Madras High Court
M/S. Shriram City Union Finance Ltd vs Sirajudeen on 20 September, 2021
Equivalent citations: AIRONLINE 2021 MAD 2624
Author: Abdul Quddhose
Bench: Abdul Quddhose
CMA.No.2294 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 20.09.2021
CORAM:
THE HON'BLE MR. JUSTICE ABDUL QUDDHOSE
C.M.A.No.2294 of 2019
M/s. Shriram City Union Finance Ltd.,
Rep. by its Authorised
representative
M. Visu, having office at
114, Suriyavel Towers,
Near Balaji Theatre,
Puducherry - 605 011. ... Appellant
vs.
Sirajudeen ... Respondent
Civil Miscellaneous Appeal filed under Section 37 of Arbitration
and Conciliation Act of 1996, against the order and decreetal order dated
31.08.2018 passed by the Principal District Judge at Puducherry in
Arbitration OP No.28/16 in setting aside the award.
For Appellant : Mr. K.V. Ananthakrushnan
For Respondent : Served- No Appearance
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CMA.No.2294 of 2019
JUDGMENT
(This case was heard through Video Conferencing) This Appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 challenging the order dated 31.08.2018 passed by the learned Principal District Judge, Puducherry in Arbitration OP No.28 of 2016, setting aside the Arbitral Award dated 27.05.2015 passed in favour of the Appellants against the respondent and Guarantors.
2. Under the impugned order, the learned Principal District Judge, Puducherry has set aside the Arbitral Award dated 27.05.2015, wherein the respondent and the guarantors to the loan transaction were directed to pay the Appellant a sum of Rs.10,23,764/- together with interest and costs on the ground that the respondent who is the borrower to the transaction did not receive notice in the Arbitration and the procedure contemplated under the provisions of the Arbitration and Conciliation Act was not followed.
3. Heard Mr.K.V. Ananthakrushnan, learned counsel for the appellant. The notice sent to the respondent have been duly served and his https://www.mhc.tn.gov.in/judis/ 2/8 CMA.No.2294 of 2019 name is also printed in the cause list today. However, the respondent has neither appeared in person or engaged a counsel.
4. The learned counsel for the Appellant has filed before this Court the Additional Typed Set of papers dated 10.01.2019 containing the loan agreement, promissory note, statement of account and the various notices sent by the Appellant prior to the Arbitration and also the notices sent by the Arbitral Tribunal to the respondent and the acknowledgment cards for the same has also been filed.
5. The primary ground raised by the respondent in the application filed by him before the learned Principal District Judge, Puducherry under Section 34 of the Arbitration and Conciliation Act, 1996 in Arbitration OP No.28 of 2016 was that he did not receive notice in the Arbitration and no opportunity was granted to him by the Arbitral Tribunal to contest the claim on merits.
6. The documents which have been filed in the Additional Typed Set of papers by the learned Counsel for the Appellant were very much https://www.mhc.tn.gov.in/judis/ 3/8 CMA.No.2294 of 2019 available with the learned Principal District Judge, Puducherry as the Arbitration file comprising of all the documents were also placed before the Learned Principal District Judge, Puducherry. As seen from the documents, the pre-arbitration notice was sent by the Appellant on 13.01.2015 to the respondent and the guarantors, which were duly served on 12.02.2015 (respondent and two guarantors on 17.02.2015 and 12.02.2015 respectively). Thereafter, the Arbitration commenced and the sole Arbitrator had also issued summons for the hearing to the respondent on 04.04.2015. The notice sent to the respondent by the sole Arbitrator, was returned with an endorsement "intimation delivered" on 15.04.2015. Therefore, it is clear that the respondent has received notice of the Arbitration from the Arbitral Tribunal.
7. The Arbitrator has also in the Arbitral Award dated 27.05.2015 has given a finding that the respondent has been duly served in the Arbitration. The learned Principal District Judge, Puducherry, while exercising power under Section 34 of the Arbitration and Conciliation Act, 1996 ought not to have held that the respondent has not received notice in the Arbitration when there is clinching evidence which is very much https://www.mhc.tn.gov.in/judis/ 4/8 CMA.No.2294 of 2019 available with him to show that the respondent had infact received the notice in the Arbitration but chose not to appear for the Arbitration for the reasons best known to him. Only on the ground of non receipt of notice, the learned Principal District Judge, Puducherry has set aside the Arbitral Award dated 27.05.2015 passed in favour of the Appellant against the respondent and other guarantors to the loan transaction. Even in the application filed by the respondent under Section 34 of the Arbitration and Conciliation Act in Arbitration OP No.28 of 2016 before the learned Principal District Judge, Puducherry, he has not disputed the existence of the loan agreement dated 10.09.2012 under which he has availed loan from the Appellant. He has also not disputed that he is not a defaulter under the said loan agreement. Having received the notice in the Arbitration, the respondent ought to have contested the Arbitration if at all he is having any defence on merits but instead he has received the notice in the Arbitration and has failed to participate in the Arbitration. The scope for challenge under Section 34 of the Arbitration and Conciliation Act is very limited and only when the applicant is able to satisfy that he comes within the parameters laid down under Section 34 of the Arbitration and Conciliation Act, the learned Principal District Judge while exercising https://www.mhc.tn.gov.in/judis/ 5/8 CMA.No.2294 of 2019 power under Section 34 can interfere with the Arbitral Award. In the case on hand, the respondent has received the notice in the Arbitration, as seen from the documents filed by the appellant before this Court, which were very much available before the learned Principal District Judge when he exercised the power under Section 34 of the Arbitration and Conciliation Act but has misdirected himself by not considering the same.
8. Infact in the Arbitral Award, the sole Arbitrator has categorically given a finding that notice has been served on the respondent in the Arbitration, which reads as follows :
4. Notice of hearing and copy of the proceedings have been sent to the Respondent on 13.04.2015 to the address mentioned in the agreement and the same is complied on accordance with Section 3 of the Arbitration and Conciliation Act, 1996 and the Respondents were failed to appear before me on the first hearing i.e. on 30.04.2015 either in person or through representatives. Hence they are called absent and set exparte. Therefore it has been decided to proceeds exparte and pass and award considering the following issues.
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9. Therefore, this Court is of the considered view that the learned Principal District Judge, Puducherry under the impugned order dated 31.08.2018 passed in Arbitration OP No.28 of 2016 has gone beyond the scope of Section 34 of the Arbitration and Conciliation Act by setting aside the Arbitral Award passed in favour of the Appellant.
10. For the foregoing reasons, the impugned order dated 31.08.2018 passed by the learned Principal District Judge, Puducherry in Arbitration OP No.28 of 2016 is hereby set aside and the Civil Miscellaneous Appeal is allowed. No costs.
20.09.2021 ab/vsi2 Index: Yes/No Internet: Yes/No Speaking Order/Non-Speaking Order To The Principal District Judge, Puducherry https://www.mhc.tn.gov.in/judis/ 7/8 CMA.No.2294 of 2019 ABDUL QUDDHOSE, J.
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