Bangalore District Court
( By Sri. Vss vs Took Signatures On Various Forms And Not ... on 17 December, 2022
KABC010167942016
IN THE COURT OF THE V ADDL. CITY CIVIL JUDGE,
AT BENGALURU.
(CCH No. 13)
Present: Sri. ONKARAPPA.R, B.Sc., LL.B.
V ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Dated this the 17th day of December 2022.
A.S. No. 105/ 2016
BETWEEN
1. R. Manjula,
D/o Ramakrishna,
W/o R. Sundhar Das,
Aged about 41 years,
R/at Door No.365/4A,
Jetty Street, Nazarabad,
Mysore-10.
2. R. Sundhar Das,
S/o G.G. Rangappa,
Aged about 48 years,
R/at Door No.365/4A,
Jetty Street, Nazarabad,
Mysore-10.
Plaintiffs
( By Sri. VSS., Advocate )
AND
1. M/s HDFC Bank Ltd.,
Golden Towers, 3rd Floor,
Old Airport Road, Kodihalli,
Bengaluru-17.
Rep.by its Dy. Manager and
authorized representative
Mr. Kishore Hegde
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2. Sri. Lakshmikant R. Deshi,
Hon'ble Sole Arbitrator,
Retd. Judge, No.202,
Vandana Sarovar,
Jakkasandra 5th A Cross,
Koramangala 1st Block,
Bengaluru-34. Defendants
(D.1- Sri. SAA., Advocate
D.2- Absent)
-: JUDGMENT :-
The petitioners/plaintiffs have filed the present suit under
Section 34(1) of the Arbitration and Conciliation Act 1996, with a
prayer to set aside the Award passed by the learned sole
arbitrator in Arbitration Proceeding No.0142/2016 dated
24/05/2016 along with cost of the suit.
2. The brief facts are as under:-
That, M/s HDFC Bank Ltd., being incorporated under the
Companies Act and carrying on its business of Ultra Light
Commercial Vehicles and other auto finance scheme. During the
course of its business, on execution of certain document the
plaintiffs availed credit facility under the project Ultra Light
Commercial Vehicle Loan for purchase of Mahendra Bolero
Pickup PS model by executing loan agreement. Further averred
that, despite service of notice there was no discharge of the loan
appropriately and properly. It is specifically contended that the
defendant took signatures on various forms and not provided an
opportunity to the plaintiffs to read the contents of the
documents. Due to unavoidable circumstances in the family the
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installments have not been made in proper time and the plaintiffs
were also ready to pay the balance installments and also to pay
regular installments. But the defendants with malafide intention
the proceedings have been initiated and ther CMP No.93/2005 e
was an attempt to seize the vehicle. The arbitrator has passed
the impugned award without examining the appropriate
documents and equal rights have not been given to the parties
and passed the award without hearing. Being aggrieved the
present suit is filed on the following grounds:-
a) The arbitrator ought to
have granted reasonable and
equal opportunity for the
purpose of deciding the
arbitration proceedings and
also ought to have noticed
that the plaintiffs have paid
installments within time and
as such action for auctioning
the movable vehicle ought
not have been given.
b) The arbitrator ought to
have considered that the
plaintiffs have personally
visited the office of the
respondent on many
occasion and sought time to
pay installments due to
unavoidable circumstances in
the family, the plaintiff could
not meet the commitment,
that does not mean that the
proceedings for the seizure of
the vehicle is to be
considered contrary to the
Arbitration agreement.
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c) Under the arbitration
agreement, it is incumbent
upon the authority to show
that there are reasonable and
sufficient opportunity that is
necessarily required to be
given for the purpose of
regularizing the loan and also
to regularize the responsibility
with an intention to see that
fair opportunity is given for
realization of the amount. The
arbitrator has failed to give
reasoning that the entire
agreement is a unilateral
agreement, as such under
unilateral agreement there
cannot be a saddling of
liability without fair
opportunity, as such arbitrator
has not conducted under the
sound judicial principles.
On these grounds the plaintiffs have prayed for setting
aside the award dated 24/05/2016. In support to the claim of the
plaintiffs, the plaintiffs have also relied on the judgment reported
in AIR 2003 SC 2629 in between Oil and Natural Gas
Corporation Ltd., Vs. SAW Pipes Ltd.,
3. Records reveal that defendant No.1 appeared
and filed statement of objections where in his objections he
contended that, the arbitration tribunal was duly formed in
accordance to the arbitration agreement and fairly conducted in
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A.S. No.105/2016
accordance to the Act without there being any lapses. The
plaintiffs have preferred this application in contravention to
provisions of the Act, as such the same is liable to be dismissed
in limine at preliminary stage itself. It is further contended that,
the defendant No.1 bank had advanced loan of Rs.5,40,967/- to
the plaintiffs under the scheme Ultra Light Commercial Vehicle
Loan for purchase of Mahendra Bolero Pickup PS model
bearing No.KA-55-5678 vide loan agreement dated 26/11/2014.
Thereafter the respondents failed and neglected to pay over
dues even after repeated requests, owing to the said default the
defendant No.1 bank with empowerment in terms of loan
agreement repossessed the hypothecated vehicle and thereafter
the plaintiffs approached the defendants to release the seized
vehicle. Since the plaintiffs were not ready to pay the loan
amount the defendants refused to release the vehicle. Thereafter
the plaintiffs filed a suit for bare injunction against the defendants
in O.S. No.877/2015 before 1st Addl. Civil Judge and JMFC at
Mysore and defendants filed an application under Section 8 of
Arbitration and Conciliation Act and the same came to be
allowed vide 06/10/2015 with a direction to approach and resolve
the dispute before the Arbitrator. The Hon'ble Arbitrator on
accepting the reference the notices were issued to the parties,
the defendants filed objections to the claim statement, trial was
commenced, arguments were heard and sole arbitrator passed
an award dated 24/05/2016. Though the plaintiffs appeared in
person and submitted to report settlement but failed and
contested the matter before the arbitrator and on perusal of the
document the sole arbitrator passed the award in accordance
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A.S. No.105/2016
with law as to the plaintiffs shall pay Rs.6,55,545/- with future
interest to the defendants and in compliance of the said award
the defendants herein sent pre sale notice, despite the same the
plaintiffs did not come forward to clear the outstanding dues, as
such the vehicle was auctioned and sale consideration amount
was credited to the loan account. As such, the arbitration
proceedings has been initiated in accordance to the terms and
conditions of arbitration clause mentioned in the loan agreement
and appointment of arbitrator is very much in line of the agreed
terms and passed the award in accordance to the law and the
award is not on any infirmities leading to grounds of appeal as
mentioned in the Act, as such the impugned award is not under
any of the ground mentioned in Section 34 of the Act, the awards
has attained finality and does not survive for consideration.
The Hon'ble Apex Court of India in Associate Builders Vs. Delhi
Development Authority [ 2014(4) ARBLR 307 (SC) has held that
the grounds for interfering with an arbitral award are limited to
those mentioned in Section 34 of the Act and merits of the award
can be looked into only under the broad head of public policy.
The plaintiffs have filed the suit only to dodge and obstruct the
enforcement of the award. On these grounds defendants
prayed for dismissal of the suit.
4. Heard arguments on both the sides. Perused the
written arguments filed by the defendant No.1 along with
material on record. As per the order sheet dated 25/08/2022
records from the 2nd defendant received along with memo.
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5. The points that arise for my consideration are :
1. Whether the plaintiffs establish
the fact that the award passed by
the sole arbitrator is in
contravention to provisions of
Section 34 of the Arbitration and
Conciliation Act, 1996 ?
2. Whether the award passed by the
sole arbitrator in Arbitration
Proceeding No.0142/2016 dated
24/05/2016 is liable to be set
aside?
3. What order ?
6. My answers to the above points are as under :
Point No.1 In the negative.
Point No.2 In the negative.
Point No.3 As per final orders for
the following,
-: R E A S O N S :-
7. Point No.1 and 2 :- Since Point No.1 and 2
hereby linked with each other, point No.1 and 2 that I have
taken to consideration simultaneously to avoid the repetition of
facts.
8. When go through the plaint it is particular grounds
of the plaintiffs that sole arbitrator ought to have granted a
reasonable and equal opportunity for purpose of deciding the
arbitration proceedings. Arbitrator ought to have noticed that the
plaintiffs have already paid the installment within time and as
such auctioning the vehicle ought not have been given. Further
the plaintiffs have also contended that there are reasonable and
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A.S. No.105/2016
sufficient opportunity that the plaintiffs necessarily required for
the purpose of regularizing the loan and also regularizing the
responsibility with an intention to see that fair opportunity given
for realization of the amount, the rules and regulation provided
for the regulation of the amount. Also specific contention of the
plaintiffs that sole arbitrator has failed to give a reasoning that
the entire agreement is a unilateral agreement and in case of
unilateral agreement, there cannot be a saddling of liability
without fair opportunity.
9. On the contrary, in the written arguments, 1st defendant
has specifically contended that, the plaintiffs failed to pay any
of the EMI to the 1st defendant in entirety. 1St defendant has
rightly taken the possession of the vehicle as per due process
of law. The present suit filed by the plaintiffs is one nothing but
to dodge and obstruct the execution of award amount awarded
by the sole arbitrator. Before passing of the award the sole
arbitrator followed the utmost procedure as per the Arbitration
and Conciliation Act 1996. The award passed by the sole
arbitrator is rightly correct and no reason remains to interfere.
Even go through the entire plaint of the plaintiffs the same plaint
have not disclosed any of the grounds as termed under Section
34 of the Arbitration and Conciliation Act, 1996. Since no
grounds stated in the plaint, itself an ground for dismissal of the
suit alone that score. Therefore for the above all grounds and
reasons taken in both objection and written argument, 1 st
defendant sought for dismissal of the suit with cost.
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A.S. No.105/2016
10. In the case on hand, it is an admitted fact
that, soon after receipt of the letter, the learned arbitrator
issued notice to both the parties to fixing an arbitration on
24/02/2015 at 5 p.m. In turn they appeared in person along
with their counsels and filed their pleadings, as such, Section
34(2) (iii) of the Act is not violated by the sole arbitrator.
Further based on pleadings narrated before the sole arbitrator
the learned arbitrator has framed in all 3 points for
consideration. In order to prove its case on behalf of the
claimant/ 1st defendant, one Mr. Kishore Kumar Hegde
authorized signatory of 1st defendant examined at before the
sole arbitrator as C.W.1 and he got marked documents at
Ex.C.1 to C.8 and C.8(a). 2 nd plaintiff by name Sundar Das.R
examined as R.W.1. Record also reveals that, having heard on
both the sides the learned sole arbitrator has passed detail
award by considering the oral and documentary evidence
available before the sole arbitrator vide its order dated
24/05/2016 by allowing the claim of the claimant 1 st defendant
holding that claimant/1st defendant is entitled for a sum of
Rs.6,55,545/- with future interest @ 18% p.a. till the date of
realization within three months. Further, the application
seeking permission to sell the vehicle Mahindra Bolero Pickup
PS bearing KA 55 5678 in the auction sale to credit the amount
in to loan account of the respondents is allowed and the
respondents may by permitted to participate in auction sale.
11. After condensed the controversy between the parties
to the proceedings that it requires me to make note of the facts
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which are not disputed. After go through the plaint, written
objections and impugned award the same hereby evident that,
it is not much disputed fact that the plaintiffs borrowed a loan at
before the 1st defendant. The plaintiffs have also not much
disputed that the 2nd defendant i.e. sole arbitrator followed the
procedure before pass an award. It is not particular case of the
plaintiff that the award passed by the sole arbitrator is against
to any public policy and against to any law of the land. On the
contrary, 1st defendant have also not much disputed that the
possession of the vehicle that he taken and put into the same
for public auction. Further 1 st defendant has also not much
disputed amount which derive from the public auction of the
vehicle that he adjusted to loan account of the plaintiffs.
12. A plain reading of Section 34 of the Act abundantly
makes it clear that, an arbitral award may be set aside by the
court only if the party making the application furnishes proof
that, he was under some incapacity, arbitration agreement is
not valid under the law, he was not given proper notice of an
appointment of an arbitrator or of the arbitral proceedings, or
arbitral award deals with a dispute not contemplated or not filed
within the terms of the arbitration, or the arbitral procedure was
not in accordance with the agreement of the parties, or subject
matter of the dispute is not capable of settlement by arbitration
or the said award is in conflict with the public policy of India
among other grounds shown in explanation 1 and 2 and t
application should be made within three months from the date
of receipt of arbitral award or from the date of disposal of
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request made under Section 33 of the Act by the arbitral
tribunal.
13. Further, Section 5 of the Act also makes it clear
about the fact that, what extent of judicial intervention can be
made in such a case. Section 42 of the Act also states about
jurisdiction of the court, where with respect to an arbitration
agreement, any application has been made in a court, that court
alone shall have the jurisdiction over the arbitral proceedings.
14. So in the light of the aforesaid provisions if we
carefully go through the arbitration award dated 24/05/2016 we
can find that, the 1st defendant has referred the matter through a
letter dated 11/01/2016 for arbitration by appointing the 2nd
defendant as sole arbitrator to settle the dispute due to default
under the provisions of the Arbitration and Conciliation Act, 1996
invoking Clause -31 of the loan agreement to direct the plaintiffs
to pay Rs.6,55,545/- with future interest at the rate of 18% p.a.
from the date of termination till the date of realization.
15. It is relevant to point out that, if this court find that
finding of facts recorded by the arbitrator is an error apparent
on the face of record and has not followed the statutory legal
position, then only it would be justified in interfering with the
award, otherwise it is not permissible in the eye of law.
16. So on careful examination of the award, now it is
clear that, the procedure adopted by the learned sole arbitrator
are not in contravention with the provisions of Section 34(2) of
the Act. Admittedly, the application filed under Section 34 of the
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Act is not an appeal and it is only an application for setting aside
the arbitral award. This being the fact as observed by the
Hon'ble Apex Court in the case of P.R. Shah, Shares & Stock
Brokers (P) Ltd., at Point C {(2012) 1 SCC 594 } referred supra,
this court cannot sit in appeal over award by reassessing or re-
appreciating evidence to find out whether different decision could
be arrived at against the findings of sole arbitrator in absence of
the grounds stated in Section 34 of the Act.
17. It is also worth to note that, as held by the Hon'ble
Apex Court in the case of Emkay Global Financial Services Ltd.,
{(2018) 9 SCC 49} the suit or applications under Section 34 of
the Act are summary in nature followed by an opportunity to the
applicant plaintiff to prove existence of any ground under
Section 34(2) of the Act only and on no other ground, otherwise
the very object of the Act for speedy resolution of the arbitral
disputes will be defeated. So, the burden of proof lies on the
person who makes the application is statutorily specified, as
such framing of issues also not necessary.
18. It is not the case of the plaintiff that, the award passed
by the sole arbitrator is in conflict with public policy of India, as
such, as observed by the Hon'ble Apex Court in the case of
Swan Gold Mining {(2015) 5 SCC 739} on this ground also
interference by this court is unwarranted.
19. Wherefore having regard to the facts and circumstances
of the case I am of the opinion that award passed by the learned
sole arbitrator is just and proper, as such there is no justification
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to interfere with the award passed by the sole arbitrator. On the
other hand the grounds made out by the plaintiffs are not
sufficient to modify the award passed by the sole arbitrator in
Arbitration Proceeding No.0142/2016 dated 24/05/2016. More
over, the grounds urged by the plaintiffs do not satisfy any of the
ingredients enumerated under the provisions of Section 34 (2) of
the Arbitration and Conciliation Act, 1996. With these
backgrounds of observation that I am of the view that there is an
substantial force in the written argument of 1 st defendant. For
the above all reasons and for the materials available on record
the judgment which relied by the plaintiff not applicable to the
case on hand. As the same citation reported in the different
context than to the facts available on case record. Since the
plaintiffs fail to made out any illegality, error or any of the
procedure in contravention to Section 34 of Arbitration and
Conciliation Act 1996 and neither of the grounds made in the
plaint are not known to Section 34 of Arbitration and Conciliation
Act that I have no hesitation agree with the award passed by the
learned sole arbitrator. Consequently the arbitration suit filed by
the plaintiffs is liable to be dismissed. Hence I answer Point
No.1 and 2 are in the negative.
20. Point No.3 :- For the foregoing reasons I proceed
to pass the following:
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ORDER
The arbitration suit filed under Section 34 of the Arbitration and Conciliation Act 1996 by the plaintiffs/respondents to set aside the award passed in Arbitration Proceeding No.0142/2016 dated 24/05/2016 by the learned sole arbitrator hereby dismissed.
Parties to bear their own costs.
Draw decree accordingly. [ Dictated to the Stenographer directly on computer, corrected by me and then pronounced in the Open Court on 17th day of December 2022].
[ ONKARAPPA.R ] V ADDL. CITY CIVIL & SESSIONS JUDGE, BENGALURU.
15A.S. No.105/2016 Operative portion of the judgment pronounced in open court vide separate judgment:-
ORDER The arbitration suit filed under Section 34 of the Arbitration and Conciliation Act 1996 by the plaintiffs/respondents to set aside the award passed in Arbitration Proceeding No.0142/2016 dated 24/05/2016 by the learned sole arbitrator hereby dismissed. Parties to bear their own costs. Draw decree accordingly.
[ ONKARAPPA.R] V ADDL.CITY CIVIL & SESSIONS JUDGE BENGALURU