Introduction
In the expanding digital credit economy, small businesses and entrepreneurs benefit from fast disbursal loans. However, such ease of credit also increases the risk of non-repayment. In this case, a registered borrower availed a digital business loan through an online platform but failed to fulfill the agreed repayment terms. With a significant amount pending and no response from the borrower, the lender invoked arbitration. PrivateCourt facilitated the entire process under the law, culminating in an ex-parte award that safeguarded the claimant’s recovery rights while ensuring a legally sound, neutral proceeding.
Dispute Snapshot
The borrower, a sole proprietorship involved in business operations, availed a digital loan worth Rs. 7,00,000 under a structured EMI repayment model. The amount was disbursed after completing digital KYC and due verification, with an agreement that included an arbitration clause. However, within a short time, the borrower ceased repayments, triggering default. Despite legal notices and follow-ups, there was no response or effort made to resolve the issue. With Rs. 6,99,338 due and recovery options limited, the lender activated the ADR mechanism offered through PrivateCourt.
The Journey to Default
From the outset, the borrower appeared compliant—meeting documentation requirements and receiving sanctioned funds digitally. Yet, repayment delays surfaced early, and eventually stopped completely. The lender initiated repeated communication efforts, including emails, phone calls, and legal notices, but the borrower remained absent. With no appearance, explanation, or proposal to repay, the lender proceeded to file a formal claim under PrivateCourt's ADR framework. The matter was taken up for arbitration, and with the respondent absent from hearings, the award process was conducted ex-parte. Despite the non-participation, the platform maintained neutrality and ensured all procedural requirements were met.
Timeline of Key Events
| Date | Event |
|---|---|
| FY 2023–24 | Loan Disbursed |
| Q1 2025 | Default Detected |
| 02 April 2025 | Claim Filed with PrivateCourt |
| 14 April 2025 | Hearing Conducted |
| 19 June 2025 | Award Issued |
Documentation and Submissions
- Executed loan agreement with ADR clause
- Legal notice and proof of dispatch
- Statement of claim and affidavit
- Loan transaction statement detailing arrears
- Digital invocation letter
- Authorization and ID proof of claimant representative
The ADR Process Facilitated by PrivateCourt
Upon receiving the request for arbitration, PrivateCourt initiated proceedings in line with the Arbitration and Conciliation Act, 1996. Efforts were made to notify the borrower via digital and postal channels. However, the borrower failed to appear or file any defense. The appointed Arbitrator reviewed the statement of claim, affidavit, and documentary evidence submitted by the lender. The hearing was conducted online, in accordance with due process. Given the respondent's absence, the Arbitrator concluded the matter through an ex-parte award. Throughout the process, PrivateCourt remained impartial and ensured full compliance with statutory requirements.
Final Award (Dated: 19 June 2025)
- Outstanding Loan Amount: Rs. 6,99,338/-
- Interest Awarded: @18% p.a. from 14/04/2025 until realization
- Arbitration Cost: Rs. 1,500 payable by respondent
- Nature of Award: Ex-Parte, legally enforceable
Final Insights
This case showcases how PrivateCourt’s ADR platform can support digital lenders in pursuing lawful and enforceable recovery—even in cases where the borrower refuses to participate. By upholding neutrality, efficiency, and legal rigor, the platform delivered a structured resolution without court intervention. The claimant gained a formal award, interest protection, and recovery clarity, while the process remained fair, unbiased, and compliant. For the growing digital credit sector, such ex-parte awards are critical safeguards—and PrivateCourt ensures they are delivered with the highest professional standards.
keywords: Loan Default, PrivateCourt, ADR, Arbitration, Digital Lending, Ex-Parte Award, Online Resolution