Delhi District Court
Kanta Pasi vs Muthoot Finance Ltd on 21 October, 2023
IN THE COURT OF MS. RAVINDER BEDI
DISTRICT JUDGE (COMMERCIAL COURT)-12
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI.
In the matter of:-
OMP COMM 61/2021
Ms. Kanta Pasi
W/o Sh. Hiralal Pasi
R/o. Ward no. 14, Ghaspura
Khandwa, M.P.-450001
.....Petitioner
VERSUS
M/s. Muthoot Finance Ltd.
Registered Office
Muthoot Towers, Alaknanda,
New Delhi-110019
.....Respondent
Appearance :
For Petitioners : Ms Latika Wadhwa, Advocate.
For Respondent: Mr. Prabhakar Pandey, Advocate.
OMP (COMM) No. 61/2021
Kanta Pasi vs. Muthoot Finance Ltd. Page 1 of 11
ORDER
1. The instant Petition is filed by Petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "Arbitration Act") challenging the Award dated 06.08.2020 passed by Ld. Sole Arbitrator.
2. For filing the petition beyond limitation, Ld. Counsel for petitioner has relied upon the Judgment of Hon'ble Supreme Court of India in M.A.No. 665 of 2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020 titled "In Re Cognizance of Extension of Limitation", by virtue of which the limitation under general or special laws has been directed to be under suspension w.e.f 15.03.2020. In the light of the same, the petitioner's petition is covered within the period of limitation as under the umbrella of Orders of Hon'ble Apex Court.
3. Petitioner has challenged the impugned Award on following grounds:-
that the arbitral proceedings should have been concluded within twelve months from the date of entering upon the reference by Ld. Arbitrator as per Section 29A of the "Arbitration Act". Reliance is placed upon the judgment of Hon'ble Delhi High Court in ONGC Petro Additions Limited Vs Ferns Construction Co. Inc (DOD:OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 2 of 11
21.07.2020) to contend that the provisions of Section 29A of the "Arbitration Act" are applicable to all pending arbitrations as on 30.08.2019 and commenced after 23.10.2015. It is stated that the reference was entered by Ld. Arbitrator on 08.08.2018 in Arbitral proceedings and the impugned Award passed on 06.08.2020 is beyond his jurisdiction as is hit by Section 29A of the "Arbitration Act".
Reliance is placed upon the judgment of Steel Authority of India Vs. Primetals Technologies India Pvt. Ltd (OMP (COMM) 349/2020) to contend that award of interest of 12 % per annum by Ld. Arbitrator is not only unreasonable but virtually in the nature of a penal interest.
Ld. Arbitrator has not been appointed as per the procedure stipulated under section 11 of "Arbitration Act". Further, loan agreement entered into between parties is not legally enforcable as the same was never signed by the Petitioner. The respondent took the signatures of petitioner on blank papers and obtained the Award based upon manipulated documents.
that impugned Award is passed exparte without giving any opportunity to petitioner of being heard and therefore the same is against the principles of natural justice.
OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 3 of 114. Petitioner has filed written arguments and placed reliance upon judgments of ONGC Petro Additions Limited Vs Ferns Construction Co.INC (DOD: 21.07.2020); Perkins Eastman Architect DPC & Anr. Vs. HSCC (India) Ltd. (DOD as 26.11.2019) and Steel Authority of India (supra) and has prayed for setting aside the arbital Award.
5. In reply to petition, Respondent took certain preliminary objections to the maintainability of the petition. It is contended that :
Petition is not maintainable as it does not fall within the pre-requisites of Section 34 of "Arbitration Act". It is contended that plea of Petitioner that opportunity of hearing was not given to her and exparte Award was bad on account of same, holds no water, since Petitioner had participated in proceedings but she kept herself away from the same deliberately.
the petition deserves dismissal since Petitioner has not approached the court with clean hands and has suppressed and the material facts. Petitioner participated in proceedings and Ld. Sole Arbitrator duly considered and examined entire record. Petitioner was given full opportunity to contest the arbitral proceedings.
The present petition is nothing but an inherent malafide attempt to waste precious time of the Court. The OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 4 of 11 Petitioner has failed to satisfy any of the conditions as laid out in Section 34 of "the Act". Hon'ble Apex Court, vide catena of judgments has settled the law that the Courts dealing with petition under section 34 of "the Act" only enjoy supervisory jurisdiction and are not to correct the errors of the arbitrators. This is in order to ensure fairness and minimum intervention of the courts, which would otherwise defeat the purpose of the Act, 1996 and thus, the petition deserves dismissal.
6. Reliance is placed by Ld. Counsel for respondent on the judgments of M/s. Sara International Pvt. Ltd. Vs. South Eastern Railway & Another (DOD : 11.12.2020) and ONGC Petro Additions Limited Vs Ferns Construction Co. INC (DOD: 21.07.2020).
7. Ld. Counsel for Petitioner argues that exparte Award deserves to be set aside. She has referred to Section 29A of Arbitration & Conciliation Act, 1996 and argued that the same is beyond the limitation prescribed thereunder. She submits that Ld Arbitrator entered upon reference on 08.08.2018 and has rendered the Award on 06.08.2020. She further argues that the higher interest awarded by Ld. Arbitrator is contrary to the settled law. She argues that the Agreement Ex. CW1/4 (colly) between parties and its Clause-4 thereof gave the OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 5 of 11 exclusive territorial jurisdiction only to Ernakulum, Kerala and Ld. Arbitrator has no territorial jurisdiction to pass the Award.
8. Per contra, Ld. Counsel for respondent has opposed the petition by arguing that the jurisdiction of the Court under section 34 of "the Act" is limited and even a contravention of a statute, not linked to a public policy would not be a ground to set aside an arbitral Award. Ld. Counsel argues that the petitioner availed a loan in the sum of Rs. 3,68,000/- from Respondent against security of gold ornaments vide Loan Agreement dated 30.03.2017 from Respondent's branch at Khandwa M.P. The loan was in the nature of secured loan and repayment of the same had to be secured against pledge of gold ornaments. It is argued that the petitioner had fraudulently pledged stolen gold ornaments as security and further failed to adhere to repay the said loan as per Agreement.
9. I have heard respective submissions of Ld. Counsel for parties, perused written arguments and entire record in the light of relevant statutory provisions of the 'Arbitration Act'.
10. The settled position in respect of the challenge under Section 34 of the Act as it stands crystallized is that the findings of fact as well of law by the Arbitrator / Arbitral Tribunal are ordinarily not amenable to interference under Section 34 of the Act. The Court cannot reappraise the evidence nor it is open to the Court to sit in appeal over conclusion of the OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 6 of 11 Arbitrator. It is only where the finding is either contrary to the terms of the Contract between the parties or the same is ex facie perverse, arbitrary, capricious or when conscience of the court is shocked that interference by Courts becomes necessary. The Arbitrator / Arbitral Tribunal is the final arbiter on facts as well as in law and even errors, factual or legal, which stop short of perversity, do not merit any interference under Section 34 of the Act.
11. Considering the same and adverting to the pleas in Petition, I am of the view that none of the grounds mentioned in the Petition is sufficient enough to interfere with the arbitral Award under section 34 of "the Act".
12. So far the plea of Petitioner that Award is passed beyond the limitation concerns, the plea deserves outright rejection. Section 29A came to be inserted in the Statute by the Amending Act 3 of 2016 with effect from 23.10.2015. Perusal of this Section indicates that it provides for timelines within which the Award has to be made, including the timeline up to which the Tribunal can extend the mandate with the consent of the parties. Sub-Section (1) of Section 29A provides a time limit of 12 months within which the Award shall be made.
13. Prior to the Amendment of 2019, the starting point of the 12 months was the date when the Arbitral Tribunal entered OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 7 of 11 upon reference, but post 2019 Amendment, the commencement date is when the pleadings before the Arbitral Tribunal are completed. In present case, the pleadings before Ld. Arbitrator were complete on 16.09.2019, when respondent filed its Rejoinder. Reliance can be further placed on the judgment of Hon'ble High Court of Judicature for Orrisa at Cuttack in M/s. Sara International Pvt. Ltd. (supra) wherein it was held that Section 29A of the Amendment Act (33/2019) has got retrospective effect. The Award was passed on 06.08.2020 and pleadings were completed on 16.09.2019, thus, Section 29A(1) of the Amendment Act (33/2019) shall be applicable. Therefore, the plea of Petitioner that Award is hit by Section 29A (1) is not tenable and has to be rejected.
14. Pertinently, the petition contains certain facts which run contrary to the record. The arbitral record indicates that Petitioner submitted herself to the jurisdiction of arbitral proceedings. She appeared and filed her written statement before Ld. Arbitrator. The proceedings were adjourned on 08.03.2019 by the Ld. Arbitrator, when both parties appeared and Petitioner's Advocate sought some more time to file Vakalatnama and on joint request, matter was adjourned for compliance of orders. On 16.09.2019, Ld. Arbitrator directed to Petitioner to file her evidence by way of affidavit. However, on 01.10.2019, Petitioner again sought adjournment to file her affidavit in evidence.
OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 8 of 1115. The arbitral proceedings would further indicate that on 14.11.2019, counsel for Petitioner telephonically informed and requested for his discharge in the absence of any instructions from petitioner. This would show the conduct of the petitioner who did not seem interested in proceedings. She was proceeded ex-parte and the matter was heard ex-parte finally by ld. Arbitrator. The pleas taken by the Petitioner including the Award being bad as the same having passed ex-parte therefore, pale into insignificance.
16. The jurisdiction of the Court under section 34 of the Act is rather limited as is observed by Hon'ble Apex Court in catena of decisions including in Ssangyhong Engineering and Construction Company Limited vs. National Highways Authority of India (NHAI), (2019) 15 SCC 131 and Delhi Airport Metro Express Private Limited vs. Delhi Metro Rail Corporation Limited, (2022) 1 SCC 131.
17. It was reiterated by Hon'ble Supreme Court in Delhi Airport Metro Express Private Limited (supra) as under:-
"..28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by Courts while examining the validity of the arbitral awards. The limited grounds available to Courts for annulment of arbitral awards are well known to legally OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 9 of 11 trained minds. However, the difficulty arises in applying the well- established principles for interference to the facts of each case that come up before the Courts. There is a disturbing tendency of Courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards.
That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality".
Likewise, erroneous application of law cannot be categorized as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression "patent illegality". What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as Courts do not sit in appeal against the arbitral award......"
18. Hon'ble Apex Court has repeatedly held in various pronouncements that while dealing to a challenge of an award OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 10 of 11 under Section 34 of the Arbitration and Conciliation Act, it is not open to the Courts to substitute its opinions to that of Arbitrator after re-appreciating the evidence produced before the Arbitral Tribunal.
19. Having observed thus, I am of the view that the petition raises none of the grounds to interfere with the Award under section 34 of the Act. The petition deserves dismissal.
20. The same stands dismissed. File be consigned to record room. The entire Arbitral record file be sent back to Ld. Arbitrator.
File be consigned to record room.
Announced in open court on 21.10.2023 (Ravinder Bedi) District Judge (Commercial Court)-12 Central District, Tis Hazari Courts /Delhi OMP (COMM) No. 61/2021 Kanta Pasi vs. Muthoot Finance Ltd. Page 11 of 11