Madras High Court
M/S.Jp Granites vs M/S.Indulsind Bank Ltd on 3 August, 2018
Author: Abdul Quddhose
Bench: Abdul Quddhose
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 03.08.2018 CORAM THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE O.P.No.591 of 2012 1.M/s.JP Granites Rep.by its Managing Partner Mrs.A.Lakshmi Prasanna D.No.17/147-B, First Floor, Kumara Street, Chittor District, Andhra Pradesh. 2.Mr.R.Krishna Murthy, S/o.Mr.Venkataiah, D.No.22-268/B, Lawyers Colony, Kattamanchi, Chittor District, Andhra Pradesh. ..Petitioners Vs 1.M/s.IndulsInd Bank Ltd., Rep. By its Power of Attorney Holder, Mr.P.Bala Venkata Giri, Having its retail banking Division at No.115 & 116 G.N.Shetty Road, T.Nagar, Chennai - 600 017. 2.Mr.A.Purushothaman, S/o.Mr.Krishnamma Naidu, D.No.17-147B, First Floor, Kummara Street, Chittor. 3.Ms.S.Rajeni Ramadass, Sole Arbitrator, No.68, Basha Street, Choolaimedu, Chennai 94. .. Respondents Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the Award dated 28-12-2011 in Arbitration Case No.417 of 2008 passed by the 3rd Respondent and direct the 1st respondent to pay the costs to the Petitioners. For Petitioner : Mr.M.Baskaran For Respondents : Mr.K.Moorthy for R1 : R2-No appearance R3-Arbitrator ORDER
The instant petition has been filed under section 34 of the Arbitration and Conciliation act, challenging the Arbitral Award dated 28-12-2011 passed against the petitioners.
2. The brief facts leading to the filing of the instant petition are as follows;
2.1 The first petitioner has availed loan for the purchase of Hitachi Ex.330 vehicle from the first respondent under an agreement dated 02-05-2007. Under the loan agreement, first petitioner was liable to repay the amount financed i.e., Rs.35,00,000/- together with finance charges of Rs.9,97,500/- and insurance charges of Rs.1,00,000/- totalling a sum of Rs.45,97,500/- in 34 monthly instalments.
2.2 The second petitioner stood as a guarantor for the due performance of the loan agreement by the first petitioner.
2.3 According to the first respondent, the petitioners committed default in the repayment of the loan. In view of the default, there arose disputes between the parties and the said dispute was referred to arbitration by the first respondent who appointed the third respondent as the sole Arbitrator to decide the dispute on merits. The third respondent/sole-arbitrator acted upon the reference and after issuing notice to the parties to the dispute and after considering the materials available on record, has passed an Arbitral Award dated 28.12.2011 directing the petitioners as well as the second respondent who is also a guarantor jointly and severally to pay the first respondent a sum of Rs.56,00,000/- together with interest and costs.
2.4 Aggrieved by the Arbitral award dated 28-12-2011, the instant petition has been filed.
3. Heard, Mr. M. Baskaran, learned counsel for the petitioners and Mr. K.Moorthy, learned counsel for the first respondent.
4. According to the learned counsel for the petitioners, the primary ground for challenge in the instant petition is that even though the loan was availed in Cudappah by the petitioners through the Cudappah Branch of the first respondent, the arbitration was initiated by an official of T.Nagar Branch, Chennai of the first respondent who is not authorised to initiate the arbitration proceedings against the petitioners on behalf of the first respondent.
5. The second submission made by the learned counsel for the petitioners is that even though consent for sale of the repossessed vehicle was given on 29-02-2008 itself, the vehicle was sold by the first respondent only on 14-05-2010, that too, for a paltry sum of Rs.6,50,000/-.
6. According to the learned counsel for the petitioner, the vehicle would have fetched a much higher price if it was sold immediately on the date when the petitioners gave consent for the sale of the vehicle.
7. Per contra, learned counsel for the 1st respondent submitted that the petitioners were given sufficient opportunity by the Arbitrator to place all their defences in the arbitration.
8. According to him, the petitioners participated in the arbitration and they also filed their counter statement as well as the additional counter statement.
9. According to the first respondent, the petitioners are defaulters under the loan agreement which is also not disputed by the learned counsel for the petitioners.
10. This court after having considered the materials available on record, Arbitral Award and after hearing the submissions of the respective counsels observes the following;
(a) Admittedly, the petitioners are defaulters under the loan agreement. They have also not disputed the details of the default furnished by the first respondent in their claim statement.
(b) The only defence they have raised is that the first respondent has not initiated arbitration through an authorised person and they have also not sold the vehicle immediately after consent was given by the petitioners to sell the repossessed vehicle. These defences were also raised in their counter statement filed before the arbitrator.
(c) Under the loan agreement, the venue of arbitration is at Chennai which is also not disputed by the petitioners. The first respondent is also having its Head Office at Chennai. Since the venue of the arbitration is at Chennai and the Corporate Office of the first respondent is also at Chennai, the first respondent has initiated arbitration only through an officer who is working at Chennai, since the arbitration took place only at Chennai. Exhibit A1 being the copy of the Power of Attorney executed by the first respondent in favour of Mr.S.T.Krishnekumaar, Chief Manager, Legal empowering him to represent the 1st respondent in the Arbitral proceedings was also filed by the first respondent. Therefore the submission made by the learned counsel for the petitioners that the first respondent was not represented through an authorised representative is rejected by this court.
(d) In so far as the second submission made by the learned counsel for the petitioners that the vehicle would have fetched a much higher price if it was sold immediately after the petitioners gave consent for sale of the repossessed vehicle, no evidence has been place before the Arbitrator to show that the vehicle would have fetched a much higher price and further the petitioners have also not placed any better offer for the purchase of the subject vehicle before the Arbitrator. They have also not informed the first respondent that there are named buyers who are interested in buying the vehicle for a much higher price.
(e) The Arbitrator has passed a well reasoned and well considered Award. In the arbitration proceedings, fourteen exhibits were filed on the side of the first respondent and excepting for the following three exhibits, namely Ex. B1, Ex.B2 and Ex.B3 filed by the petitioners, all relate to copies of notices sent by the petitioners, no other document has been filed by the petitioners before the arbitrator.
11. Considering all the above factors, this Court is of the considered view that no ground has been made out by the petitioners to challenge the well considered arbitral award . The scope for interference under Section 34 of the Arbitration and Conciliation Act is very limited. Unless the findings of the Arbitrator are perverse and Award is patently illegal, this court cannot interfere under section 34 of the Arbitration and Conciliation Act.
12. The Hon'ble Supreme Court in a Catena of decisions starting from Renusagar Power Company Ltd vs. General Electric Company 1994 Supp (1) SCC 644 to the recent Associated Builders Vs DDA (2015) 3 SCC 49 has held only under the following grounds the Arbitrator Award can be challenged under Section 34 of the Arbitration and Conciliation Act:
(a) Procedure contemplated under Arbitration and Conciliation Act was not followed by the Arbitrator.
(b)The Arbitral Award is a non speaking Award.
(c)The Arbitrator has transgressed his jurisdiction.
(d)The Arbitral Award is in conflict with the public policy of India.
(iii)An award would be regarded as conflicting with the public policy of India if:-
(a) it is contrary to the fundamental policy of Indian law, or
(b) it is contrary to the interests of India,
(c) it is contrary to justice or morality,
(d) it is patently illegal, or
(e) it is so perverse, irrational, unfair or unreasonable that it shocks the conscience of the court.
(iv)An award would be liable to be regarded as contrary to the fundamental policy of Indian law, for example, if
(a) it disregards orders passed by superior courts, or the binding effect thereof, or
(b) it is patently violative of statutory provisions, or
(c) it is not in public interest, or
(d) the arbitrator has not adopted a judicial approach, i.e.has not acted in a fair, reasonable and objective approach, or has acted arbitrarily, capriciously or whimsically, or
(e) the arbitrator has failed to draw an inference which, on the face of the facts, ought to have been drawn, or
(f) the arbitrator has drawn an inference, from the facts, which, on the face of it, is unreasonable, or
(g) the principles of natural justice have been violated.
(v)Insofar the patent illegality has to go to the root of the matter. Trivial illegalities are inconsequential.
(vi) Additionally, an award could be set aside if
(a) either party was under some incapacity, or
(b) the arbitration agreement is invalid under the law, Or
(c) the applicant was not given proper notice of appointment of the arbitrator, or of the arbitral proceedings, or was otherwise unable to present his case, or
(d) the award deals with a dispute not submitted to arbitration, or decides issues outside the scope of the dispute submitted to arbitration, or
(e) the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(f) the arbitral procedure was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(g) the award contravenes the Act, or
(h) the award is contrary to the contract between the parties.
(vii) Perversity, as a ground for setting aside an arbitral award,has to be examined on the touchstone of the Wednesburyprinciple of reasonableness. It would include a case in which
(a) the findings, in the award, are based on no evidence, or
(b) the Arbitral Tribunal takes into account something irrelevant to the decision arrived at, or
(c) the Arbitral Tribunal ignores vital evidence in arriving at its decision.
(viii) At the same time,
(a) a decision which is founded on some evidence, which could be relied upon, howsoever compendious, cannot be treated as perverse,
(b) if the view adopted by the arbitrator is a plausible view, it has to pass muster,
(c) neither quantity, nor quality, of evidence is open to re-assessment in judicial review over the award.
(ix)Morality would imply enforceability, of the agreement, given the prevailing mores of the day. Immorality, however, can constitute a ground for interfering with an arbitral award only if it shocks the judicial conscience.
13. The petitioner has not satisfied any of the grounds mentioned above to interfere with the Arbitral Award dated 28.12.2011. Therefore, this Court is of the considered view that there is no merit in the petition filed by the petitioner. Hence, this petition shall stand dismissed. No costs.
03.08.2018 msr/arb ABDUL QUDDHOSE, J.
msr/arb O.P.No.591 of 2012 03.08.2018