Madras High Court
S.Kothandaraman vs M/S.Equitas Small Finance Bank Limited on 9 November, 2020
Author: P.T. Asha
Bench: P.T. Asha
CMA.No.4320 of 2020
. IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 09.11.2020
CORAM
THE HONOURABLE Ms. JUSTICE P.T. ASHA
CMA.No.4320 of 2020
in CMP.No.24500 of 2019
1.S.Kothandaraman
2.Mrs.K.Rani ... Appellants
Vs
M/s.Equitas Small Finance Bank Limited,
(Formerly known as M/s.Equitas Finance Ltd.,)
F-39, Spencer Plaza, No.769, Fourth Floor,
Phase II, Anna Salai,
Chennai - 600 002.
... Respondent
Prayer: Civil Miscellaneous Appeal filed under Section 37(1) Arbitration
and Conciliation Act, praying to set aside the interim order dated
22.08.2019, in I.A.No.1 of 2019, in claim petition
No.MG/ESFB/SME/319/2018, under the loan agreement dated
ELPVELOR0002983 on the file of the learned Arbitrator Mrs.Meera
Gnanasekar, Linghi Chetty Street, Chennai.
For Applicant : M/s.K.Venkatesan
For Respondent : Mr.A.Damodaran
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CMA.No.4320 of 2020
ORDER
The unsuccessful applicant/respondent in an Arbitral Proceedings is the appellant herein.
2. The appeal is filed challenging the dismissal of the interim application filed by the appellant herein under Section 43 of the Arbitration and Conciliation Act 1996, as amended by the Amendment Act 2015 r/w Order 7 Rule 11 (a) and (b) of the C.P.C.
3. The brief facts necessary for disposing of the above appeal are as follows:
The respondent which is a non banking financial company had extended the loan to the appellants and the property of the appellant had been offered as security. The appellants had undertaken to repay the amount borrowed in 120 equated monthly installment of Rs.30,329/- commencing from 10.01.2015 and concluding on 10.12.2007. 2/8 http://www.judis.nic.in CMA.No.4320 of 2020
4. The agreement between the parties provided for resolution of disputes through arbitration. The respondent company would submit that the appellants had committed default in payments of the monthly instalment and despite several reminders they had not come forward to regularise the account. As on 12.09.2018, the due was a sum of Rs.35,06,853/-. Therefore, the respondent had invoked the Arbitration Clause and issued a demand notice dated 20.09.2018.
5. After the Arbitrator had entered reference notice had been served on the appellants herein and they had come forward with the impugned application. The following are the grounds on which the said applicant was filed:
(a) The claim is hopelessly barred by limitation;
(b) The appellant had not executed any agreement in favour of the respondent M/s.Equitas Small Finance Bank Limited;
(c) The loan agreement is opposed public policy;
(d) The Arbitrator does not have jurisdiction as the entire cause of 3/8 http://www.judis.nic.in CMA.No.4320 of 2020 action arose at Gudiyattam, Vellore District;
(e) The claim does not disclose any cause of action.
6. The said application has been opposed the respondent/claimant by filing a counter:
(a) As regards the issue of the limitation, the respondent would contend that the loan agreement had come to an end on 10.12.2027.
Further the last instalment was paid on 10.09.2015 and the appellants were to pay successive instalments which gives rise to a continuous cause of action;
(b) The allegation that the claim petition does not make out a cause of action is totally false. Since the respondents had extended the loan facility to the appellants, which was to be repaid in equated monthly instalment, the appellants had failed to comply with the repayment schedule as a result of which there was a default giving rise to levy of interest and the total amount outstanding was a sum of Rs.35,00,000/-. The claim petition has been filed invoking the Arbitral Clause in the agreement. This constitutes the cause of action for filing the claim. 4/8 http://www.judis.nic.in CMA.No.4320 of 2020
(c) The respondent would contend that the company remains the same and it was only a change in the nomenclature. Originally the company was known as Equitas Finance Limited, which was the name that was in vogue or in usage, at the time, when the appellants had borrowed the money. Thereafter, the name has been changed to the present name. Therefore, there has been no change in the constitution or the management of the company which continues to remain the same;
(d) The respondent would submit that under the Arbitration clause signed by both parties, the venue of Arbitration has been fixed at Chennai. Therefore, the appointment of an Arbitrator and the conduct of the Arbitral Proceedings at Chennai is very much within the Jurisdiction and in keeping with the terms of the loan agreement.
7. The respondents had therefore sought for the dismissal of the application.
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8. By an order dated 22.08.2019, the learned Arbitrator was pleased to dismiss the said application. Challenging the same, the appellants are before this Court.
9. Heard the counsel on either side.
10. At the outset, it is not known as to how the application that has been filed by the appellants would lie under Section 17 of the Arbitration and Conciliation Act 1996. Section 17 contemplates that during the Arbitral Proceedings or any time prior to the making of the award, the party can apply to the Arbitral Tribunal for an interim measure of protection in respect of the matters adumbrated therein. The very language conveys that the application under Section 17 would be effective only till the making of the Arbitral Award. Thereby, the Arbitral Tribunal would continue to exercise its jurisdiction, even after the interim order has been passed. The instant application is one filed for rejecting the claim petition. The provisions of the Civil Procedure Code does not apply to the Arbitral 6/8 http://www.judis.nic.in CMA.No.4320 of 2020 Proceedings. The rejection of the claim statement, by no stretch of imagination, can be construed to be an interim measure as it seeks to bring to an end the Arbitral Proceedings without proceeding to the enquiry stage. The learned Arbitrator has rightly rejected the said application.
11. I do not find any infirmity in the order passed by the learned Arbitrator. The Civil Miscellaneous Appeal filed under Section 37 (2b) of the Arbitration and Conciliation Act, stands dismissed. Consequently, connected miscellaneous petition is closed.
09.11.2020
Internet : Yes/No
Index :Yes/No
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P.T. ASHA. J,
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