Madras High Court
P. Ramadoss vs M/S.Shriram City Union Finance Ltd on 27 July, 2018
Author: Abdul Quddhose
Bench: Abdul Quddhose
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 27.07.2018 CORAM THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE O.P.NO.472 OF 2014 P. Ramadoss Petitioner Vs 1.M/s.Shriram City Union Finance Ltd., rep. by their authroised representative having their office at No.123, Angappa Naicken Street, Chennai 600 001. 2.Mrs. P.Jayamatha 3.Mr.A.Premanand 4.Mr.R.Arunkumar Peter 5.Mr.V.Senthilkumar .. Respondents Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the Award passed by the fifth respondent in Ref No.A.C.P. [SCUF EF] (V.S.) No.067/2013 dated 06.03.2014 in respect of the Loan Agreement No.TNAG2TF10050001 and allow the petitioner to contest the case on merits. For Petitioner : Mr.R.Kothandapani For Respondents : M/s.Janani for Mr.K.V.Ananthakrishnan for R1 R2 to R4- No appearance R5-Arbitrator ORDER
The instant petition has been filed under section 34 of the Arbitration and Conciliation Act challenging the Arbitral Award dated 6.3.2014 passed against the petitioner.
2. The brief facts leading to the filing of the instant petition are as follows;
2.1 The petitioner is the 4th respondent in the arbitration proceedings. The petitioner and the remaining respondents in the arbitration proceedings availed a trade loan from the 1st respondent for a sum of Rs.5,00,000/- under a loan agreement dated 6.10.2011. The trade loan together with interest was repayable by the borrowers to the 1st respondent in 12 monthly instalments commencing from 10.11.2011 and ending on 10.10.2012.
2.2 According to the 1st respondent, the petitioners as well as other borrowers 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 1st respondent who appointed the 5th respondent as the arbitrator to decide the dispute on merits between the parties.
2.3 The sole arbitrator acted upon the reference and after issuing notice to the parties to the dispute has passed an Arbitral Award dated 6.3.2014 directing the petitioner as well as other borrowers jointly and severally to pay the 1st respondent, a sum of Rs.2,29,700/- towards balance outstanding amount, Rs.16,000/- towards banking charges, Rs.45,310/- towards overdue charges/interest, Rs.4365/- towards legal expenses @ 1.5% totalling a sum of Rs.2,95,375/- together with future interest at 36% per annum from 12.2.2013 till 6.3.2014 and thereafter at 18% per annum till the date of realisation and the arbitrator also directed the borrowers to pay Rs.5000/- towards costs of the arbitral proceedings.
2.4 Aggrieved by the Arbitral Award dated 6.3.2014, the instant petition is filed.
3. Heard Mr.R.Kothandapani, learned counsel for the petitioner and Ms. Janani learned counsel for the 1st respondent.
4. Learned counsel for the petitioner submits that the primary ground for challenge in the instant petition is that sufficient opportunity was not given by the arbitrator for the petitioner to defend the claim made by the 1st respondent.
5. He drew the attention of this Court to the findings of the Arbitrator regarding service of notice on the petitioner. He submitted that the petitioner's counsel had filed the vakalat before the Arbitrator, but the Arbitrator has wrongly recorded as if the petitioner's counsel had only undertaken to file the vakalat.
6. According to the learned counsel, the vakalat was filed on the first hearing date on behalf of the petitioner and the Arbitrator informed the counsel who appeared on behalf of the petitioner that he will inform the next date of hearing through post which was never sent to the petitioner. Therefore, according to the learned counsel for the petitioner, since no notice was sent to the petitioner after the first hearing date by the Arbitrator, the Arbitrator ought not to have set the petitioner exparte in the arbitral proceedings on 30.4.2013.
7. Per contra, learned counsel for the 1st respondent submitted that as seen from the Arbitral Award, notice was served on the petitioner and the petitioner's counsel undertook to file vakalat on behalf of the petitioner on 27.2.2013 being the date of the first hearing and the counsel also took time to file counter. According to her, the Arbitrator never informed the petitioner that the petitioner will once again intimate by post the next hearing date
8. This court after having considered the materials available on record and after examining the Arbitral Award and after hearing the submissions of respective counsels observes the following;
(a) As seen from the Arbitral Award, the first hearing date of the arbitration was fixed on 27.2.2013. The Arbitrator has given a finding in his procedural history that on 27.2.2013, the petitioner who is the 4th respondent in the arbitration was served with notice and on 27.2.2013, Mr.S.Krishnan, Advocate representing the petitioner undertook to file vakalat and counter by 29.3.2013. On 29.3.2013, the arbitrator has recorded that there was no representation on the side of the petitioner and once again the hearing was adjourned for filing of vakalat and counter by the petitioner to 30.4.2013.
(b) Once again on 30.4.2013, since there was no representation on the side of the petitioner, he was was set exparte by the Arbitrator on 30.4.2013. Thereafter several hearings have taken place as seen from the procedural history recorded by the Arbitrator. Finally on 25.1.2014 the proof affidavit was filed by the 1st respondent along with seven documents which were marked as exhibits Ex.A.1 to A7 and the arbitrator has reserved the case for pronouncement of orders.
(c) On 6.3.2014, the Arbitral Award was passed against the petitioner as well as the other borrowers under the loan agreement. As seen from the Arbitral award, sufficient opportunity was given to the petitioner to defend the claim made by the 1st respondent. There is no explanation given by the petitioner as to what the petitioner did between 27.2.2013 being the date of the first hearing when the petitioner's counsel entered appearance in the arbitration and the date of passing of the Arbitral Award i.e. On 6.3.2014. Having entered appearance in the arbitration proceedings, the petitioner ought to have defended the claim by filing a counter as undertaken by the petitioner's counsel on 27.2.2013.
9. The arbitrator has also considered all the documents which are marked as exhibits filed by the 1st respondent in support of their claim and only thereafter, has passed the Arbitral Award in favour of the 1st respondent. This Court is of the view that the findings of the Arbitrator are in accordance with law and there is no illegality in the Arbitral Award.
10 . 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.
11. The petitioner has not satisfied any of the grounds mentioned above. 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.
27.7.2018 Speaking order/ Non speaking order Index:Yes msr ABDUL QUDDHOSE, J.
msr O.P.NO.472 OF 2014 27.7.2018