Introduction
This case study highlights the effectiveness of PrivateCourt’s digital dispute resolution platform in resolving a loan default case between a financial institution and a borrower. The matter was settled via a mutually agreed consent award through arbitration proceedings, enabling both parties to reach an enforceable resolution quickly and efficiently.
Dispute Snapshot
In 2023, a registered financial institution sanctioned a loan of Rs. 20,00,000 to a borrower in Tamil Nadu for business purposes. The borrower initially adhered to the repayment terms. However, repayment gradually halted, despite repeated reminders. The overdue amount escalated to Rs. 15,43,687.
Unable to recover the dues through standard collection efforts, the claimant invoked the arbitration clause embedded in the loan agreement. PrivateCourt was chosen to facilitate the process through its digital dispute resolution platform under the Arbitration and Conciliation Act, 1996.
The Journey to Default
The borrower, a small business owner, had availed the loan for business expansion. While the initial phase of loan usage progressed as expected, the borrower soon faced operational setbacks. Market disruptions and financial mismanagement led to an inability to keep up with EMI payments.
Despite follow-ups and reminders by the claimant, the borrower defaulted persistently. Eventually, a legal invocation notice dated 19 November 2024 was issued. With no amicable solution in sight, the matter was escalated to PrivateCourt’s online arbitration platform.
Timeline of Key Events
| Date | Event |
|---|---|
| 2023 | Loan sanctioned |
| 19 November 2024 | Legal notice invoking arbitration sent |
| 2 December 2024 | Arbitrator appointed and claim filed |
| January 2025 | Virtual hearings conducted via Zoom |
| 31 January 2025 | Final consent award passed |
The entire dispute resolution was conducted electronically via PrivateCourt’s platform, ensuring convenience, compliance, and neutrality.
Documentation and Submissions
The claimant provided the following documents during arbitration:
- Executed loan agreement (No. 0259-04587433-662001)
- Invocation notice dated 19/11/2024
- Borrower’s acceptance letter dated 02/12/2024
- Statement of claim and affidavit
- Record of defaulted EMIs
- Cost and interest calculations
The borrower, upon receiving notice, appeared for the hearing and agreed to settle the dispute through arbitration, consenting to the terms proposed.
Arbitration Process Facilitated by PrivateCourt
Upon invocation, a sole arbitrator was appointed from PrivateCourt’s independent panel. All parties received due notices, and the arbitration agreement was upheld by both sides without contest.
PrivateCourt ensured the procedural flow through digital infrastructure—managing scheduling, documentation, communication, and secure video hearings.
During the hearing, the respondent acknowledged the outstanding amount and consented to regularize the EMIs. The claimant accepted this offer, subject to a clause that stipulated payment of the full outstanding amount with interest in case of future default.
All proceedings were compliant with the Arbitration and Conciliation Act, 1996, and PrivateCourt’s Dispute Resolution Rules.
Final Award (Dated: 31 January 2025)
Based on mutual consent and documented proceedings, the arbitrator passed the following award:
- The respondent shall repay the overdue amount of Rs. 15,43,687 in EMIs.
- In case of default, the respondent shall be liable to pay the entire amount of Rs. 15,43,687 with 10.5% annual interest.
- The respondent shall also pay Rs. 2,100 towards arbitration costs.
- The award is final and enforceable in accordance with applicable law.
Final Insights
This case exemplifies the effectiveness of digital arbitration in resolving loan disputes. PrivateCourt’s neutral, technology-driven platform facilitated a legally binding settlement within two months—eliminating the need for prolonged litigation.
The respondent’s cooperation, coupled with the claimant’s openness to settlement, allowed for a swift resolution through a consent award. PrivateCourt continues to empower NBFCs, banks, and MSMEs by offering online dispute resolution services rooted in compliance, convenience, and fairness.
keywords: Loan Default, PrivateCourt, Arbitration, Consent Award,Online Arbitration , Digital Dispute Resolution and Conciliation Act