbitration, how the arbitration will be started,
that the dispute has to be compulsorily referred to arbitration, or
that the decision of the arbitral tribunal will bind the parties. The
words in Serial No. 29 become more relevant when they are seen
along with Serial No. 28 of Schedule I. Serial No. 28 separately
mentions the “Place of Jurisdiction”, while Serial No. 29 mentions
the “Place for Arbitration”. Therefore, it appears that the
difference between jurisdiction and arbitration was known when
the Schedule was prepared. Still, the operative part of Clause 14.5
does not contain a agreement requiring the parties to go to
arbitration.

30. The Applicant submits that the entry regarding the “Place for
Arbitration” must be given effect because the whole contract has
to be read together. There is no dispute with the general principle
that a contract should be read as a whole. But reading the whole
document together does not mean that the Court can put an
obligation into the agreement which the parties have not stated.
The intention has to be gathered from the words which the parties
have used.



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31. The Supreme Court in Bangalore Electricity Supply Co. Ltd.
v. E.S. Solar Power (P) Ltd., (2021) 6 SCC 718, as referred to in
Alchemist Hospitals, has stated that the Court should not try to
find out some undisclosed intention in the minds of the parties.
The Court has to see the meaning of the words used. In the
present case, the words used give jurisdiction to courts and
tribunals. They do not say that the disputes are required to be
referred to a private arbitral tribunal.

32. The Applicant has submitted that the word “tribunals” used
in Clause 14.5 should include an arbitral tribunal. Even if it is
accepted that, in a suitable agreement, the word tribunal can
include an arbitral tribunal, the difficulty in the present case still
remains. Clause 14.5 does not only use the word “tribunal”. It says
“courts and tribunals as specified under Schedule I”. It uses the
expressions “Legal Proceedings”, “court or tribunal of competent
jurisdiction” and proceedings in different jurisdictions. The
language of the Clause appears more to be regarding jurisdiction
of courts or other competent forums. It does not provide that the
disputes have to be compulsorily referred to arbitration.

33. An arbitral tribunal gets its authority from the consent of the
parties. A civil court or statutory tribunal gets its jurisdiction from
law. Therefore, the agreement must show that the parties have
consented to give the power of deciding their disputes to a private
arbitral tribunal. In the present Clause 14.5, such consent is not
found in clear and operative words.




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34. Clause 14.5(d) creates difficulty for the Applicant. It
provides:

      “Nothing contained in this Clause shall limit any right of the
      Lender to initiate Legal Proceedings in any other court or
      tribunal of competent jurisdiction, nor shall the taking of
      Legal Proceedings in one or more jurisdictions preclude the
      taking of Legal Proceedings in any other competent
      jurisdiction, whether concurrently or not…”

35. Thus, this provision keeps a right with the Lender to proceed
before other competent forums. If the parties had intended that
their disputes must compulsorily go to arbitration, the agreement
would show that arbitration was selected as the forum for
deciding those disputes. Here, the wording keeps open the right to
proceed before other courts or tribunals. This does not support the
submission that a concluded arbitration agreement was made
between the parties.

36. The Applicant has relied upon Visa International Ltd, and has
submitted that the intention of the parties can be gathered from
surrounding circumstances, correspondence and conduct. There is
no difficulty in accepting this general principle. However, the
surrounding circumstances must show an agreement satisfying
Section 7. Such circumstances cannot themselves create an
arbitration agreement when the language does not show such
agreement. I have considered the correspondence relied upon by
the Applicant. The demand notice dated 22 June 2026 states that
Rs.1,15,85,747/- is claimed towards penal charges or penal
interest. It states that, if the amount is not paid, the notice may be
treated as a notice under the Arbitration and Conciliation Act,


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1996 “invoking Arbitration under Clause 14.5 read with Schedule
I”. This part of the notice is relevant. The Applicant invoked
arbitration in the notice dated 22 June 2026. The notice does not
point out any earlier communication by which the parties had
already agreed to arbitration. The Applicant is relying upon Clause
14.5 as the source of its right to invoke arbitration.

37. A later correspondence cannot take the place of the original
arbitration agreement unless that correspondence satisfies Section
7. In paragraph 31 of Alchemist Hospitals, the Supreme Court
considered a similar question and held that where there was no
arbitration   agreement      in   the    first   place,      subsequent
correspondence could change the position only when it and
unequivocally showed an agreement to refer the dispute to
arbitration. Therefore, when the original arbitration agreement is
not there, the later correspondence cannot by supply the missing
agreement.

38. In the present case, the communications dated 16 March
2023 and 25 May 2023 relied upon by the Applicant relate to the
lender NOCs and other requirements which were pending. The
Respondent says that these communications were only requests
for extension of time and did not amount to an admission of
liability towards penal charges. Even if these communications are
considered in the manner stated by the Applicant, they do not
contain any agreement to refer the disputes to arbitration.
Therefore, they cannot remove the basic difficulty which is found
in Clause 14.5.




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39. I find on the first issue that the parties did not enter into a
concluded and binding arbitration agreement under Clause 14.5
of the Term Loan Agreement. The words “Place for Arbitration”
appearing in Schedule I are not sufficient to create such an
agreement. The definition of “Legal Proceedings” cannot create it.
The use of the word “tribunals” is not enough. The subsequent
demand notice dated 22 June 2026 cannot by create an
arbitration agreement between the parties. This finding is
sufficient for deciding the present Application under Section 11.
The power under Section 11 to appoint an Arbitrator can be
exercised when there is an arbitration agreement between the
parties. When the basic agreement to refer the dispute to
arbitration is not found, there is no arbitral reference which can
be made by this Court.

40. On      considering   the    Agreement,     Schedule      I,    the
correspondence and the submissions of both sides together, I do
not find it possible to accept that Clause 14.5 read with Schedule I
constitutes a valid arbitration agreement between the parties. The
present Application under Section 11 cannot be allowed. The
parties, however, will remain at liberty to take such other
remedies as may be available to them in law and under the
documents.

41. In view of the foregoing discussion, and upon overall
assessment of the material record, the following order is passed:

      (i)   The Arbitration Application filed under Section 11 of
      the Arbitration and Conciliation Act, 1996 is rejected;




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(ii) The issue of limitation raised by the Respondent is not
adjudicated upon, as the Application fails for want of a valid
arbitration agreement. All rights and remedies of the parties
in respect of their substantive claims and contentions are
kept open, to be pursued before the forum otherwise
competent in accordance with law;

(iii) The Arbitration Application stands disposed of in the
above terms;

(iv) There shall be no order as to costs.

                                      (AMIT BORKAR, J.)




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