Delhi District Court
Nitin Sansanwal vs M/S Kotak Mahindra Bank on 26 April, 2013
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IN THE COURT OF DR. NEERA BHARIHOKE, ADJ1 (SOUTH) SAKET
COURTS, NEW DELHI
ARBT. NO. 70/11
IN THE MATTER OF:
Nitin Sansanwal
124A, Katwaria Sarai,
Near Idea Cellular Office,
New Delhi 110016
....Petitioner
VERSUS
1 M/s Kotak Mahindra Bank
Vinay Bhavya Complex,
4th floor, 159A, CST Road,
Kalina, Santacruz
MUMBAI - 400098.
2 Sh. Vinod Kumar Sharma
Sole Arbitrator,
D1, Sudha Hospital,
Gokul Dham, Goregaon,
MUMBAI - 400063.
.... Respondents
ORDER:
Vide this order I shall dispose the present petition filed under Section 34 of Arbitration & Conciliation Act, seeking to set aside the Arbitration Contd...P......1 of 12 : 2 :
award dated 19.09.2009 passed in the matter of M/s Kotak Mahindra Bank Vs Nitin Sansanwal for amount of Rs. 2,17,004.77/.
2 The petitioner has submitted that he came to know about the award when he received a summon on 24.02.2011 from the court of Ms. Anu Aggarwal Ld. Civil Judge in Execution Petition no. 6/2010 in the matter of M/s Kotak Mahindra Bank Vs Nitin Sansanwal to appear before the court. The petitioner after service of summons for execution petition from the court of Ms. Anu Aggarwal came to know that the above said award was passed on 19.09.2009 by respondent no.2.
3 Petitioner has submitted that agent/representative of the respondent no.1 approached the petitioner for providing the credit card facility and on insistence of the representative the petitioner agreed to have the credit card facility and signed the application form and other documents which were provided by the respondent. At the same time it was also assured by the representative that the petitioner will get the statement of account regularly on each and every month.
4 The petitioner has submitted that he regularly paid the dues of the respondent no.1 whatever were asked by the respondent time to time. The petitioner never kept pending the dues of the respondent which were asked by Contd...P......2 of 12 : 3 :
the respondent.
5 It is further submitted by the petitioner that he never received the monthly statement of account as assured by the representative of the respondent and the rate of interest and penal charges were very high, which were against the terms and conditions. Petitioner has submitted that the respondent no.1 never informed the petitioner about the dues of the respondent, which were subject matter of the Arbitration Proceedings and no letter of appointment of respondent no.2 as Arbitrator was ever issued to him by the respondent no.1. Petitioner was neither intimated by respondent no.2 as arbitrator at any point of time nor notice was served prior to initiate arbitration proceedings.
6 Petition has further submitted that as he had no knowledge of the arbitration proceedings, he did not appear before the respondent no.2 and ex parte award was passed on 19.09.09 against the petitioner.
GROUNDS :
A. Because there is no agreement between the petitioner and respondent no.1 about the appointment of respondent no.2 as an Arbitrator in the event of any dispute between them.
B. Because the respondent no.1 never informed the petitioner about the Contd...P......3 of 12 : 4 :
appointment of respondent no.2 as an arbitrator and respondent no.1 appointed the respondent no.2 of its own without the knowledge and consent of the petitioner.
C. Because the respondent no.2 did not consider the facts that the respondent no.1 neither ever raised any demand of any arrears/dues from petitioner nor ever served any demand notice upon the petitioner. D. Because the respondent no.2 miserably failed to appreciate the facts that the statement of account of respondent no.1 is totally false, fictitious, fabricated and concocted.
E. Because respondent no.2 never served any notice of the arbitration proceedings upon the petitioner.
F. Because respondent no.2 has not afforded any opportunity of being heard to the petitioner and to defend the claim of the respondent no.1 and to lead their evidence.
G. Because the respondent no.2 has never supplied the copies of the statement of claim and documents filed by the respondent no.1. H. Because the respondents neither provided copy of award to the petitioner nor intimated about present award.
I. Because the impugned award is bad in law in as much as sole arbitrator admittedly never issued a statement as contemplated under Section 12 and 13 of Arbitration & Conciliation Act 1996.
J. Because the impugned award is liable to be set aside as there was no Contd...P......4 of 12 : 5 :
Arbitration Clause as contemplated under Arbitration and Conciliation Act. It is stated that the petitioner never signed Arbitration agreement with respondent no.1.
K. Because the impugned award is liable to be set aside as the award in question deals with issue beyond the scope of any Arbitration Agreement through not admitted. The arbitrator has not reproduced the relevant arbitration clause in his award.
L. Because the respondent no.1 has produced the impugned award in connivance with respondent no.2. It is stated that no money was ever due to the petitioner by M/s Kotak Mahindra Bank.
7 Respondent no.1 has filed a detailed reply and has submitted that the present petition is badly time barred u/s 34(3) of Arbitration & Conciliation Act as petitioner was not under any incapacity and he got proper notice of appointment of Ld. Sole Arbitrator as well as the arbitral proceedings as all the notices and exchange of letters was made at the only and last known address of the petitioner as furnished by them at the time of applying for credit card facility. 8 It is further submitted that composition of Arbitral Tribunal was in accordance with arbitration agreement executed between the parties and Ld. Arbitrator has dealt with only those disputes which fall within the scope of submission to arbitration and in terms of the submission.
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9 Respondent has denied all the contentions of the petitioner except those which are matter of record and has relied on most important Terms and Conditions of the Card Agreement with respect to arbitration clause. 10 Respondent has also submitted that petitioner was throughout aware of the arbitration proceedings as well as passing of the award as Ld. Arbitrator had sen the notices of arbitration proceedings as well as award to the petitioner. It has been denied that the petitioner came to know about the passing of award on receiving notice of execution and has submitted that petitioner had stated so just to cover up the issue of period of limitation. 11 Respondent no.1 has denied that the impugned award has been passed in collusion with respondent no.2. Respondent no.1 has stated that the impugned award has been passed in terms of the contract / agreement executed between the parties.
12 Ld. Counsel for petitioner argued that petitioner did not execute any arbitration agreement and petitioner was not given notice about appointment of arbitrator or commencement of any arbitral proceedings. Ld. Counsel for respondent no.1 contended that while availing Credit card facility by petitioner., he agreed with the most important terms and conditions of the Card Agreement containing arbitration clause wherein it is provided that in the event Contd...P......6 of 12 : 7 :
of any dispute arising between the parties, such dispute shall be resolved by the arbitrator and the said arbitrator shall be appointed by Respondent no.1.
13 A perusal of the Terms and Conditions of Card Agreement reveals that Clause 32.2 provides for arbitration as follows :
"Any dispute, difference and or claims arising out of it in connection with or in relation to the agreement shall be settled by arbitration in accordance with the provisions of Arbitration & Conciliation Act 1996 and any subsequent statutory amendment, if any, to the Act, by a sole arbitrator to be appointed by the bank. Any arbitration award, direction passed shall be final and binding on the parties. The venue of such arbitration shall be at Mumbai. "
14 The petitioner has admittedly signed "My Kotak Card Application Form" and in the column of declaration in the said form, petitioner has declared that he has read and understood the terms and conditions of the bank's credit card and he has agreed that he will be bound by these terms and conditions including those excluding/limiting the banks liability. He has also confirmed in the said declaration that he has read and understood the terms and conditions governing the entire business relationship with the bank and relating to various services including but not relating to card holder's agreement. A perusal of "Most Important Terms and Conditions" reveals that it specifically provides that Contd...P......7 of 12 : 8 :
these apply to all Kotak Mahindra Bank Credit Card/Card Holder/Applicant of credit Cards. Thus petitioner by signing the undertaking in the application form is bound by Most Important Terms and Conditions
15 Thus by virtue of Most Important Terms and Conditions, Card Agreement/My Kotak Card Application Form contained a valid arbitration clause and the My Kotak Card Application Form has admittedly been executed by the petitioner. It also provides for appointment of sole arbitrator by the respondent no.1 only which was duly appointed in the present matter also as per terms of the arbitration clause. Petitioner cannot be allowed to turn around to deny the existence of the arbitration agreement or to challenge the process of appointment of arbitrator to which he had voluntarily agreed. Just because the same person is acting as arbitrator in other matters of the respondent no.1, the said fact in itself does not establish or point towards any collusion between the arbitrator and the respondent no. 2. Thus, there was no requirement of issuing a statement by Ld. Arbitrator u/s 12 & 13 of Arbitration & Conciliation Act. 16 In response of contention of petitioner that notice of arbitration and award was never served on him, Respondent no. 1 has submitted that the service on the petitioner was duly affected and the original postal receipts bearing the stamp of the post office are there on record. I concur with respondent no.1 that under section 27 of General Clauses Act, it shall be Contd...P......8 of 12 : 9 :
deemed that service on the petitioner was duly affected. There is also track report available on arbitral record which shows that the notice of arbitration proceedings dated 16.05.2009 was delivered to the petitioner on 28.05.2009. Similarly, original postal receipts are there on the record with respect to notice of arbitration proceedings sent to petitioner by Ld. Arbitrator dated 02.06.2009 for appearing on 20.06.2009. There is also copy of demand notice dated 18.04.2009 sent by respondent No.1 to petitioner along with original postal receipts. There is also original postal receipts dated 16.10.2009 in support of sending the arbitral award dated 19.09.2009 by ld. arbitrator. Thus, petitioner was duly served with notice of arbitration proceedings as well as award. If the petitioner does not appear before the Ld. Arbitrator despite receiving notice of arbitration proceedings, it does not lie in his mouth to contend that he was never given an opportunity of being heard and to defend the claim of respondent no.1 or to lead his evidence. The said objections are untenable.
17 The impugned award has been challenged on the ground that allegedly the amounts claimed before respondent no. 2/ Ld. arbitrator were not outstanding against the petitioner. A perusal of the arbitral record reveals that respondent no. 1 has filed all relevant documents alongwith statement of accounts of the petitioner reflecting outstandings of petitioners to be payable to respondent no. 1 and the impugned award has been passed by taking into consideration the same. Respondent no. 2/ Ld. arbitrator has dealt with only Contd...P......9 of 12 : 10 :
those disputes which fall within the scope of submission to arbitration and in terms of the submission.
18 Ld. Counsel for respondent argued that the present application is badly time barred as petitioner failed to file the objections to impugned award within prescribed period of three months and has filed the present petition after expiry of more than three months of the passing of award. Petitioner has relied on his having been served on 24.02.2011 on receiving summons from executing court and have argued period of limitation prescribed under Section 34 (3) of Arbitration and Conciliation Act had not commenced prior to that. 19 In the present matter, the award was served on petitioner which was made and signed on 19.09.2009 and was duly posted as supported with postal receipts on record bearing date 16.10.2009. Dispatch of award is corroborated by original postal receipt on record. In view of observations made above, there was due service of the signed copy of the award by the Ld. arbitrator on the petitioner maximum by end of October, 2009. The petitioner filed the present petition on 08.03.2011 while the award was passed by the Ld. Arbitrator on 19.09.2009 much after the expiry of period of limitation prescribed under section 34(3) of Arbitration and Conciliation Act for challenging the award.
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Section 34 (3) of Arbitration & Conciliation Act, 1996 reads as:
"An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33 from the date on which that request had been disposed of by the Arbitral Tribunal :
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within the further period of 30 days, but not thereafter.
In the case of Union of India Vs Popular Construction Company (2001) 8 SCC 470, it has been held by the Hon'ble Supreme Court that :
"As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are 'but not thereafter' used in the proviso to sub Section (3). In our opinion this phrase would amount to an express exclusion within the meaning of section 29 (2) of the Limitation Act and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase 'but not thereafter' wholly otiose. No principle of interpretation would justify such a result."
20 Thus an arbitral award can in no circumstances be challenged after the expiry of three months, extendable with the further period of thirty days if applicant was prevented by sufficient cause for making the application within these three months.
Contd...P......11 of 12 : 12 :
21 In light of the law laid down in "Union of India Vs Popular Construction Company" (supra) and provisions of Section 34 (3), the present petition is badly time barred and is therefore nonmaintainable. 22 The present petition is accordingly disposed off as dismissed. File be consigned to record room after necessary compliance. Dictated and announced in the open court on 26.04.2013 (Dr. Neera Bharihoke) ADJI(South) Saket Courts 26.04.2013 Contd...P......12 of 12