Calcutta High Court (Appellete Side)
Hdfc Bank Ltd vs Banu Bibi & Anr on 9 July, 2010
Author: Harish Tandon
Bench: Harish Tandon
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In The High Court At Calcutta
Civil Revisional Jurisdiction
Appellate side
Present :
The Hon'ble Justice Harish Tandon.
C.O. No. 2363 of 2007.
HDFC Bank Ltd.
-vs-
Banu Bibi & Anr.
For the petitioner : Mr. Mainak Bose
For the Opposite Party : Mr. Shyamal Chakraborty
Judgment on : 09.07.2010
HARISH TANDON, J.:
This revisional application is directed against an order no. 32 dated June 25, 2007 passed by the learned Judge, 3rd Bench, City Civil Court at Calcutta in Title Suit no. 1191 of 2005 rejecting an application filed by the petitioner under section 5 and 8 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as the said Act).
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The opposite party instituted Title Suit no. 1191 of 2005 against the petitioner and the opposite party no. 2 herein, seeking a declaration that the petitioner and the opposite party no. 2, being the defendants therein, have no right to illegally seize the vehicle in question upon utilizing the blank and printed papers signed by the opposite party at the time of taking loan and to convert the same into colourable document and permanent injunction restraining the defendants therein to seize the vehicle in question except due process of law.
The opposite party no. 1 also filed an application for temporary injunction under Order 39 Rule 1 and 2 of the Code of Civil Procedure. By an order dated August 12, 2005 the trial court passed an ad interim order restraining the defendants therein from seizing the motor vehicle in question except due process of law till 9th September 2005. The trial court further directed the opposite party no. 1 to comply the provisions contained in Order 39 Rule 3 of the Code of Civil Procedure. The opposite party no. 1, as it appears sent the requisites by registered post on the same day.
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Subsequently the opposite party no. 1 also filed an application under section 151 of the Code of Civil Procedure alleging that in spite of an order of injunction dated August 12, 2005 the petitioner forcibly took possession of the vehicle in question and prayed for a direction upon the Officer in-charge, Motor Theft Section, Detective Department, Lalbazar to forthwith reseize the vehicle in question and to hand over the same to the opposite party no. 1, Alternatively, an Advocate-Receiver be appointed for such purpose. The petitioner entered appearance and filed an application under section 5 and 8 of the said Act. It is contended that by an agreement dated October 5, 2004 the opposite party no. 1 took loan for purchase of the vehicle in question and agreed to repay the same with accrued interest by 47 equated monthly installments. It is further contended that the said agreement contains an arbitration clause and as such the court should refer the parties to arbitration. The petitioner also contested the said application under section 151 of the Code filed by the opposite party no. 1 contending that the agreement dated 5th October 2004 not only contains an arbitration clause but also confers right upon the petitioner to take possession of the said vehicle without resorting to any legal proceeding. The petitioner further stated that 4 the opposite party no. 1 defaulted in payment of the agreed monthly installments, the possession of the vehicle in question was taken by the petitioner on 8th August 2005 through the opposite party no. 2 being the Commissural Associates who is also the recovery agent of the petitioner.
By consecutive order passed on the same day the aforesaid two applications were disposed of by the trial court thereby dismissing an application filed by the petitioner under section 5 and 8 of the said Act and allowing the said application filed by the opposite party no. 1 under section 151 of the Code directing the Officer in-charge Motor Theft Section, Detective Department, Lalbazar to forthwith reseize the vehicle in question and to hand over the same to the opposite party no. 1.
Mr. Mainak Bose, learned Advocate appearing on behalf of the petitioner assailed the impugned order on the ground that once the court finds that there is an existence of a valid arbitration agreement the court is left with no option but to refer the parties to an arbitration as the provisions contained under section 8 of the said Act 5 are mandatory. He further argues that the trial court disposed of the said application filed by the petitioner under section 5 and 8 of the said Act on technicalities without adverting itself as to the merit thereof and further contended that the said order is not sustainable.
Mr. Bose in support of his contention has cited the following judgments : (2003) 6 SCC 503 (Hindustan Petroleum Corp. Ltd. Vs. Pink City Miduly Petroleums, (2003) 5 SCC 531 (Sukanya Holdings (P) Ltd. Vs. Joyesh Pandys & Anr.), (2006) 7 SCC 275 (Rashtriya Ispat Nigam Ltd. & Anr. Vs. Verna Transport Co., (2007) 3 SCC 686 (Agri Gold Exims Ltd. Vs. Sri Lakshmi Units & Worems & Anr.), AIR 1975 Cal 222 (Biswanath Raugnta Vs. O.I. Engineering Co.) and AIR 1974 Andhra Predesh 278 (M/s. Srivenkateswara Constructions & Ors. Vs. Union of India).
Mr. Shyamal Chakraborty, learned Advocate appearing on behalf of the opposite party disputed the contention of the petitioner in contending that the opposite party no. 1 as plaintiff challenges the very agreement being a product of fraud and as such it is not the arbitrator but the civil court which can decide such dispute. He 6 further contends that the opposite party no. 2 is not a party to arbitration agreement and as such it is only the civil court which can decide the disputes involved in the said suit. He strenuously argued that the person who affirmed and verified the said application on behalf of the petitioner as a Constituted Attorney and/or authorized signatory did not produce any document of his authority and as such the said application is liable to be dismissed.
Mr. Chakraborty also cited various judgments in support of his submission which are as follows : 2009 (2) CHN 597 (GE Capital Vs. Amritajit Mitra), (2003) 5 SCC 531 (Sukanya Holdings (P) Ltd. Vs. Joyesh Pandys & Anr.), 2005 (1) CHN 159 (Idcol Cement Ltd. Vs. P. Roy Chowdhury), (2008) 2 SCC 602 (Atul Singh & Ors. Vs. Sunil Kumar Singh & Anr.) and (2000) 4 SCC 539 (P. Anand Gajapathi Raju & Ors. Vs. P.V.G Raju (Dead) & Ors.) The opposite party no. 1 has filed the said suit alleging that for the purpose of financial assistance in buying the motor vehicle in question, she approached the opposite party no. 2 who agreed to grant to extend the loan of Rs. 3,94,000/-. In an earlier part of the 7 month of October, 2004 the petitioner granted the loan to the opposite party no. 1 for purchase of the said vehicle and the loan amount with accrued interest was agreed to be repaid in 47 equated monthly installments of Rs. 11,097/- commencing on and from 5th November 2004. It is further alleged that the said loan was agreed to be granted strictly in terms of the RBI guidelines. At the time of granting the loan the opposite party no. 2 got the opposite party no. 1 signed various blank documents and papers about 60-70 numbers which the opposite party no. 1 in good faith executed and signed without ascertaining the contents therein. Thus the opposite party no. 2 has practised fraud upon the opposite party no. 1. It is only on October 29, 2004 opposite party no. 2 issued a letter to the opposite party no. 1 indicating that the loan has been extended to her by the petitioner and the payments of installments to be made directly to the petitioner.
The opposite party no. 1 paid upto five installments and the part of sixth installment to the petitioner. It is further alleged that the opposite party no. 2 attempted to seize the vehicle in question forcibly on July 12, 2005 but could not succeed and as such she apprehends 8 that further attempt may be made for forcible seizure of the vehicle in question.
On the basis of the allegation as stated above, the opposite party no. 1 filed an application for temporary injunction and an ex parte ad interim order of injunction was passed on 12th August 2005.
Section 5 of the Arbitration and Conciliation Act 1996 postulates that no judicial authority shall intervene in a matter which are governed by part I of the said Act which includes an adjudication by the Arbitral Tribunal as well as enforcing of an award thereof.
Section 8 of the said Act puts a mandate on the judicial authority before which an action is brought to refer the parties to arbitration if the court is satisfied that the subject matter involved in the said action is a subject mater of an arbitration agreement. Such recourse should be adopted by the judicial authority provided an application is accompanied by an original arbitration agreement or duly certified copy thereof and a party applying has not submitted his first statement on the substance of the dispute. 9
On a bare reading of the aforesaid provision it emerges that the court should not intervene and/or entertain a matter in an action before it if the said matter is a subject matter of an arbitration agreement. The enquiry should be restricted within the four corners of section 8 of the said Act. The trial court while dealing with such an application has not applied its judicial mind as envisaged under section 8 of the said Act but has travelled dehors the said provision and dismissed the said application on the ground that the person who affirmed and verified the pleading as authorized signatory is not competent, in absence of any document authorizing him to sign and verify the said application.
It would be profitable to mention Order 29 Rule 1 of the Code of Civil Procedure which reads thus :
"R. 1. Subscription and verification of pleading - In suits by or against a corporation any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case."10
On a plain reading of the said provision it merges that a suit by or against a corporation (body corporate in this case) the secretary or the director or any principal officer might sign and verify on behalf of the corporation. But a company, being a juristic entity, can authorize any person to sign on its behalf. To buttress the said contention it would be relevant to refer a judgment of the apex court reported in AIR 1997 SC 3 (United Bank of India Vs. Naresh Kumar & Ors.). The apex court dealing the similar objection was pleased to observe :
"9. In cases like the present where suits are instituted or defended on behalf of a public corporation, public interest should not be permitted to be defeated on a mere technicality. Procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is sufficient power in the courts, under the Code of Civil Procedure, to ensure that injustice is not done to any party who has a just cause. As far as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable.
10. It cannot be disputed that a company like the appellant can sue and be sued in its own name. Under Order 6 Rule 14 of the Code of 11 Civil Procedure a pleading is required to be signed by the party and its pleader, if any. As a company is a juristic entity it is obvious that some person has to sign the pleadings on behalf of the company. Order 29 Rule 1 of the Code of Civil Procedure, therefore, provides that in a suit by or against a corporation the Secretary or any Director or other Principal Officer of the corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6, Rule 14 together with Order 29, Rule 1 of the Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having being executed a person referred to in Rule 1 Order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and dehors Order 29, Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6, Rule 14 of the Code of Civil Procedure a person may be expressly authorised to sign the pleadings on behalf of he company, for example, by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In 12 absence thereof and in cases where pleadings have been signed by one of its officers a Corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The court can on the basis of the evidence on record, and after taking all the circumstances of the case, specifically with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by its officer."
In view of the ratio decided by the apex court in case of United Bank of India Vs. Naresh Kumar & Ors. (supra) I have no hesitation to hold that the approach of the trial court in dealing with an application filed by the petitioner was wrong and uncalled for.
Although an extensive argument is advanced as to the merit of the said application under section 5 and 8 of the said Act filed by the petitioner but I do not wish to decide the same as in my considered opinion the trial court did not apply its mind nor decide the said aspect. In my considered opinion the trial court should decide the said application on merit in accordance with law afresh. 13
The revisional application is allowed. The order impugned is hereby set aside. The trial court is directed to reconsider the application filed by the petitioner under section 5 and 8 of the Arbitration and Conciliation Act 1996 afresh without being influenced by any of the observation made by this court in this revisional application. I trust and hope that the trial court shall make all effort to dispose of the said application under section 5 and 8 of the Arbitration and Conciliation Act 1996 filed by the petitioner as expeditiously as possible preferably within a period of two months from the date of communication this order.
(Harish Tandon, J.)