Madras High Court
Mvr Gas And Mvr Chemicals And Oils vs Equitas Small Finance Bank Ltd on 19 January, 2021
Author: M.Sundar
Bench: M.Sundar
O.P.Nos.980 & 981 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 19.01.2021
Coram
THE HONOURABLE MR. JUSTICE M.SUNDAR
O.P.Nos.980 & 981 of 2019
and
A.Nos.9184 & 9749 of 2019
1. MVR Gas and MVR Chemicals and Oils
BV Sadanand Proprietor
No.801, 9th Main Road, 3rd Block
Koramangala, Bangalore - 560 034
Rep. by its Power Agent
Mr.G.Mahesh
2. Mr.B.V.Sadanand
S/o.M.Venkateshaswamy Reddy
No.801, 9th Main Road
3rd Block, Koramangala,
Bangalore - 560 034.
3. Mrs.S.L.Manjula
W/o.B.V.Sadanand
No.801, 9th Main Road
3rd Block, Koramangala
Bangalore - 560 034. ... Petitioners in both OPs
vs.
Equitas Small Finance Bank Ltd.,
(Formerly known as Equitas Finance Ltd.,
and Equitas Finance Pvt. Ltd.,)
Spencer Plaza, 4th Floor
Phase II, No.769, Mount Road,
Anna Salai, Chennai-600 002
Tamil Nadu, India. ... Respondent in both OPs
1/48
https://www.mhc.tn.gov.in/judis/
O.P.Nos.980 & 981 of 2019
Original Petition No.980 of 2019 filed under Section 34 of the
Arbitration and Conciliation Act, 1996, to set aside the ex-parte award of the
arbitrator passed in No.SAP/ESFB/BL-094/2019 dated 27.09.2019 against
the petitioners.
Original Petition No.981 of 2019 filed under Section 34 of the
Arbitration and Conciliation Act, 1996, to set aside the ex-parte award of the
arbitrator passed in No.SAP/ESPB/BL-095/2019 dated 27.09.2019 against
the petitioners.
For petitioners in both OP : Mr.Devasenathipathi
For respondent in both OP : Mr.A.Damodaran
COMMON ORDER
This common order will govern the captioned two 'Original Petitions' [hereinafter 'OPs' in plural and 'OP' in singular for the sake of brevity and convenience] and captioned applications therein.
2. In this web hearing on a video conferencing platform i.e., Virtual Court today, Mr.Devasenathipathi, learned counsel on record for three petitioners in both captioned OPs and Mr.A.Damodaran, learned counsel on record for the lone respondent in both captioned OPs are before me. 2/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
3. Aforementioned two learned counsel consented for captioned OPs being taken up for final disposal and being heard out though the captioned OPs are listed under the cause list caption 'FOR REPORTING SETTLEMENT'. To be noted, this is owing to report from 'Tamil Nadu Mediation and Conciliation Centre' ('TNMCC' for the sake of brevity) being report dated 21.12.2020 wherein TNMCC reported that mediation has been completed, but no agreement has reached. In other words, mediation failed. Therefore, with the consent of learned counsel on both sides, captioned OPs were taken up for final disposal and being heard out.
4. Owing to the short statutory perimeter or in other words the limited legal landscape of Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' {which shall hereinafter be referred to as 'A and C Act' for the sake of brevity and convenience}, within which a legal drill of testing an arbitral award should perambulate short facts shorn of elaboration will suffice.
5. Short facts are that petitioners in captioned OPs availed financial assistance by way of loan from respondent i.e., 'Equitas Small Finance Bank 3/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 Ltd.,' [hereinafter 'said Bank' for the sake of convenience and brevity] vide two separate loan agreements, (i) Loan Agreement in BLMSNRD0000060 dated 31.01.2017 (loan amount of Rs.40,00,000/-) and (ii) Loan Agreement in BLMSNRD0001915 dated 21.02.2018 (loan amount of Rs.20,90,000/-); that loan availed by petitioners from said Bank were agreed to be repaid in 36 'Equated Monthly Installments' ['EMI' in singular and 'EMIs' in plural for the sake of brevity]; that there is an arbitration clause in both loan agreements which serves as Arbitration Agreement between the parties being arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of A and C Act; that alleging default in repayment, arbitration agreement was triggered by said Bank; that 'Arbitral Tribunal' ('AT' for the sake of brevity) was constituted; that AT is constituted by a sole arbitrator; that AT entered upon reference, adjudicated upon the claim of said Bank and made two separate awards viz., '(i) Award dated 27.09.2019 bearing reference No.SAP/ESFB/BL-094/2019 and (ii) Award dated 27.09.2019 bearing reference No.SAP/ESFB/BL-095/2019' [hereinafter 'impugned award' in singular and 'impugned awards' in plural]; that impugned awards have been assailed in the captioned two OPs.
4/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
6. Both the captioned OPs are now being heard out in the light of the aforesaid trajectory. This Court having set out short facts or in other words factual matrix in a nutshell containing essential facts imperative for appreciating this common order (which also captures the trajectory captioned matters have taken) this Court now embarks upon the exercise of discussing the lone point that has been urged in captioned OPs. Before that is done, it is necessary to mention that records of AT pertaining to both impugned awards have been placed before me, the same having been requisitioned by predecessor Hon'ble Judge.
7. Adverting to captioned OPs, learned counsel for petitioners submitted that challenge to impugned awards is predicated on one lone point and that lone point is AT has not put petitioners on notice about the hearing and it is the pointed case of petitioners made with specificity that prior to interim and final awards (impugned awards) petitioners have not received any communication from the AT. To be noted, this is articulated in Paragraph Nos.6 of O.P.No.980 of 2019 and Paragraph No.5 of O.P.No.981 of 2019 and the same read as follows:
5/48
https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 Paragraph No.6 of O.P.No.980 of 2019:
'The petitioners submit that on perusal of the award it is seen that sufficient opportunities were given to them to appear in the tribunal none of the notice alleged to be sent were received by the petitioners, nothing likewise were received by the petitioners herein, except the interim award and the final award which has been made as a part and parcel of this petition.' Paragraph No.5 of O.P.No.981 of 2019:
'The petitioners submit that on perusal of the award it is seen that sufficient opportunities were given to them to appear in the tribunal none of the notice alleged to be sent were received by the petitioners, nothing likewise were received by the petitioners herein, except the interim award and the final award which has been made as a part and parcel of this petition.'
8. Be that as it may, as the lone point urged before this Court turns on AT not sending notice of sittings to petitioners, this matter essentially turns on the second limb of Section 34(2)(a)(iii) of A and C Act, which reads as follows:
'34. Application for setting aside arbitral award.-
(1) ......
(2) An arbitral award may be set aside by the Court only if-
(a) the party making the application [establishes on the 6/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 basis of the record of the arbitral tribunal that]-
(i) ......
(ii) .....
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) .....
(underlining made by this Court for ease of reference)
9. This Court, by saying second limb of Section 34(2)(a)(iii) of A and C Act, obviously refers to the ground that the parties who are protagonists of captioned applications are predicating and positing their challenge to the impugned awards on the ground that they were not given proper notice of arbitral proceedings.
10. In this regard, it is necessary to notice that there was an amendment to Section 34(2)(a)(iii) of A and C Act vide an Amending Act being Act No.33 of 2019 wherein the expression 'furnishes proof that' was replaced by 'establishes on the basis of the record of the arbitral tribunal that'. To be noted, this Amending Act being Act No.33 of 2019 is dated 09.08.2019, but vide Section 1(2) of said Amending Act, provisions of Amending Act kick in on and from the date on which the provisions of 7/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 Amending Act are notified by the Central Government in official gazette, different dates can be appointed for different provisions of the Amending Act. Out of 16 sections in this Amending Act, only 11 sections have been notified and such notification was done on 30.08.2019 by notification of Central Government vide S.O.3154(E).
11. The aforementioned amendment to Section 34(2)(a)(iii) of A and C Act where the expression 'furnishes proof that' was replaced by 'establishes on the basis of the record of the arbitral tribunal that' is vide Section 7 of the Amending Act and Section 7 of the Amending Act is one of the 11 sections that has been notified vide aforementioned notification on 30.08.2019. Therefore, Section 34(2)(a) of A and C Act as amended by Amending Act No.33/2019 is being applied to the case on hand by following Ssangyong principle being law laid down by Hon'ble Supreme Court in Ssangyong Engineering and Construction Company Limited Vs. National Highways Authority of India reported in (2019) 15 SCC 131. To be noted, this is in view of the fact that both captioned OPs have been presented in this Court post 30.08.2019, to be precise on 15.11.2019.
8/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
12. A careful perusal of records of AT reveals that AT has sent a communication dated 09.07.2019 fixing the date, time and venue of hearing/ sitting as 26.07.2019 (4.00 p.m.) in the office of sole arbitrator. This communication has been mailed to all petitioners by registered post with acknowledgement due and each of the three petitioners have duly received the same on 16.07.2019, as is evident from postal acknowledgement cards in the records of AT.
13. A scanned reproduction of communication dated 09.07.2019 from AT are as follows:
9/48
https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 10/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 11/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 12/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
14. A scanned reproduction of postal receipts (as in records of AT) evidencing mailing of aforementioned communication dated 09.07.2019 are as follows:
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https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 14/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
15. A scanned reproduction of postal acknowledgement cards evidencing receipt of communication dated 09.07.2019 by the three petitioners in captioned OPs are as follows:
15/48
https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 16/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 17/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 18/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 19/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 20/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
16. A further perusal of records from AT reveals that sole arbitrator has also sent requisite disclosure under cover of aforementioned letter dated 09.07.2019. This Court is informed that petitioners did appear on 26.07.2019, but it may not be necessary to delve into that aspect of the matter as, after 09.07.2019 communication which has been duly served on all three petitioners, claim statement has also been mailed by registered post with acknowledgement due to all three petitioners and the same have also been duly received by all three petitioners.
17. Claim statement has been mailed on 01.08.2019, which is evidenced by postal receipts and postal acknowledgement cards forming part of records of AT. A scanned reproduction of the same are as follows: 21/48
https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 22/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 23/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 24/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 25/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 26/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 27/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 28/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 29/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 30/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 31/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 32/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 33/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
18. This Court on further perusal of records of AT finds that even thereafter, another communication from AT enclosing proceedings dated 30.08.2019 has been sent. A scanned reproduction of proceedings dated 30.08.2019 are as follows:
34/48
https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 35/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 36/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
19. Aforesaid communication dated 30.08.2019 has also been duly received by all three petitioners and a scanned reproduction of postal receipts and postal acknowledgement cards (as in the records of AT) are as follows:37/48
https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 38/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 39/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 40/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 41/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 42/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 43/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 44/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 45/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019
20. To be noted, the aforementioned communication from AT which has been duly received by each of the three petitioners have been mailed to the same addresses as in short and long cause titles of captioned OPs filed by petitioners who are protagonists qua challenge to impugned awards.
Therefore, the lone ground that petitioners did not receive any communication from AT prior to interim and final awards i.e., impugned awards falls flat on its face. That ground fails without any speck of doubt as not one but three sets of communications have been duly received by each of the three petitioners at the addresses as shown in the captioned OPs prior to the receipt of impugned awards. Therefore, this Court has no difficulty in unhesitatingly coming to the conclusion that there is no violation or infarct of the second limb of Section 34(2)(a)(iii) that has been alluded to supra. This is evident from the records of AT as alluded to and thereafter delineated supra.
21. Registry is directed to retain the records of AT along with the envelope and covering letter from the sole Arbitrator dated 27.01.2020 in a 46/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 sealed envelope and this is obviously for the purpose of reference in an intra court appeal, if that be so. There shall be a post script to this order also in this regard.
22. Before parting with this case, this Court deems it appropriate to observe that the protagonists of applications assailing arbitral awards should be careful and responsible while raising grounds such as non-receipt of proper notice of arbitral proceedings as the entire exercise of requisitioning records and perusing the same was clearly avoidable in the case on hand as each of three petitioners have received 3 sets of communications prior to the impugned awards. Notwithstanding this position they have ventured to predicate their challenge on the ground of no proper notice of arbitral proceedings by saying that they have not received any notice from AT prior to the receipt of the impugned award. Owing to the nature of submission made by learned counsel for petitioners, this Court is not imposing costs in this case, but it need not be the same in days to come in cases of this nature.
M.SUNDAR. J 47/48 https://www.mhc.tn.gov.in/judis/ O.P.Nos.980 & 981 of 2019 mk
23. In the light of the discussion thus far, both the captioned OPs failed and the same are dismissed. Consequently, connected applications are closed. This Court refrains itself from imposing costs.
19.01.2021 Speaking/Non-speaking order Index : Yes / No Internet : Yes / No mk P.S. Registry is directed to retain the records of AT along with envelope and covering letter from the Sole Arbitrator dated 27.01.2020 in a sealed envelope.
O.P.Nos.980 & 981 of 2019 48/48 https://www.mhc.tn.gov.in/judis/