Delhi District Court
Gurvinder Singh vs Kotak Mahindra Bank Ltd on 18 January, 2025
IN THE COURT OF DJ-08 : CENTRAL : ROOM NO. 152 TIS HAZARI
COURTS : DELHI
Presided Over by : Ms. Vandana, DHJS
Arbitration No. 84406/2016
CNR No: DLCJ01-005449-2015
In the matter of:-
Gurvinder Singh
S/o late Sh. Harbansh Singh Bhatia,
388, HIG, Ratan Lal Nagar ,
Kanpur-208022, Uttar Pradesh ......... Petitioner
Versus
1. Kotak Mahindra Bank Ltd.
Regional Office at :
Ambadeep Building, 14 K.G. Marg
New Delhi-110001
Branch office at:
6, Vaishali Enclave, Near Gulab Sweets,
Pitampura, New Delhi-110034
2. Devendra Yadav
S/o Sh. R.S. Yadav,
310, E Block, Shyam Nagar,
Kanpur-208013, Uttar Pradesh,
3. Sh. G.S.Jugti
Advocate/Arbitrator,
Ch. No. 263, Civil Wing,
Tis Hazari Courts, Delhi ........ Respondent
Date of institution : 03.11.2015
Date of pronouncement : 18.01.2025
of Judgment
Arbitration No. 84406/2016 page no. 7/7
JUDGMENT
1. Vide this judgment, I shall dispose-of the objection petition under Section 34 of the Arbitration & Conciliation Act, 1996 against the Award dated 26.06.2015.
2. Brief facts, necessary for disposal of the present petition are as under:-
2.(a) The petitioner had taken a loan of Rs. 5,80,000/- from the respondent bank for a period of 3 years on interest @ 5% per annum, which was to be returned in 35 equal monthly installments of Rs. 19,053/-.
2. (b) It has been further stated that all the loan installments have been paid in time except few installments which were paid after 3-4 days of the due date and as per the account statement only an amount of Rs. 1 paisa 28 was due from the applicant / objector.
2.(c) It has been further stated that all of a sudden the applicant / objector received a notice of an advocate to pay an amount of Rs.
4,64,027.45/- as on 23.03.2015, which was duly replied stating that the entire loan amount has already been paid, but the applicant / objector again received a notice dated 19.04.2015 from the sole arbitrator, whereby the applicant / objector was called upon to appear before him on 11.05.2015. The notice was duly replied. However, the ex parte award dated 26.06.2015 was passed against the applicant / objector.
3. GROUNDS FOR SETTING ASIDE THE AWARD
i) Because the Impugned Award is based upon conjectures and surmises and is passed on not only insufficient but also on erroneous ground and is contrary to the facts of the case.
Arbitration No. 84406/2016 page no. 7/7 ii) Because the Arbitration proceedings have been conducted by
the Arbitrator in an arbitrary manner without following the principles of law.
iii) Because the impugned Award has been passed in very haste without considering the compelling circumstances of the applicant / objector.
iv) Because the Award is illegal and unlawful due to the fact that even in the absence of the applicant / objector sufficient reply to the undisclosed claim petition was filed by the applicant / objector which was a sufficient reply to the claim petition but the Ld. arbitrator did not consider the same.
v) Because it seems that the Ld. Arbitrator was not only in haste but also predetermined to pass the award against the applicant / objector. It is to be seen that the award was passed and signed on 26.06.2015 but the Indian Non Judicial Paper had already been purchased by the bank on 24.06.2015 which makes it clear that the respondent bank was quite sure well in advance that the award was going to be passed on 26.06.2015 and that too in their favour. The award is thus illegal and unlawful.
vi) Because no copy of the claim petition or the documents thereto were ever supplied to the applicant / objector and as such the Award is even otherwise illegal and unlawful and not tenable in the eyes of law.
Reply to Objections on behalf of the respondent no. 1 / Kotak Mahindra Bank
4. Vide reply, all the allegations were denied and was stated that the Ld. Sole Arbitrator has given the just and proper award after considering Arbitration No. 84406/2016 page no. 7/7 all the facts on record. Hence, prayer has been made to dismiss the present petition.
5. Rejoinder to the reply to the objection of the respondent no. 1 was filed, wherein all the averments made, were denied.
6. Respondent no. 2 is ex parte.
7. I have heard the arguments advanced by the Ld. counsel for the petitioner and the respondent and perused the record.
ANALYSIS AND FINDINGS
8. As per section 34 of the Act, an arbitration award can be set aside only, if, the court is satisfied that there are grounds as mentioned in Section 34 (2) and (3) of the Act. Under no other ground, arbitration award can be set aside. The only ground under which award can be interfered with is U/s. 34 of the Act. The court is not to sit in appeal over the award passed. It is merely to see, if, the Arbitrator has not acted as per law or he himself misconducted or the award was in conflict with existing legal provisions.
9. Section 34 (1) and (2) of The Arbitration and Conciliation Act, 1996 read as under:
"34. Application for setting aside arbitral award- (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or Arbitration No. 84406/2016 page no. 7/7
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(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) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India. Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the Arbitration No. 84406/2016 page no. 7/7 fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute."
10. During the proceedings, one application was filed for filing the statement of account of respondent no. 1 / Kotak Mahindra Bank, which was allowed vide order dated 08.07.2024. According to this bank statement of the account / CIBIL, last installment was made on 10.02.2009 towards the loan and now no amount is due towards the respondent. The relevant portion of the said statement of account is as under:-
Account Dates Amounts Status Member Name : Kotak Bank opened 12.05.2005 Sanctioned 5,80,000/- Account No. CV968547 Last payment 10.02.2009 Current balance 0 Type Commercial Vehicle Closed on 09.11.2015
11. It is relevant to mention here that the above said CIBIL report / statement of account was never challenged by the respondent. In Fact, the above said fact was never disclosed by the respondent to the Ld. Arbitrator and fraudulently obtained ex parte award dated 26.06.2015 under section 34 (2)(b) (ii) of the Arbitration and Conciliation Act 1996.
12. Section 34 (2)(b) (ii) of the Arbitration and Conciliation Act 1996 provides that an arbtiral award may be set aside by the court if it finds that the arbitral award is in conflict with the public policy of India.
13. The explanation appended to the section provides that for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.
Arbitration No. 84406/2016 page no. 7/7
14. In the case in hand, the statement of the account of the respondent / CIBIL, establishes that the loan amount has already been paid before passing of the award dated 26.06.2015. In fact, the loan account no. CV968547 qua which arbitral award was obtained by the respondent on 26.06.2015, was closed on 09.11.2015, after passing of the arbitral award dated 26.06.2015. Therefor, in my considered view, the aforesaid Award is against the violation of principles of natural justice and fundamental policy of India.
15. RELIEF:-
Accordingly, in view of the discussion, as adumbrated above, I hereby pass the following
-:FINAL ORDER:-
a. The Petition / application / objections under Section 34 of the Arbitration and Conciliation Act is hereby allowed. The Impugned Award dated 26.06.2015 passed by Ld. Sole Arbitrator is hereby set-aside.
b. The parties are left free to pursue their remedies in accordance with law.
c. No order as to costs in the present petition. The parties shall bear their own respective costs.
Digitally signed by VANDANA
16. File be consigned to record room after due compliance.
VANDANA Date:
2025.01.18 15:09:43 +0530 Pronounced in the open court (Vandana) on 18th January, 2025. District Judge-8 Central:Tis Hazari Courts: Delhi.
Arbitration No. 84406/2016 page no. 7/7