Madras High Court
Dharma Constructions vs M/S.Indusind Bank Ltd on 18 June, 2018
Author: Abdul Quddhose
Bench: Abdul Quddhose
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 18.06.2018 CORAM THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE O.P.NO.561 OF 2011 Dharma Constructions, Rep by A.Dharma Reddy, S.o of A.Veera Reddy, Venigandla, peddakakani, Guntur-552 509. Petitioner Vs 1.M/s.IndusInd Bank Ltd., Rep.by its POA S.T.Krishnekumar, Having its Consumer Finance Division at No.115 &116, G.N.Chetty Road, T.Nagar,Chennai-600 017. 2.V.Adiseshu 3.S.Rajeni Ramadass Arbitrator New No.68,Basha Street, Choolaimedu, Chennai 600 094. .. Respondents Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the award dated 11.04.2011 passed by the 3rd respondent. For Petitioner : Mr.Srikanth For Respondents : Mr.K.Moorthy for R1 For R2 &R3 : No Appearance ORDER
The instant application has been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act challenging the Award passed against the petitioner who is a borrower to the loan transaction. While allowing the claim, the learned Arbitrator has directed the borrower and guarantor jointly and severally to pay Rs.11,28,765.44 together with interest at the rate of 18% per annum from the date of reference i.e., from 15.08.2010 till the date of realisation and they were also directed to pay a sum of Rs.1,000/- towards cost of arbitration.
2. Admittedly, the petitioner is a borrower under a loan transaction with M/s. IndusInd Bank Ltd, the 1st respondent herein and 2nd respondent is the guarantor. The petitioner availed a loan of Rs.11,00,000/- from the 1st respondent Bank under a agreement No.ASAA07303 on 06.8.2007 for the purchase of USED KOMATSU Machinery with Sl.No.24335 and the said sum is repayable with finance charges and insurance charges totalling a sum of Rs.12,10,000/- in 11 monthly instalments . As on 14.8.2010, the petitioner and the second respondent are jointly and severally liable to pay a sum of Rs.11,28,765/- to the first respondent.
3. The petitioner committed default in the repayment of the loan to the 1st respondent. As per the terms and conditions of the loan, the dispute was referred to arbitration and the 3rd respondent was appointed as the sole Arbitrator in accordance with the arbitration clause. The 3rd respondent acted upon the arbitration reference and as seen from the Arbitral Award, notice was also issued to the petitioner who is the borrower under the loan transaction. Despite receipt of notice, since the borrower as well as guarantor failed to appear before the Arbitrator, the Arbitral Award dated 11.4.2011 came to be passed against the petitioner as well as the guarantor, thereby directing them to jointly and severally pay the 1st respondent the sum of Rs.11,28,765.44 together with interest and costs. Aggrieved by the said Arbitral Award, the instant petition has been filed by the petitioner under section 34 of the Arbitration and Conciliation Act by the borrower/petitioner herein.
4. The learned counsel for the petitioner submitted that the 1st respondent repossessed the machinery from the petitioner without prior notice and without any order from the competent authorities.
5.Learned counsel further submitted that the petitioner has filed a criminal complaint against the agent of the 1st respondent Mr. Battula Chandrasekar before the IV Additional Munsif/Magistrate, Guntur and pursuant to orders of this Court, a case was registered in Crime No.268 of 2010 under section 420 and 379 IPC pursuant to which, a criminal complaint has been registered against the said Mr. Battula Chandrasekar, representative of the 1st respondent.
6.According to the learned counsel for the petitioner, the machinery which was purchased by the petitioner by availing loan from the 1st respondent was the only source of livelihood for the petitioner.
7.Apart from repossessing the machinery, the learned counsels for the petitioner submitted that the 1st respondent without intimating the petitioner has slapped penal charges under the pretext of claiming additional financial charges.
8. According to him, these additional charges are wholly unauthorised and is outside the purview of the loan agreement.
9. Learned counsel further submitted that due to the illegal repossession of the machinery by the 1st respondent, the petitioner had made a counter claim against the 1st respondent in the arbitration which was not duly considered by the learned Arbitrator.
10. Per contra, learned counsel for the 1st respondent submits that the petitioner is a defaulter under the loan agreement dated 6.8.2007 which is also admitted by the petitioner in the instant petition filed under section 34 of the Arbitration and Conciliation Act. According to the learned counsel for the 1st respondent, the machinery was seized from the petitioner in view of the default committed by the petitioner in the repayment of the loan.
11. The learned counsel for the 1st respondent referred to the terms and conditions of the loan agreement which authorises the 1st respondent to repossess the machinery in case of default committed by the petitioner in the repayment of the loan. The learned counsel submitted that exercising the right of repossession, the machinery was repossessed from the petitioner and therefore there is no violation or any illegality committed by the 1st respondent.
12.Learned counsel for the 1st respondent further submitted that all the grounds for challenge raised by the petitioner in the instant petition has been properly considered by the learned Arbitrator under the impugned Award and there is no perversity or patent illegality in the impugned Award and therefore according to him, there is no scope for interference in the Award dated 11.4.2011 passed against the petitioner.
13. This Court after perusing the materials available on record and after hearing the submissions of the respective counsels has noticed the following;
(a) the petitioner is admittedly a defaulter in the repayment of the loan under the loan agreement dated 11.4.2011;
(b) the 1st respondent in the event of the default, is entitled to repossess the machinery from the petitioner and sell the same under the terms and conditions of the loan agreement dated 6.8.2007.
(c) The Arbitrator has also been appointed by the 1st respondent only in accordance with the terms and conditions of Arbitration Clause contained under the terms and conditions of the loan agreement dated 6.8.2007.
14. The Arbitrator has framed four issues which are as follows;
1.Whether the first and second respondents are jointly and severally liable to pay a sum of Rs.11,28,765.44 as on 14.08.2010 together with interest to the claimant, which arise out of the default in payment of instalments as per the Loan Agreement dated 06.08.2007?
2.Whether the action of claimant in repossessing and selling the schedule machinery is within the purview of the loan agreement?
3.Whether the respondent is entitled to the counter claim sought for him?
4.Whether the Claimant is entitled to costs?
15. In support of the claim, the 1st respondent has also filed six documents before the Arbitrator which have been marked as Ex.A.1 to A6.
16. Ex.A.1 is the copy of the Power of Attorney executed by the 1st respondent in favour of the Chief Manager Mr.S.T.Krishnekumaar to represent them in the Arbitral Proceedings. Ex.A.2 is the loan agreement dated 6.8.2007 executed between the 1st respondent and the petitioner. Ex.A.3 is the copy of invoice raised by the dealer in respect of the loan vehicle. Ex.A.4 is the copy of the final demand letter dated 17.09.2010 intimating the termination of loan agreement and reference of dispute to arbitration. Ex.A.5 is the copy of the statement of Accounts. Ex.A.6 is the copy of the statement of Additional Finance Charges.
17. The Arbitrator has passed a reasoned award giving the reasons for deciding each and every issue framed by her. This Court is satisfied with the reasons given by the Arbitrator for coming to the conclusion that the petitioner is liable to pay a sum of Rs.11,28,765.44 together with further interest at 18% p.a. from 15.8.2010 till the date of actual payment which is also liable to pay a sum of Rs.1000/- as cost.
18. This Court under Section 34 of the Arbitration and Conciliation Act cannot re-appreciate the evidence. Further on perusal of the Award, this Court also finds that the conclusion reached by the Arbitrator based on the oral and documentary evidence does not call for any interference by this Court under Section 34 of the Arbitration and Conciliation Act since the findings are not perverse or patently illegal
19. The Hon'ble Supreme Court in a Catena of decisions starting from Renusagar Power Company Ltd vs. General Electric Company 1994 Supp (1) SCC 644 to the recent Associated Builders Vs DDA (2015) 3 SCC 49 has held only under the following grounds the Arbitrator Award can be challenged under Section 34 of the Arbitration and Conciliation Act:
(a) Procedure contemplated under Arbitration and Conciliation Act was not followed by the Arbitrator.
(b)The Arbitral Award is a non speaking Award.
(c)The Arbitrator has transgressed his jurisdiction.
(d)The Arbitral Award is in conflict with the public policy of India.
(iii)An award would be regarded as conflicting with the public policy of India if:-
(a) it is contrary to the fundamental policy of Indian law, or
(b) it is contrary to the interests of India,
(c) it is contrary to justice or morality,
(d) it is patently illegal, or
(e) it is so perverse, irrational, unfair or unreasonable that it shocks the conscience of the court.
(iv)An award would be liable to be regarded as contrary to the fundamental policy of Indian law, for example, if
(a) it disregards orders passed by superior courts, or the binding effect thereof, or
(b) it is patently violative of statutory provisions, or
(c) it is not in public interest, or
(d) the arbitrator has not adopted a judicial approach, i.e. has not acted in a fair, reasonable and objective approach, or has acted arbitrarily, capriciously or whimsically, or
(e) the arbitrator has failed to draw an inference which, on the face of the facts, ought to have been drawn, or
(f) the arbitrator has drawn an inference, from the facts, which, on the face of it, is unreasonable, or
(g) the principles of natural justice have been violated.
(v)Insofar the patent illegality has to go to the root of the matter. Trivial illegalities are inconsequential.
(vi) Additionally, an award could be set aside if
(a) either party was under some incapacity, or
(b) the arbitration agreement is invalid under the law, Or
(c) the applicant was not given proper notice of appointment of the arbitrator, or of the arbitral proceedings, or was otherwise unable to present his case, or
(d) the award deals with a dispute not submitted to arbitration, or decides issues outside the scope of the dispute submitted to arbitration, or
(e) the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(f) the arbitral procedure was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(g) the award contravenes the Act, or
(h) the award is contrary to the contract between the parties.
(vii) Perversity, as a ground for setting aside an arbitral award,has to be examined on the touchstone of the Wednesburyprinciple of reasonableness. It would include a case in which
(a) the findings, in the award, are based on no evidence, or
(b) the Arbitral Tribunal takes into account something irrelevant to the decision arrived at, or
(c) the Arbitral Tribunal ignores vital evidence in arriving at its decision.
(viii) At the same time,
(a) a decision which is founded on some evidence, which could be relied upon, howsoever compendious, cannot be treated as perverse,
(b) if the view adopted by the arbitrator is a plausible view, it has to pass muster,
(c) neither quantity, nor quality, of evidence is open to re-assessment in judicial review over the award.
(ix)Morality would imply enforceability, of the agreement, given the prevailing mores of the day. Immorality, however, can constitute a ground for interfering with an arbitral award only if it shocks the judicial conscience.
20. The petitioner has not satisfied any of the grounds mentioned above. Therefore, this Court is of the view that there is no merit in the petition filed by the petitioner. Hence, this Original Petition shall stand dismissed. No costs.
18.06.2018 msr Speaking Order/non-speaking order Index:yes/No ABDUL QUDDHOSE, J.
msr O.P.NO.561 OF 2011 18.06.2018