State Consumer Disputes Redressal Commission
Indusind Bank vs Jatan Kumar Sethi on 13 July, 2009
BEFORE THE CONSUMER DISPUTES REDRESSAL COMMISSION, RAJASTHAN, JAIPUR APPEAL NO: 852/2008 Indusind Bank Ltd.,( Ashok Leland Finance Ltd.) Regd.office - Land Marg, Race Course Circle, Barodra. Area office-Umrai Commercial Complex, IInd floor, A-1/A-2, S.C.Road, Jaipur. Opposite parties-appellants Vs. Jatan Kumar Sethi C/o Sethi Yatra Company, Station Road, Jaipur. Complainant-respondent Date of judgment 13.7.09 Before: Mr.Justice Sunil Kumar Garg- President Mrs.Vimla Sethia-Member Mr.Ajay Tantia counsel for the appellants Mr.Chandra Shekhar Dadhich counsel for the respondent JUDGMENT
BY THE STATE COMMISSION ( PER HON. MR.JUSTICE SUNIL KUMAR GARG, PRESIDENT ) 2 This appeal has been filed by the appellants bank against order dated 16.4.08 passed by the District Forum, Jaipur IInd in complaint no. 1660/2007 by which the complaint of the complainant respondent was allowed in the manner that the appellants bank were directed to pay a sum of Rs. 4,85,000/- within two months to the complainant respondent alongwith interest @ 9% p.a. from the date of filing of the complaint i.e. 18.1.02 and further to pay a sum of Rs. 5000/- as costs of litigation.
2. It arises in the following circumstances-
That the complainant respondent had filed a complaint against the appellants before the District Forum, Jaipur IInd on 18.1.02 inter alia stating that he had applied for loan with the appellants bank on 10.7.97 and the loan was sought for purchasing a chassis under the hire purchase scheme and the appellants bank had sanctioned the loan for a sum of Rs. 4,90,000/- with charging rate of interest at 12.50% and the loan was to be re-paid in 29 instalments by the complainant respondent and for that an agreement was executed between the parties on 6.8.97 and the complainant respondent had issued 29 blank cheques in favour of the appellants bank and each instalment was for a sum of Rs. 23,800/-. It was further stated in the complaint that after the loan was sanctioned, the complainant respondent had purchased the chassis from Rajesh Motors, Jaipur on 6.8.97 for a sum of Rs. 4,95,765/- and thereafter a body on that chassis was got constructed after spending a sum of Rs. 5,50,000/- and this amount was spent by the complainant respondent himself. It was further stated in the complaint 3 that the price of the deluxe bus had become to the tune of Rs. 10,45,765/-. It was further stated in the complaint that out of 29 cheques, 16 cheques were got cleared by the appellants bank but two cheques for the month of December 98 and January 99 for a sum of Rs. 23,800/- each could not be get cleared as the complainant respondent was facing some financial crisis, even then from the help of his relatives and friends he had issued two cheques for a sum of Rs. 20,000/- and Rs. 40,000/- but the appellants bank malafidely did not encash the other cheques. It was further stated in the complaint that on 8.10.99 a notice was given by the appellants bank about the default committed by the complainant in respect of non-payment of instalments and the bus in question was taken in their possession by the appellants bank on 9.10.99 though as per the terms of the agreement the appellants bank was having a power to seize the chassis and not the full bus and not only this the body of the said bus was sold by the appellants bank for a sum of Rs. 1,15,000/- though at the time of auction the price of the bus was Rs. 6 lacs and for causing loss of Rs. 4,85,000/- a legal notice was given by him to the appellants on 12.8.2000 and thus for the deficiency committed by the appellants bank, the present complaint was filed.
A reply was filed by the appellants bank before the District Forum, Jaipur IInd on 26.9.02 and in the reply it was stated that as per clause V of the agreement dated 6.8.97, if any dispute had arisen between the parties the same would be referred to the Arbitrator at the option of the owner and the Arbitrator shall be nominated by the owner and the award of the Arbitrator shall be final and binding 4 on all the parties concerned, including the guarantor and thus the District Forum had no jurisdiction to decide the complaint filed by the complainant. It was further stated in the reply that not only this the matter was referred to the arbitrator and in the proceedings before the arbitrator, the complainant respondent had appeared and had taken part and the arbitrator had passed an award on 22.7.2000 in favour of the appellants and against the complainant respondent and further the proceedings of execution of that award are still pending before the District Judge, Jaipur City and from that point of view also the present complaint was not maintainable at all. It was further stated in the reply that since the complainant had not come with clean hands, therefore, complaint be dismissed.
After hearing the parties, the District Forum,Jaipur IInd through impugned order dated 16.4.08 had allowed the complaint inter alia holding that-
(i) That in view of s. 3 of the C.P.Act,1986 though there was arbitration clause, the jurisdiction of the District Forum was not barred and thus the present complaint was found maintainable.
(ii) That the bus no. RJ 14 P 6959 was wrongly seized by the appellants and further the same was wrongly sold in an auction proceedings for a sum of Rs. 1,15,000/- causing loss to the complainant for a sum of Rs.4,85,000/-.
Aggrieved from the said order dated 16.4.08 passed 5 by the District Forum, Jaipur IInd, this appeal has been filed by the appellants bank.
3. In this appeal the main contention of the learned counsel for the appellants bank is that in view of the fact that before the present complaint was filed by the complainant respondent, proceedings before the arbitrator had taken place and award had been passed by the arbitrator on 22.7.2000 and therefore, proceedings which had taken place before the District Forum are persi illegal and without jurisdiction and deserves to be set aside and for that reliance had been placed on the judgment of the Hon'ble National Commission in the case of The Installment Supply Ltd. Vs. Kangra Ex-Serviceman Transport Co. & anr. ( 2006 (2) CPR 339 (NC) ) and the District Forum had committed serious error and illegality in decreeing the claim of the complainant respondent. Hence the impugned order could not be sustained and liable to be quashed and set aside and this appeal deserves to be allowed.
4. On the other hand, the learned counsel appearing for the respondent has supported the impugned order of the District Forum and has argued that the findings recorded by the District Forum be sustained as the present case which was filed by the complainant respondent was for the deficiency in service on the part of the appellants and thus the complaint was maintainable and it was prayed that appeal be dismissed.
5. We have heard the learned counsel for the appellants as well as for the respondent and gone through the entire materials available on record.
66. There is no dispute between the parties on the point that the complainant respondent had taken loan for purchasing the chassis from the appellants bank for a sum of Rs.4,90,000/- on 10.7.97 and an agreement was executed between the parties on 6.8.97.
7. There is no dispute on the point that there was an arbitration clause no. V which reads as under-
" It is agreed between the parties that in case of any dispute arising under this agreement the same shall be referred to an arbitrator at the option of the owner. The arbitrator shall be nominated by the owner and the award of the arbitrator shall be final and binding on all the parties concerned, including the guarantor. The venue of such arbitration shall be at Madras. It is further agreed that in the event of the said arbitrator dying or being unable to act for any reason, the owner shall be entitled to appoint in his place another arbitrator who shall be entitled to resume the said arbitration proceedings from the stage at which it was left by his predecessor.
Save as aforesaid the courts in................ alone and no other courts whatsoever will have jurisdiction to try any suit in respect of any claim of dispute arising out of or under this agreement or in any way relating to the same."
8. There is no dispute on the point that on account of default of two instalments, the appellants had seized the bus of the complainant respondent on 9.10.99 and thereafter had put that bus in an auction and the same was sold for a sum of Rs.1,15,000/-.
79. There is no dispute on the point that a claim petition no. 14/2000 under the provisions of Arbitration and Conciliation Act,1996 was filed before the arbitrator R.P.Khandelwal, Jaipur and award had been passed by the arbitrator on 22.7.2000 in the following manner-
" In the result the claim is allowed and the respondents are directed to pay the sum of Rs. 2,27,212/- alongwith interest at the rate of 24% p.a. as decided above within one month from the date of receipt of this award. In case of non-compliance thereof the claimant may proceed further by executing this award for recovery of the amount due from the respondents jointly and severally."
10. In para 5 of the award dated 22.7.2000 it was mentioned that the notice of the arbitration proceedings was given to the complainant respondent though earlier notice was returned unserved but on 12.2.2000 the complainant had given appearance and adjournment was sought and on 25.3.2000 both parties were present.
11. Further from page 7 of the award dated 22.7.2000 it clearly appears that later on none appeared on behalf of the complainant respondent before the arbitrator and no reply was filed on behalf of the complainant respondent and the arbitrator had proceeded ex-parte against the complainant respondent .
12. Thus, in the facts and circumstances just narrated above, the question for consideration is whether the findings recorded by the District Forum by which claim was decreed could be sustained or not.
813. It may be stated here that arbitration clause in the insurance policy or in any other agreement is no bar to the proceedings under the C.P.Act,1986. Consequently, the complainant had option to seek remedy either under the C.P.Act,1986 or any other law including through arbitration as provided in the contract between the parties.
13. In a case of Fair Air Engineers Pvt. Ltd. Vs. N.K.Modi ( 1996) III CPJ 1 (SC) , the following crucial question had aresen for consideration before the Hon'ble Supreme Court-
" Whether the proceedings of the Forums created under the Act are legal proceedings and the authorities have the trapping of judicial authority or a court within the meaning of section 34 of the Arbitration Act,1940 ? "
14. The Hon'ble Supreme Court answered the above question in the case of Fair Air Engineers Pvt. Ltd. ( supra ) in the following manner-
" We have no hesitation to hold that the proceedings before the District Forums, the State Commission and the National Commission are legal proceedings. The District Forums, the National Commission and the State Commission are judicial authorities falling under section 34 of the Arbitration Act."
15. The another question which came up for consideration before the Hon'ble Supreme Court in Fair Air Engineers' case, was whether the case shall be stayed by operation of section 34 9 of the Arbitration Act. The court held that by invocation of section 34 of the Arbitration Act, the party to the proceedings does not get an automatic right to have the proceedings pending before the judicial authorities stayed. The said section gives discretion to the authorities to stay the proceedings on their satisfying that there was no sufficient reason why the matter should not be referred in accordance with the agreement between the parties for arbitration when the party seeking stay of the proceedings was and still remains ready and willing to do all things necessary to the proper conduct of the arbitration. In other words, on judicial satisfaction as to the contract between the parties and subject matter of the dispute as to the nature of the dispute, the judicial authority has been invested with a discretion to stay the proceedings or proceed with the matter pending before it. The court opined that similar power is also available under section 8 of the Arbitration and Concilliation Ordinance, 1996 ( Now the Arbitration and Conciliation Act, 1996 ).
16. Thus, it could be held that merely because there is an arbitration clause in agreement between the parties, the jurisdiction of the Consumer Forum would not be excluded and for that a decision of the Hon'ble National Commission in the case of Juliet V. Quadros Vs. Mrs. Malti Kumar and ors. ( 2005 (2) CPR 1 (NC) ) may be referred to.
17. In the present case the question is where the matter had already been referred to the Arbitrator and not only this thereafter the arbitrator had passed the award before the complaint was filed before the District Forum, in such a case whether proceedings before the District Forum could be held maintainable or not.
1018. It may be stated here that the Hon'ble National Commission in the case of The Installment Supply Ltd. Vs. Kangra Ex-Serviceman Transport Co. & anr.( supra ) has held that where an award had been passed by the Arbitrator, in such a case no complaint could be filed before the District Forum and the District Forum could not entertain that complaint and should not pass the order overlooking the terms of the award and from that point of view, the impugned order dated 16.4.08 passed by the District Forum, Jaipur IInd could not be sustained as that order was passed without jurisdiction and that order had become nullity in the eye of law.
19. It may further be stated here that no doubt, a bare perusal of the award dated 22.7.2000 reveals that the complainant respondent had appeared before the Arbitrator on 12.2.2000 and thereafter he had not appeared, therefore, ex-parte award was passed by the Arbitrator and whatever may be the reasons, but that award was binding on the parties unless and until the same is set aside by the competent authority and since in the present case award was passed by the arbitrator before the present complaint was filed by the complainant respondent before the District Forum, therefore, the findings recorded by the Arbitrator in that award could not be challenged before the District Forum and from that point of view also the District Forum was not competent to pass the impugned order.
Note:- It is made clear that award was passed by the arbitrator between the parties on 12.2.000 and the complaint was filed by the complainant respondent before the District Forum, Jaipur IInd on 18.1.02.
1120. Further the questions whether that award is legally maintainable or not or whether findings recorded in the award are liable to be confirmed or not, are such type of questions which could only be decided by that authority before whom that award would be challenged and not before the District Forum. Therefore, the law laid down by the Hon'ble National Commission in the case of Juliet V. Quadros Vs. Mrs. Malti Kumar and ors. ( 2005 (2) CPR 1 (NC) ) and by the Bihar State Commission in the case of Tata Finance Ltd. Vs. Panchanand Ojha ( 2005 (1) CPR 360 ) would not come to help to the complainant respondent as in both cases it was held that inspite of the arbitration clause the District Forum had jurisdiction to try the complaint but in the present case the award had been passed by the arbitrator prior to filing of the complaint before the District Forum. Even then if the proceedings before the arbitrator had taken ex- parte, that ex-parte order still holds good unless and until the same is set aside by the competent authority and that authority is not the District Forum but the authorities are which are provided in the Arbitration Act,1996.
21. Not only this, in this case execution proceedings are still pending before the District Judge, Jaipur City and in that proceedings the complainant respondent had already appeared there, and thus it could be said that the award in question is under challenge before the District Judge, Jaipur City and when this being the position the impugned order dated 16.4.08 passed by the District Forum, Jaipur IInd could not be sustained.
22. It may further be stated here that since a specific section 34 has been provided in the Arbitration Act, 1996 for setting aside the arbitratory award and therefore, if the complainant respondent 12 had any grievance, he should take recourse under the provisions of the Arbitration Act, 1996.
23. For the reasons stated above, it is held that the findings of the District Forum decreeing the claim of the complainant respondent could not be sustained and the same are liable to quashed and set aside as they are wholly illegal, erroneous and perverse one and the appeal deserves to be allowed.
Accordingly, the appeal filed by the appellants bank is allowed and the impugned order dated 16.4.08 passed by the District Forum, Jaipur IInd is quashed and set aside and the complaint filed by the complainant respondent stands dismissed.
(Vimla Sethia) (Justice Sunil Kumar Garg) Member President