Delhi District Court
Raj Kumar vs Cholamandalam Investment And Finance ... on 26 September, 2025
IN THE COURT OF SH. GAURAV SHARMA
JSCC-CUM-ASCJ-CUM-GUARDIAN JUDGE,
NORTH WEST, ROHINI COURTS/DELHI
CNR No. DLNW030007092022
CS SCJ 458/2022
Sh. Raj Kumar
S/o Sh. Amar Singh
R/o: B-9/60, Sector-5,
Rohini, Delhi-110085
......Plaintiff
Versus
1. M/s Cholamandlam Investment And Finance Co. Ltd.
Having Its Registered Office:
2nd Floor, 6 Pusa Road, Karol Bagh,
New Delhi-110033.
2. The State Government of NCT Delhi
Through M.L.O. Regional Transport Offices
Transport Department
5/9 Under Hill Road,
Raj Pura Road, Delhi-110054
.......Defendants
Civ Suit 458/2022
Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 1/12
Date of Institution : 02.04.2022
Judgment reserved on : 02.06.2025
Judgment pronounced on : 26.09.2025
JUDGMENT
26.09.2025
1. Suit Decreed.
2. Far from putting forth any credible defense, it is seen that the defendant no. 1 did not appear in the court altogether. Despite being served, no appearance was entered into by the defendant no. 1. As for defendant no. 2, it has not diligently pursued the case in as far as putting forth any evidence at all on record. If that be so, plaintiff evidence adduced on record can be taken to have inspired confidence, entitling him to the relief sought.
3. Pithily put, the case of the plaintiff is that he was working as a bus provider to the school and having a bus in his name which was engaged in Abhinav Public School, Pitampura, Delhi for pic up and dropping of the students from their school and houses. In May 2018, for the purposes of purchasing new mini bus, the plaintiff had applied for a loan from defendant no. 1. He paid Rs. 1.30 Lakhs in cash to Mahindra Inderplast Automobiles, Siraspur, Delhi and the amount of Rs. 11,50,437/- was Civ Suit 458/2022 Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 2/12financed / disbursed by defendant no. 1. However, the defendant no. 1 is stated to have shown a higher sanctioned loan amount of Rs. 12,47,457/- and obtained the plaintiff's signatures on the loan agreement where the rate of interest was not disclosed. As per the loan agreement, the plaintiff would repay the loan in 68 equal monthly installments of Rs. 32,340/- each. After purchasing the mini bus bearing no. DL-1VC-3438, plaintiff attached the said bus with Abhinav Public School, Pitampura, Delhi. As per the plaintiff, he had paid Rs. 8 Lakhs (approximately) upto 21.08.2018, from his bank account as well as in cash, against the said loan. However, when the COVID pandemic came, the operation of the mini bus, which was being used / attached with the abovesaid School was totally stopped and financial constraints were faced by the plaintiff, due to which EMIs towards the loan taken could not be paid. In such a scenario, on 14.12.2021, it is averred that the officials of the defendant no. 1 forcefully took the possession of the mini bus against signatures of the plaintiff on some papers by handing over a receipt and taking away the original documents of the vehicle. Plaintiff has requested the defendant no. 1 on various occasions to release the vehicle, however the same was ignored and defendant no. 1 even threatened the plaintiff to sell / transfer / hand over the vehicle if he did not pay heed to their illegal demands. On 20.03.2022, plaintiff came to know that the defendant no. 1 is going to sell / transfer the Civ Suit 458/2022 Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 3/12vehicle without his consent / permission. In such circumstances, plaintiff sent a legal notice dated 24.03.2022 to defendant no. 2 asking it to not transfer the ownership of the abovesaid vehicle if defendant no. 1 approaches for the same. Thereafter, defendant no. 1 approached the office of defendant no. 2 for transfer of the abovesaid vehicle. In view of the same, defendant no. 2 issued a notice dated 19.08.2023 to the plaintiff to file representation within 07 days. However, the said notice was received by the plaintiff on 14.09.2023. Plaintiff filed his reply but it was not accepted by the defendant no. 2, so he sent his reply through speed post. It is claimed by the plaintiff that the defendant no. 1 had let out the mini bus without his consent. Hence, the present suit proceedings came to be filed, wherein which the following reliefs were sought:
a) Pass a decree of permanent injunction in favour of the plaintiff and against the defendants not to transfer the ownership of mini bus bearing registration no.
DL-1VC-3438 / creating third party interest therein till the disposal of the suit.
b) Pass a decree of mandatory injunction against the defendant no. 1 to handover the possession of mini bus bearing registration no. DL-1VC-3438 to the plaintiff.
4. The defendant no. 1 was served on 20.05.2024. Despite the same, it never appeared in Court and vide order dated Civ Suit 458/2022 Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 4/1219.12.2024, right of the defendant no. 1 to file WS was closed and it was proceeded ex-parte.
5. The defendant no. 2 was served and status report came to be filed. Defendant no. 2 / MLO Regional Transport Office stated by filing of a status report that due to the pendency of the present proceedings, requisite changes in the name transfer qua the mini bus had not been made in the name of defendant no. 1, despite them having forwarded copy of arbitration award dated 31.10.2022 in question alongwith notice in the form of Form 37 under Rule 61(3) for updation of the records.
6. In order to prove its case, the plaintiff examined himself as PW1 and he tendered his evidence by way of affidavit Ex. PW1/A. He also relied upon documents being:-
i) Computer generated disbursement of loan : Ex. PW1/1
ii) Copy of Registration Certificate : Ex. PW1/2 (OSR)
iii) Computer generated bank statement : Ex. PW1/3
iv) Original cash receipts : Ex. PW1/4 (Colly.)
v) Copy of receipt issued by agent of defendant : Ex. PW1/5 (OSR) (Colly.)
vi) Legal demand notice : Ex. PW1/6 Civ Suit 458/2022 Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.pg no. 5/12
vii) Copies of the letter issued by the defendant no. 2 : Ex. PW1/7
viii) Reply to the letter issued by the defendant no. 2 : Ex. PW1/8
7. Upon being examined as such, PE was closed and final arguments were advanced.
8. Submissions heard. Case file perused.
9. In the present case, it is seen that the possession of the vehicle in question was taken over by defendant no. 1, as per the plaintiff version, forcefully and without due process, based upon arbitral award proceedings, undertaken, effectively by stealth, by defendant no. 1. The plaintiff has claimed that neither any loan recall notice was ever received nor the one qua the arbitration proceedings themselves. It has been alleged that the arbitrator in such proceedings was appointed unilaterally and as such therefore, such arbitral proceedings authorising the defendant no. 1 officials to take over possession of the vehicle in question was bad in law. In this regard, it has also been averred that the defendant no. 1 personnel got signed a document of receipt against his wishes whilst taking over the vehicle. Defendant no. 1 has altogether remained absent during the entire proceedings and as such therefore, no defence whatsoever has been put forth by Civ Suit 458/2022 Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.pg no. 6/12
him/on his behalf. But nevertheless, since copy of arbitral award proceedings have been placed before the court, they are liable to be considered. Given such a scenario therefore, to hold the repossession of the vehicle in question by defendant no.1 vide the arbitral award proceedings a vitiating or otherwise, would necessarily entail examining of the arbitration clause in question to examine if it provided for unilateral appointment of the arbitrator. The court is cognizant of the fact that the plaintiff has not preferred proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, as amended ('Act') and the present suit is one for injunction only. Ordinarily, a civil court cannot test the validity of an arbitral award in such collateral proceedings and in strict sense of the term, the correct remedy for setting aside an arbitral award is a petition under Section 34 of the Act. However, it is equally well settled that in case of a nullity, something which is non est from the very beginning, a go by can be given even in collateral proceedings (Kiran Singh v. Chaman Paswan, (1954) 1 SCC 710). Considering the same, evaluation of the arbitration clause is taken as hereunder to see if the appointment of the arbitrator amounted to unilateral or not, which in turn would have a bearing on the repossession of the vehicle as good or bad.
10.Before adverting to the specifics of the present case, it shall be in fitness of things to set out the legal principles Civ Suit 458/2022 Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 7/12enunciated over a period of time vis a vis unilateral arbitrator appointment. Superior courts have held that an arbitration clause allowing a party to unilaterally appoint a sole arbitrator excludes the other party from equal participation in the process of appointment of arbitrators. An arbitration clause requiring a party to select its arbitrator only from a curated panel of arbitrators violates the principle of equality. Such a reasoning is based on the premise that the independence and impartiality of arbitral proceedings can be effectively enforced only if parties participate equally at all stages of an arbitration, including at the stage of appointment of arbitrators. That is to say, in the absence of formal equality at the stage of appointment of arbitrators, parties may not have an equal say in the appointment of an unbiased arbitral tribunal. Equal treatment of parties at the stage of appointment of an arbitrator ensures impartiality during the arbitral proceedings. Unilateral appointment of a sole arbitrator has been repeatedly held to violate constitutional principles of equality.
11.Procedural equality is a necessary concomitant to an impartial adjudicatory process and as such therefore, it has been held that the unilateral appointment of an arbitrator by a person having a financial interest in the outcome of the arbitral proceedings will give rise to justifiable doubts on the independence and impartiality of the arbitrator.
Civ Suit 458/2022Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 8/12With regards waiver also, it's been reiterated time and again that in view of the amended Act now, parties can waive the allegation of bias against an arbitrator unilaterally appointed only when such waiver is by an express agreement in writing, and not otherwise.
12.Keeping the above principles in mind, the arbitration clause contained in the loan agreement document in the present case may be looked at. It is reproduced as herein below :
"All disputes, differences and/or claims arising out of this Agreement whether during its subsistence or three after shall be settled by arbitration in accordance with provisions of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof and shall be referred to the Sole Arbitration of an Arbitrator nominated by the company. The award given by such Arbitrator shall be final and binding on all parties to this Agreement. In the event of an appointed arbitrator dying or being unable or unwilling to act as arbitrator for any reason, the company on such death of the arbitrator or his inability or unwillingness to act as arbitrator shall appoint another person to act arbitrator. Such person shall be entitled to proceed with the reference from the stage left by his predecessor. The Venue of arbitration proceedings shall be Chennai at the registered office of the company which is presently at Dare House no, 2 (Old no. 234), NSC Bose Road, Parrys, Chennai-600001 or such other place/location/city which the company at its discretion may decide from time to time."
13.On a perusal of the clause as above, it is ex facie clear that the arbitration clause is as such which does indeed provide for appointment of arbitrator in a unilateral manner, by the defendant no. 1 company. If that be so, the same is invalid, Civ Suit 458/2022 Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 9/12null and void since its very inception and resultantly, any proceedings emanating therefrom are also nullity and cannot result into an enforceable award, being against public policy of India. To put it differently, award by an ineligible arbitrator, unilaterally appointed by defendant no. 1 is liable to be declared a nullity, which goes to the root of the jurisdiction. (Mahavir Prasad Gupta v. State (NCT of Delhi), 2025 SCC OnLine Del 4241, decided on 31-5-2025)
14.The defendant no. 1 in the present case got appointed a receiver vide order dated 23.10.2021 passed by the unilaterally appointed arbitrator, who got the vehicle in question repossessed from the plaintiff. Now since the arbitrator was unilaterally appointed, the award is liable to declared as jurisdictionally invalid. As the defendant no. 1 has chosen to remain absent during trial and offered no counter narrative, repossession of the vehicle based on such award proceedings cannot be sustained. Objection to an arbitral award can be taken either at the stage of challenge to the award under Section 34 of the Act or also, during the enforcement proceedings under Section 36 of the Act. In the present proceedings, if the plaintiff is denied relief, it would impliedly tantamount to valid enforcement of arbitral award, which cannot be done.
Civ Suit 458/2022Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 10/1215.Another connected aspect on which the court must dwell upon is with regards the current status of the vehicle in question itself. It is true that the defendant no. 1, as noted in the arbitral award proceedings, has already sold the same. However, since the genesis - the repossession thereof itself by defendant no. 1 has been held to be bad in law, subsequent sale by defendant no. 1 also was not proper/could not have taken place. The bonafide purchaser therefore, would be at liberty to take appropriate proceedings as per law, vis a vis his interests as against defendant no. 1 going forward. Importantly however, since defendant no. 2 has apprised the court that pursuant to the present proceedings having been undertaken, even despite request of defendant no. 1, the registration details qua the vehicle in question were not altered pending outcome of the present proceedings, the factum of subsequent selling of the vehicle would not be a constraining factor for this court to afford relief to the plaintiff, who has made out a favorable case based upon the facts before the court.
RELIEF
16.Considering the totality of circumstances therefore, this court holds as follows :
FINAL ORDER (1) Decree of permanent injunction is passed in favour of the plaintiff as against the defendants restraining them not Civ Suit 458/2022 Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.pg no. 11/12
to formally execute documents qua transfer of ownership of mini bus bearing registration no. DL-1VC-3438 from the name of the plaintiff.
(2) Decree of mandatory injunction is passed in favor of the plaintiff as against both the defendants and defendant no. 1 is directed to hand over the physical possession of the vehicle in question (mini bus bearing no. DL-1VC-3438) to the plaintiff. Any steps, ancillary and incidental to the same, as may be required to be undertaken by the defendant no.1 in that regard be taken accordingly.
Decree-sheet be prepared accordingly.
File be consigned to Record Room after due compliance.
Announced in the open Court Digitally
signed by
on 26.09.2025. GAURAV
GAURAV SHARMA
SHARMA Date:
2025.09.26
16:25:24
+0530
(Gaurav Sharma)
JSCC-cum-ASCJ-cum-Guardian Judge
North West/Rohini Courts/Delhi
26.09.2025
Civ Suit 458/2022
Raj Kumar Vs. M/s Cholamandlam Investment And Finance Co. Ltd.
pg no. 12/12