Kerala High Court
M/S.Muthoot Leasing And Finance Ltd vs Aliyar Kunju on 28 January, 2004
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HON'BLE MR. JUSTICE A.V.RAMAKRISHNA PILLAI
FRIDAY, THE 24TH DAY OF FEBRUARY 2012/5TH PHALGUNA 1933
OP(C).No. 50 of 2010 (O)
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EP.NO.64/2009 IN ARB.REF.NO.128/2006 of ADDL.DISTRICT
COURT,KOTTAYAM.
PETITIONER:
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M/S.MUTHOOT LEASING AND FINANCE LTD,
NOW RENAMED AS MUTHOOT VEHICLES AND ASSETS
FINANCE LTD., MUTHOOT CHAMBERS, BANERJI ROAD
KOCHI, REPRESENTED BY THE LEGAL OFFICER
BABY SUJATHA.
BY ADVS.SRI.C.S.MANILAL
SRI.S.NIDHEESH
RESPONDENTS:
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1. ALIYAR KUNJU,
HAMIDIYA BUILDING,VAZHAPPALLY,
CHANGANACHERRY- 686 103.
2. SAJIMON,
THURUTHEL, SAJITHA MANZIL, BOAT JETTY
CHANGANACHERRY- 686 101.
R1 BY ADV.SRI.P.U.ZIYAD
THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON
24-02-2012, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
OP(C).No. 50 of 2010 (O)
APPENDIX
PETITIONER'S EXHIBITS:-
EXT.P1: TRUE COPY OF THE HYPOTHICATION AGREEMENT WITH THE
PETITIONER DATED 28/1/2004.
EXT.P2: TRUE COPY OF THE AWARD DATED 19/5/2007 IN ARB.REF.
NO.128/2006.
EXT.P3: TRUE COPY OF THE EXECUTION PETITION E.P NO.64/09 IN
ARB.REF.NOL128/2006 BEFORE THE DISTRICT COURT.
EXT.P4: TRUE COPY OF THE OBJECTION IN E.P NO.64/09.
EXT.P5: TRUE COPY OF THE ORDER DATED 28/5/2010 IN E.P
NO.64/2009 (ARB.REF.128/2006).
RESPONDENTS' EXHIBITS:- 'NIL'
//TRUE COPY//
P.A TO JUDGE
A. V. RAMAKRISHNA PILLAI, J
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O.P(C) No.50 of 2010
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Dated this the 24th day of February, 2012
JUDGMENT
The petitioner which is a non banking financial institution, instituted arbitration proceedings against the respondents as the respondents owed a sum of Rs.1,95,000/- to the petitioner under Ext.P1 hypothication agreement in respect of a vehicle. The arbitration proceedings culminated in Ext.P2 award in favour of the petitioner who filed Ext.P3 execution petition before the District Court, Kottayam. The court below dismissed the application vide Ext.P5 order holding that Ext.P2 award is void ab-initio. Ext.P5 order is under challenge.
2. I have heard learned counsel for the petitioner and the learned counsel for the respondents.
3. The main challenge in this writ petition is that the finding of the court below that Ext.P2 is void ab-initio, is without jurisdiction as it is against the well settled principle that the Execution Court cannot go beyond the decree.
4. Admittedly, the first respondent entered into Ext.P1 OP.(C) No.50 of 2010 -:2:- hypothication agreement with the petitioner for availing a loan of Rs.1,50,000/- for purchasing a vehicle. As the respondents committed financial indiscipline, invoking Clause 18(A)(ii)(a) & (c) of Ext.P1, the vehicle was repossessed, and sold and the sale proceeds were credited to the loan account.
5. The case of the petitioner is that even after the adjustment of the sale proceeds, a further sum of Rs.1,18,584/- was outstanding as on 15/06/2006. Thus, a registered notice was issued as per Clause 27 in Ext.P1. As the same did not evoke any positive response, the matter was referred to the Arbitrator, who was made mention of in Ext.P1 agreement itself.
6. Though notice was issued to the respondents, they did not turn up and on proof of affidavit filed by the petitioner as well as on the basis of the documents produced by the petitioner, the Arbitrator passed Ext.P2 award allowing the petitioner to realise the amount of Rs.1,18,584/- with 18% interest. The petitioner then moved the District Court, Kottayam through Ext.P3 application for getting the award executed. The respondents filed Ext.P4 objection raising the following contentions: OP.(C) No.50 of 2010 -:3:-
(i) No notice had been received from the Arbitrator and hence award is not enforceable.
(ii) The vehicle in question was seized and sold and hence the claim of the company is unsustainable and the E.P is not maintainable.
(iii) The cheque case filed against the respondent by the company ended in an acquittal and hence for the same reason, no E.P. can be filed.
7. The court below proceeded to pass an impugned order rejecting Ext.P3 execution petition finding that Ext.P2 award is void ab-initio. The court below placing reliance on a document, which was produced as Ext.B1 before it (it was an extract of registration particulars with respect to the vehicle involved) found that the hypothication agreement has been terminated on 10/10/2005. The court below was of the view that as the hypothication agreement stood terminated on 10/10/2005, there was no arbitration agreement for going into arbitration and thus, the whole arbitration conducted subsequently were void ab-initio. The arbitration reference was entered into only in 2006 and by that time the agreement stood terminated ; it was so found by the court below.
8. The argument advanced by the learned counsel for the petitioner is that the repossession of the vehicle by itself will not absolve the OP.(C) No.50 of 2010 -:4:- respondents from the liability of paying the balance as repossession is one of the mode of securing the hypothetic. I was taken to Clause 19 of Ext.P1 by the learned counsel for the petitioner, which reads a follows:
"The net proceeds of sale, realisation, recovery, and/or insurance claim proceeds relating to the Hypothicated Vehicle herein, on receipt by 'MLFL' shall be applied at its absolute discretion in the manner it thinks fit. The Borrower shall continue to be liable, for any deficiency in the amount due to 'MLFL' by the Borrower after adjustment of the net proceeds of sale, realisation, recovery and/or insurance claim as above."
9. What can be discerned from clause 19 stated above is that the borrower shall continue to be liable for any deficiency in the amount after the adjustment of net proceeds of sale.
10. It was further argued by the learned counsel for the petitioner that the correctness of the award cannot be challenged by the respondents in execution proceedings. This argument can be best appreciated in the light of Sec.16 of the Arbitration and Conciliation Act, 1996, which empowers the Arbitral Tribunal to rule on its on jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. That being the law, the respondents could have OP.(C) No.50 of 2010 -:5:- raised their objection before the Arbitrator. The respondents who were served with notice did not turn up and did not raise the contention before the Arbitrator that no arbitration agreement was subsisting to be proceeded with.
11. The learned counsel for the respondents would argue that since the vehicle in question was seized and sold, the claim by the company is unsustainable. But the aforesaid contention will not stand in the light of Clause 19 referred to in Ext.P1 hypothication agreement, which is extracted above. As rightly pointed out by the learned counsel for the petitioner the correctness or otherwise of the award passed by the Arbitrator, cannot be challenged in the execution proceedings and the only recourse open to the respondents is to challenge the same under Section 34 of the Arbitration and Conciliation Act. I see force in the argument advanced by the learned counsel for the petitioner.
12. On an anxious consideration of the entire matter, I am of the definite view that the finding of the court below that Ext.P2 award is void ab-initio, is unsustainable and is liable to be quashed. OP.(C) No.50 of 2010 -:6:-
13. I do notice that while dismissing Ext.P3 application, the court below has made a passing observation, that the judgment debtors are having no means. However, it is not evident from Ext.P5 order as to how the learned District Judge has arrived at such a conclusion. The same is not seen discussed in the impugned order.
14. In the result, this Original Petition is allowed. Ext.P5 order is set aside. Consequently Ext.P3 execution petition shall stand restored to file. The learned District Judge shall proceed with the application in accordance with law after affording opportunity to both sides to adduce further evidence, if any.
It is hereby made clear that this order will not stand in the way of the respondents to have recourse to the remedies available to them in law.
sd/-
A. V. RAMAKRISHNA PILLAI JUDGE //TRUE COPY// P.A TO JUDGE krj