Bangalore District Court
M/S.Umar Radiators vs M/S.City Financial Consumer on 23 February, 2017
IN THE COURT OF THE XIX ADDL. CITY CIVIL &
SESSIONS JUDGE AT BANGALORE CITY: (CCH.18)
Dated this 23rd day of February, 2017.
Present
SMT.K.B.GEETHA, M.A., LL.B.,
XIX ADDL. CITY CIVIL & SESSIONS JUDGE,
BANGALORE CITY.
A.S.NO.67/2010
PLAINTIFFS/ 1. M/s.Umar Radiators,
PETITIONERS : No.8, Arkappanahalli,
Opp.9th Cross,
Wilson Garden,
Siddapur,
Bangalore-560 027.
Represented by its proprietor
Mr.Mohammed Mujeeb.
2. Mr.Mohamemd Mujeeb,
Aged about 43 years,
s/o late Sri Haque Mohammed Hayath.
3. Mrs.Thaseen Taj,
Aged about 38 years,
w/o Sri Mohamemd Mujeeb.
Both are r/at
No.62/4, 2nd floor,
Hayath Regency,
Ranoji Rao Road,
Bangalore-560 004.
(By Sri.B.Y.Achar,Advocate)
-VS-
2 A.S.No.67/2010
DEFENDANTS/ 1. M/s.City Financial Consumer
RESPONDENTS: Finance India Ltd.,
A company incorporated under the
Companies Act, having its
Registered office at No.3,
LSC, Pushp Vihar,
New Delhi-110 062.
2. Ms.Arti Rohatgi,
Advocate & Sole Arbitrator,
No.335, Layer's Chamber,
Civil Wing, Tishazari Courts,
New Delhi-110 054.
3. Phoenix ARC Pvt.Ltd.,
Regd.Office, 7th Floor,
Dani Corporate Park, 158,
S.T.Road, Kalina,
Santacruz(E)
Mumbai-400 009.
India.
(D.1 - By Sri.TS, Advocate)
(D.2 - Exparte)
(D.3 - Suit dismissed against D.3
as per Order dtd:7/1/2017)
[
JUDGMENT
The plaintiffs/petitioners have filed this suit for setting aside the award dtd:30/3/2010 in Arbitration Case No.AR/ARB/1177/2009 passed by 2nd respondent/sole arbitrator and for such other reliefs.
3 A.S.No.67/2010
2. The case of plaintiffs/petitioners in nutshell is that they have obtained home loan of Rs.28,36,000/- from respondent No.1 under Loan Account No.12703483 & 12628683 agreeing to repay the same in equated monthly installments with interest at 14.25% p.a. Petitioners were prompt in repaying the monthly installments as per the schedule of repayments. Since there was recession in the market and poor turnover in the business, petitioners incurred huge loss and not in a possession to pay the installments regularly. Subsequently, the accounts were classified as "Non Performing Asset" by the 1st respondent and without recalling the entire advance, respondent No.1 has referred the matter to sole arbitrator. 2nd respondent has no jurisdiction to entertain the arbitration case, but entertained it on the assumed jurisdiction and decided the matter in favour of 1st respondent by placing petitioners exparte. 2nd respondent had not properly served notice to petitioners regarding arbitration case. At the time of appointment of sole arbitrator, 1st respondent has not taken the consent of the petitioners. The arbitration award 4 A.S.No.67/2010 reveals that 1st respondent company who was represented by PA Holders further delegated their power in favour of one Ashish Singh by executing power of attorney on 1/12/2008 which is not permissible in the eye of law. Loan transaction took place between parties in Bangalore. Suit schedule property is situated in Bangalore. Hence, cause of action for the arbitration case arose only in Bangalore. Thus, the award passed by 2nd respondent is bad in law as it is contrary to the facts of the case and opposed to provisions of the Arbitration Act and terms and conditions of the Home Equity Agreement entered between the petitioners and the 1st respondent. The said award is one sided and opposed to principles of natural justice. The claim of 1st respondent is false and contrary to the facts of the case and opposed to law, customs, usage and practice. Without any clarification and discussion, 2nd respondent allowed the claim of 1st respondent and failed to consider objections sent by petitioners for appointment as sole arbitration. He further charged exorbitant fees which are opposed by the 5 A.S.No.67/2010 petitioners. Provisions of Arbitration & Conciliation Act gives ample power to the learned arbitrator to consider the clauses of the agreement as to equitable or inequitable in nature and she can over look the same and she cannot sit pretty on the ground that the parties are bound by the clauses of the agreement. The 1st respondent company had filed the above arbitration case without any jurisdiction and simultaneously instituted the conciliation proceedings against petitioner for the same claim. The arbitration award was passed on 30/3/2010. Petitioners had filed the arbitration case in the form of original suit i.e., O.S.No.3602/2010 and this court passed an order on 31/5/2010 and then converted the same into A.S. Accordingly, this case is registered. As on the date of filing of the suit in O.S.3602/2010, the arbitration suit was well within limitation. Hence, prayed for allowing the suit by setting aside the exparte order dtd:30/3/2010.
3. After service of summons, 1st respondent appeared before court and filed objections to the petition stating 6 A.S.No.67/2010 that the application filed by the applicant No.1 is not maintainable, as applicant No.1 was not a party in the aforesaid award and thus, he has no locus-standi to challenge the award. Application is barred by limitation as it is filed almost 4-½ months after receipt of the award. It is not maintainable as it does not attract any of the conditions contemplated under S.34 of Arbitration & Conciliation Act. Applicants have not filed the suit with clean hands and made false statement with malafide intention to evade payment of outstanding dues. Various notices including appointment of learned arbitrator and arbitration proceedings were sent to the applicants through various modes which were duly served upon them. Despite having knowledge of arbitration proceedings, applicants deliberately avoided to appear before the arbitral tribunal with malafide intention. Even in equity, applicants cannot seek any relief, because, they have availed loan of Rs.28,36,000/- from respondent company and defaulted in payment of agreed installment. Except admitting the arbitral proceedings and arbitration 7 A.S.No.67/2010 clause in the loan agreement, respondent No.1 denied all other allegations made in the case filed by applicants/petitioners/plaintiff and contended that arbitrator had jurisdiction and he was properly appointed and due notice was served upon applicants and there was specific clause in the arbitration agreement that single arbitrator shall be appointed by respondent No.1 company. Applicants failed to pay the agreed monthly installments and even postponing the payment of amount demanded by respondent No.1 by issuance of legal notice. Hence, respondent No.1 was compelled to appoint respondent No.2 as arbitrator. Sandeep Gambhir and Dhruv Jain were empowered to delegate the powers by Board of Directors of the company, situated at New Delhi and said delegation is proper. Hence, prayed for dismissal of arbitration suit with exemplary costs.
4. During pendency of the proceedings, petitioner/plaintiff had filed I.A.No.5 under Order I R.10 CPC to implead Phoenix ARC Pvt. Ltd., as defendant No.3 in the suit. 8 A.S.No.67/2010 Soon after service of notice, the proposed respondent has not appeared and not filed objections to I.A.No.5. Afterwards, the case was transferred from CCH.No.11 to this court.
5. Even after giving sufficient opportunities, only on one hearing date, petitioner's counsel submitted partial arguments and then afterwards, both parties and their counsels became continuously absent. Hence, this court took arguments on I.A.No.5 as heard and allowed said I.A. and impleaded the Phoenix - proposed respondent as defendant No.3 in the suit. Afterwards also petitioners or their counsel continuously absent and then as per direction of court, office has carried out amendment in the petition. But, petitioners have not taken further steps to issue summons of the suit to the defendant No.3. Hence, suit against defendant No.3 was dismissed.
6. Even afterwards, both sides have not appeared nor submitted arguments. As the matter is very old one, this court took the arguments of both sides as heard. 9 A.S.No.67/2010
7. From the above facts, the points that arise for consideration are:-
1) Whether the petitioners prove that the arbitral award satisfies any of the ingredients enumerated under Section 34(2)(a) & (b) of Arbitration & Conciliation Act?
2) Whether the arbitral award dtd:30/3/2010 passed by the Arbitral Tribunal is to be set-
aside?
3) What order?
8. Findings of this court on the above points are:-
Point No.1:- In Negative;
Point No.2 :- In Negative;
Point No.3:- As per the final order for the following:-
REASONS
9. Point No.1:- Petitioners/plaintiffs have filed this petition under S.34 of Arbitration & Conciliation Act, 1996, to set-aside the award dtd:30/3/2010 passed by the 2nd respondent in No.AR/ARB/1177/2009.
10. This petition was presented in the year 2010 and the arbitral award was also passed in the year 2010. Hence, 10 A.S.No.67/2010 Arbitration & Conciliation Act, 1996 prior to amendment is applicable to the facts of the case. Only if the case falls under any of the clauses of S.34 of Arbitration and conciliation Act, the court can interfere with the Award passed by the learned arbitrator and set aside or modify it.
11. Hence, prior to amendment of Arbitration & Conciliation Act, 1996 is applicable to the case. S.34 of Arbitration & Conciliation Act prior to amendment of 2015 reads as follows:-
"S.34. Application for setting aside arbitral award- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (1) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if;
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an 11 A.S.No.67/2010 arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this part; or
(b) the Court finds that -
(i) the subject - matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation:- Without prejudice to the generality of sub-clause(ii) of clause(b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of 12 A.S.No.67/2010 the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section
81. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral Tribunal;
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. "
12. Thus, the arbitral award can be set aside only under any of the grounds mentioned in S.34 of Arbitration and conciliation Act.
13. According to S.34(3) of Arbitration and conciliation Act, an application for setting aside the award cannot be made after 3 months from the date on which the party had received the arbitral award.13 A.S.No.67/2010
14. Plaintiffs/petitioners have filed this petition on 12/8/2010. The award was passed on 30/3/2010. However, it was posted to petitioner Nos.2 & 3 on 6/4/2010. Thus, petitioners might have received it within 3 or 4 days. Thus, within 3 months from said date i.e., on or before 10/7/2010, petitioners ought to have filed this petition. But, it was filed on 12/8/2010. However, it is to be noted here that petitioners instead of filing the petition like arbitration suit, they have filed it in a format of original suit and it was registered on 24/5/2010 in O.S.No.3602/2010. Afterwards, the court had passed an order on 3/6/2010 to return the same to petitioners to present in proper format and then, it was taken back by petitioners' advocate on 15/7/2010 and represented on 12/8/2010.
15. Considering all the above aspects, this court is of the opinion that the petition filed by petitioners is well within limitation.14 A.S.No.67/2010
16. Under Section 34(2)(a)(i) of the Arbitration & Conciliation Act, if a party was under some incapacity, then, arbitral award can be set-aside. However, that is not the contention of plaintiff that he was incapable. Hence, said ground is not available for plaintiff.
17. Under Section 34(2)(a)(ii) of the Arbitration & Conciliation Act, the arbitral award can be set-aside if there is no valid arbitration agreement between parties. However, that is not the contention of plaintiff and there is specific arbitration clause in the contract between plaintiff and defendant. Hence, said ground is also not available for plaintiff.
18. Under Section 34(2)(a)(iii) of the Arbitration & Conciliation Act, the arbitral award can be set-aside if proper notice of appointment of learned arbitrator is not given to plaintiff.
19. It is the specific contention taken by petitioners/plaintiffs in this suit that the arbitrator has not properly caused notice to petitioners regarding arbitration 15 A.S.No.67/2010 case and without issuing proper notice, 2nd respondent had decided the matter.
20. Petitioners have produced the arbitration award. In the award, at Para No.4 to 6, it is specifically stated that after the arbitrator was appointed as sole arbitrator to adjudicate upon the disputes upon the claim made by respondent/defendant No.1 against the present petitioner Nos.2 & 3, the arbitrator has given concurrence to act as sole arbitrator for adjudication of the disputes having arisen between parties and fixed the matter for preliminary hearing and directions on 13/11/2009. He has further stated that copy of the notice of present proceedings was sent to the respondents by registered A/D post and by hand to the claimant. It is further observed in the Award that the learned counsel for claimant entered appearance on 13/11/2009, but none appeared on behalf of respondent despite being served with notice sent by the tribunal. Hence, learned arbitrator adjourned the matter to 17/12/2009. 16 A.S.No.67/2010
21. In para No.5 of the award, learned arbitrator made an observation that even on 17/12/2009, respondents had not appeared, but, even then, in the interest of justice, he had to give one more opportunity to respondents, he has adjourned the matter on 22/1/2010, and also made an observation that if on 22/1/2010, respondents did not appear, they shall be placed exparte and copy of the proceedings dtd:17/12/2009 was sent to the respondents through registered post.
22. In para No.6 of the award, learned arbitrator has made further observation that on 22/1/2010 the counsel for claimant company appeared and again despite of notice being sent to respondent through last known address, respondents not appeared before the arbitral tribunal. It is further observed that notice sent to respondent No.2 - Mrs.Thaseen Taj i.e., present plaintiff No.3 at 1st address was duly served whereas notice sent to respondent No.1 i.e., Mohammed Mujeeb who is 2nd plaintiff in this suit was not returned unserved by postal 17 A.S.No.67/2010 authorities; notice sent to respondents unserved by postal authorities at 2nd address with remarks "always absent during delivery time" and at 3rd address with postal remarks "left". Hence, the learned arbitrator considered that notice sent to respondents held duly served and placed them as exparte and again adjourned the matter to 8/3/2010 for recoding the evidence of the claimant. Again, in the interest of justice, he had sent copy of proceedings dtd:22/1/2010 through UCP to respondents. Afterwards, the arbitral tribunal had received duly signed acknowledgment card of the notice sent to respondent No.1 (present plaintiff No.1) at 1st address.
23. On perusal of the arbitral award and the present petition cause title, this court noticed that present plaintiff No.2 & 3 are the respondent Nos.1 & 2 in the arbitral proceedings and there were 3 addresses mentioned in the award cause title. The 1st address of the present plaintiffs in that arbitral proceedings is the same address of plaintiffs mentioned in the present cause title. 18 A.S.No.67/2010
24. The observation of learned arbitrator as stated above in para No.5 to 7 of the award made it clear that the arbitrator had sent notice through RPAD to the same address to the present plaintiff Nos.2 & 3 on 3 occasions and he received postal acknowledgements for having served notices to them twice. Under these circumstances, the contention of plaintiffs in the plaint that notice of arbitration proceedings was not served upon them cannot be considered as proper.
25. The present plaintiff No.1 is M/s.Umar Radiators represented by its proprietor Mr.Mohammed Mujeeb. However, said M/s.Umar Radiators was not at all party in the arbitration proceedings. Because, the loan was taken by the proprietor of the firm in his individual capacity on the guarantee of plaintiff No.3 i.e., his wife. Hence, it is crystal clear that 1st plaintiff has no locus standi to file the present suit. However, said suit filed by present plaintiff Nos.2 & 3 is maintainable.19 A.S.No.67/2010
26. Under Section 34(2)(a)(iv) of the Arbitration & Conciliation Act, if the arbitral award deals with the dispute not contemplated under the terms of arbitration, then, the award can be set-aside. However, that is not the situation in the present case. Present respondent No.1 had put forth all his claims before the learned arbitrator and learned arbitrator has answered to those claims, which were covered under the arbitration agreement. Hence, said ground is also not available for plaintiff.
27. Under Section 34(2)(a)(v) of the Arbitration & Conciliation Act, if the arbitral tribunal is constituted not in accordance with the agreement of parties, then, the arbitral award can be set-aside. However, that is not the situation.
28. Further contention taken by present petitioners/plaintiffs in this arbitration suit is that their consent was not taken for appointment of sole arbitrator by defendant No.1 and thus, appointment of respondent 20 A.S.No.67/2010 No.1 as sole arbitrator is not in accordance with law and their consent was mandatory for appointment of sole arbitrator and they had not given consent for appointment of the arbitrator.
29. The learned arbitrator in his award reproduced the arbitration clause found in the loan agreement between parties. For convenience, it is reiterated as follows:-
"III 10.7 (h) In the event of any dispute or differences arising under this agreement including any dispute as to any amount outstanding, the real meaning or purport hereof (Dispute), such dispute shall be finally resolved by arbitration. Such arbitration shall be conducted in accordance with the provisions of the Indian Arbitration & Conciliation Act, 1996 or any amendment or re-enactment thereof by a single arbitrator to be appointed by the Lendor. The venue of arbitration shall be at New Delhi and the arbitration shall be conducted in English language."21 A.S.No.67/2010
30. According to this clause between parties, in the event of dispute arose between the parties, such dispute shall be finally resolved by arbitrator and a single arbitrator to be appointed by the lendor.
31. Thus, under this loan agreement, plaintiff Nos.2 & 3 have given exclusive powers to respondent No.1 to appoint the arbitrator. Under those circumstances, the further expressed consent of present plaintiff Nos.2 & 3 for appointment of arbitrator is not required. In this regard, this court relied on the citation reported in (2005) 9 SCC 686 in "Dharma Prathishthanam v/s Madhok Constructions (P) Ltd.," wherein, their Lordships held as follows:-
" Arbitration Act, 1940 - Ss.8, 9, 3 & 20 and Sch.I para 1 - Valid appointment of arbitrator(s) and reference thereupon - Requirements for - Arbitration agreement using clear and unambiguous language expressing parties; intention to have their disputes settled by arbitration - Two cases envisaged:(A) arbitration agreement naming 22 A.S.No.67/2010 arbitrator(s) or authority who would appoint arbitrator; and (B) arbitration agreement neither naming arbitrator(s) nor authority who would appoint arbitrator - In case(A), held, parties are already ad idem on real identity of arbitrator, and this binds parties and court - All that may remain to be done in the event of an occasion arising therefor, is to seek an order for reference under S.20 to arbitrator appointed by parties - In case(B), held, appointment and reference shall be to a sole arbitrator as per S.3 r/w Sch.I para 1, unless a different intention is expressly spelled out - Said appointment and reference have to be consensual and not unilateral - Consent may have been/be given (i) at time of entering into the contract out of which arbitration originated, or (ii) at time of choosing arbitrator and making reference, or (iii) is sanctioned by statutory rules, regulations or bye-laws."
32. This court further relied on another citation reported in 2013(2) Mh.L.J. 623 in "Zeneth Fire Services(India) Pvt.Ltd., Mumbai v/s Charmi Sales, Ahmedabad", wherein, their Lordships held as under:- 23 A.S.No.67/2010
"(a) Arbitration and Conciliation Act (26 of 1996), SS.11 and 13(2) - Appointment of the sole Arbitrator - Mutual consent is a must - Mere not objecting to the appointment within 15 days from the date of knowledge of the Constitution of Tribunal itself is not sufficient to overlook the mandate of appointment of sole Arbitrator -
Burden lies upon the party who appoints the Arbitrator unilaterally, contrary to the terms and conditions of the agreement, to prove that the basic appointment of the sole Arbitrator was valid and binding."
33. In the above 2 citations, it is held that if the arbitrator is to be appointed on mutual consent then, the written consent of both sides is required. However, in the instant case, as discussed earlier, under the loan agreement, where arbitration clause is also there, the present plaintiff Nos.2 & 3 have expressly given their consent for appointment of arbitrator at the discretion of lendor i.e., at the discretion of present defendant No.1. Under those circumstances, when it is stated that the 24 A.S.No.67/2010 authority named can appoint an arbitrator, plaintiff Nos.2 & 3 have already given their consent ad-idem on the real identity of the arbitrator before. Thus, consent already spelled out and binds plaintiff Nos.2 & 3. Under these circumstances, the above objections raised by plaintiffs that they have not given consent for appointment of sole arbitrator is not sustainable in the eye of law. Hence, said ground is also not available for plaintiff Nos.2 & 3.
34. Hence, this court holds that ground available under S.34(2)(a)(i) to (v) are not applicable to the present case.
35. Petitioners/plaintiff Nos.2 & 3 further contended in the petition that the 1st respondent company is not properly represented. The person who has represented 1st respondent company has no authority to represent it. P.A.Holders-Sandeep Gambir and Dhruvjain have further delegated their powers to one Ashish Singh to act on behalf of 1st defendant company in the arbitral proceedings which is not permissible in the eye of law and hence, the arbitral award is not in accordance with law. 25 A.S.No.67/2010
36. In this regard, this court relied on the citation reported in 2014 SCC Online Hyd 802 in "Ahmed Bin Sayeed and ten others v/s Mr.Kamala Bai and seven others" wherein, their lordships held as under:-
"Delegation by an agent, that is entrusted to another person by an agent of the exercise of a power or duty entrusted to him by his principal, is in general prohibited, under the maxim delegatus non potest delegare. A delegated authority cannot be delegated further. The relationship of principal and agent is based on confidence and trust. When the principal has reposed trust in a particular agent, the agent cannot substitute another person in his place. In other words, an agent cannot employ a sub-agent to get the work done through him. This rule, however, is subject to certain exceptions, viz.,
1. When there is a custom of trade to that effect, the agent may employ a sub- agent.
2. Where the nature of agency so requires, an agent must employ a sub-agent. For instance, an agent authorized to recover some amount from a third person by filing a 26 A.S.No.67/2010 suit must engage a lawyer for the purpose, or when an agent has been authorized to purchase or sell goods in a foreign country, he must engage a sub-agent for doing the work.
3. When an act does not require personal skill, the same may be got done through a sub-agent. The rule against delegation is only for such acts, which an agent has undertaken to perform personally. If the undertaking is of a purely ministerial nature, where an agent has not undertaken to perform the same personally, a sub-agent may be appointed to do the work. For instance, if an agent has been appointed to weight coal lying at a place, or to transport goods from one place to another, he may get the work done from a sub-agent.
4. When the principal, expressly or impliedly, agrees to the appointment of a sub- agent for doing certain work, which has been otherwise assigned to the agent, a sub-agent may be validly appointed.
Therefore, the maxim would, however, stringently apply where personal skill of the agent is essential or where the principal has reposed trust and confidence in the agent. 27 A.S.No.67/2010
The reason that no such power can be implied as an ordinary incident in the contract of agency is that confidence in the particular person employed is at the root of the contract.
Accordingly, the general power of attorney holder too in whom confidence is reposed has, generally speaking, no power to delegate their authority. "
37. Relying on the above said citation, this court holds that if such delegation of power by Sandeep Gambir and Dhruvjain to Ashish Singh is not proper, then, it could have been objected by respondent No.1 Company and not by present plaintiffs. There is no such objection whatsoever from respondent No.1 company. On the other hand, in the objection to main petition, respondent No.1 company had stated that the power of attorney itself reflects that Sandeep Gambir and Dhruvjain are empowered to delegate powers by Board of Directors of the company. When they are having such power of such delegation of power, definitely, delegation of power by 28 A.S.No.67/2010 Sandeep Gambir and Dhruvja in favour of Ashish Singh and respondent No.1 had not objected for it. Hence, this objection of plaintiff Nos.2 & 3 will also not sustainable in the eye of law.
38. It is contended in the plaint that the arbitration proceedings held at New Delhi is without jurisdiction because, plaintiffs are residing and carrying out business in Bangalore and their mortgaged property is situated in Bangalore and loan transaction took place in Bangalore.
39. It is an admitted fact that petitioners are residing and carrying on business in Bangalore and their mortgaged property is also situated in Bangalore. However, as discussed earlier, in the arbitration clause in loan agreement, it is specifically stated that the venue of arbitration shall be at New Delhi. It is not in dispute that the respondent No.1 is having its registered office at New Delhi. To prove the contention of petitioners that loan transaction took place only at Bangalore, they have not produced any iota of materials before this court. Under 29 A.S.No.67/2010 these circumstances, this court holds that when respondent No.1 is having its registered office only in New Delhi and when there is specific clause in the agreement that arbitration shall be conducted at New Delhi; this court holds that the arbitration proceedings conducted in New Delhi is with jurisdiction and not without jurisdiction.
40. Petitioners took contention in the petition that the 1st respondent company had filed the arbitration case without jurisdiction and simultaneously initiated conciliation proceedings at Bangalore.
41. To substantiate that the conciliation proceedings were also initiated by 1st respondent in Bangalore at the time arbitration proceedings were conducted in New Delhi, petitioners have not produced any iota of evidence. Hence, there is no proof that conciliation proceedings took place in Bengaluru. Hence, this objection of petitioners is also not tenable in law.
30 A.S.No.67/2010
42. Under Section 34(2)(b)(i) of the Arbitration & Conciliation Act, the court can set-aside the arbitral ward if the court finds even the subject-matter of the dispute is not capable of settlement by arbitration under law for the time being under force. However, that is not the situation in present case. The subject-matter of the dispute is within the ambit of arbitration and it is not barred by any law in force. Hence, arbitral award cannot be set-aside even under Section 34(2)(b)(i) of the Arbitration & Conciliation Act.
43. It is contended in the petition/plaint that reasonable opportunity was not given to present petitioner Nos.2 & 3 before passing the award.
44. The award speaks that the learned arbitrator has given several opportunities to petitioners to appear before him and put forth the claims of petitioners. It speaks that the learned arbitrator had sit on several hearing dates i.e., at 1st on 13/11/2009 and then on 17/12/2009 and also on 22/1/2010. Only on 3rd hearing date on 31 A.S.No.67/2010 22/1/2010, the learned arbitrator placed the petitioner Nos.2 & 3 as exparte. Afterwards also, he has not concluded the session. He again sit on 8/3/2010 on which date the claimant/present petitioner No.1 has let in evidence and also submitted arguments and then posted the matter to orders and accordingly, the orders were pronounced on 30/3/2010. Thus, sufficient opportunities were given to the present petitioner Nos.2 & 3 to put forth their claim before the arbitral tribunal. Because, petitioners had not gone there and not contested the claim of respondent No.1, now he cannot claim for reasonable opportunity was not given.
45. In the petition/plaint, at para No.6, petitioner contended that 2nd respondent i.e., the learned arbitrator though not having jurisdiction to entertain the case, assumed jurisdiction and decided the matter in favour of 1st respondent.
46. There is no evidence to show that 2nd respondent had no jurisdiction to entertain the claim and he was 32 A.S.No.67/2010 barred to become the arbitrator. While discussing the point on consent, this court already discussed in length and held that respondent No.1 had every right to appoint the arbitrator and this was agreed by petitioner Nos.2 & 3 at the time of entering into loan agreement. Hence, respondent No.1 appointed respondent No.2 as the learned arbitrator. In the award, learned arbitrator has stated that through letter dtd:12/10/2009 he was nominated as the arbitrator by claimant i.e., present respondent No.1 and he gave his consent to act as sole arbitrator for adjudication of the dispute. Thus, the contention of petitioners at para No.6 that learned arbitrator had no jurisdiction to entertain the petition is not tenable in the eye of law.
47. Petitioners contended that the interest awarded by the learned arbitrator was exorbitant.
48. On perusal of the award, this court noticed that the learned arbitrator has allowed the claim of present 1st respondent for recovery of Rs.30,43,446/- with interest; 33 A.S.No.67/2010 recovery of Rs.2,45,581/- as arrears of interest and future interest at 16% p.a. on the award amount.
49. As per S.31(7)(a) of the Arbitration & Conciliation Act, when the award is for payment of money, the arbitral tribunal may include in the sum for which the award is made interest at such rate as it deems reasonable on the whole or any part of the money, for the whole or any part of the period between the date on which cause of action arose and the date on which the award is made and the sum directed to be paid by arbitral award shall carry interest at the rate of 18% p.a. from the date of award to the date of payment unless the award otherwise directs.
50. In the instant case, as discussed above, the learned arbitrator has imposed future interest only at 16% p.a. on the awarded sum. Hence, the interest awarded by the learned arbitrator is also not exorbitant as alleged by the petitioner Nos.2 & 3.
34 A.S.No.67/2010
51. Petitioners further contended that 2nd respondent allowed 1st respondent without any clarification and discussion.
52. On perusal of the award, this court noticed that learned arbitrator has discussed the claim of 1st respondent in length and also discussed the agreement between present claimant Nos.2 & 3 and respondent No.1 and also discussed the documents i.e., Home Loan Agreement, supplementary loan agreement, statement of accounts, copy of legal notice, postal acknowledgment and hold that petitioners are due the amount claimed by claimant/present 1st respondent. Hence, the above said objection is also not tenable in law.
53. It is not in dispute that the petitioner Nos.2 & 3 have executed the loan agreement in favour of present respondent No.1 and obtained home loan of Rs.28,36,000/- and agreed to repay the same with interest at 14.25% p.a. The rate of interest is being changing and thus, the arbitral tribunal awarded rate of 35 A.S.No.67/2010 interest at 16% p.a. and this is not exorbitant as discussed earlier. Even the petitioners admitted that they became defaulter for payment of some of the installments, because of recession in the market and poor turn over of the business. Thus, in accordance with the loan agreement only, the 1st respondent has issued legal notice to petitioner Nos.2 & 3 by recalling the entire advance amount and then referred the matter to sole arbitrator. The sole arbitrator considered the facts i.e., both oral and documents put forth before it by the claimant, discussed those facts and all the documents in length and concluded that petitioner Nos.2 & 3 are due the amount claimed by claimant. If the amount paid by petitioner Nos.2 & 3 are not properly deducted by 1st respondent, then, it was the bounden duty of petitioner Nos.2 & 3 to put forth the same before the learned arbitrator and to get proper deductions of those amounts. However, that is not the contention of petitioners and they did not do so. Now, they cannot claim that there 36 A.S.No.67/2010 was no proper discussion or clarification by learned arbitrator.
54. The only remaining provision of law under which the arbitral award can be set-aside is under S.34(2)(b)(ii) of the Arbitration & Conciliation Act. Under this provision, the arbitral award can be set-aside if it is in conflict with public policy of India.
55. If the arbitral award is passed without giving reasons, then it amounts to against public policy of India and such an award is liable to be set-aside. The public policy of India is that if the learned arbitrator had decided any case contrary to the law laid down by courts and the law in existence as on the date of passing of award. However, that is not the situation in the present case.
56. As discussed earlier, the learned arbitrator had given proper reasons for coming to the proper conclusion. 37 A.S.No.67/2010 Hence, the award passed by the learned arbitrator is not against the public policy of India.
57. The above discussion reveals that petitioner No.1 has no locus-standi to file the present petition, because, it was not a party before the arbitral tribunal and it was not one of the executants of the agreement which contains the arbitration clause.
58. Petitioner Nos.2 & 3 have not made out any case to file under S.34(2)(a)(i) to (v), S.34(2)(b)(i) & (ii). Hence, this court holds that arbitral award cannot be liable to be set-aside. Accordingly, point No.1 is answered in negative.
59. Point No.2:- In view of finding on point No.1, this court holds that arbitral award cannot be set-aside. Accordingly, point No.2 is answered in negative.
60. Point No.3:- In view of findings on point Nos.1 & 2, this court proceeds to pass the following:- 38 A.S.No.67/2010
ORDER Arbitration Suit filed by the petitioners under Section 34 of the Arbitration & Conciliation Act is dismissed.
Under facts and circumstances of the case, parties are directed to bear their own costs.
(Dictated to the Judgment Writer, transcribed and computerized by her, corrected and then pronounced by me in the open Court on this the 23rd day of February, 2017).
(K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.
GVU/-
39 A.S.No.67/201023/2/2017 Judgment pronounced in open court vide separate detailed judgment with the following operative portion:-
ORDER Arbitration Suit filed by the petitioners under Section 34 of the Arbitration & Conciliation Act is dismissed.
Under facts and circumstances of the case, parties are directed to bear their own costs.
(K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.40 A.S.No.67/2010