Delhi District Court
Deepak Singhal vs Phoneix Arc Pvt. Ltd on 12 May, 2015
IN THE COURT OF Dr. KAMINI LAU: ADDL. DISTRICT JUDGEII
(CENTRAL DISTRICT): TIS HAZARI COURTS: DELHI
CS No. 303/2014
Unique Case ID No.: 02401C0492312014
Deepak Singhal
2062/2, Gali Peepal Wali,
Basti Julahan, Sarai Khalil,
Delhi - 110006
......... Petitioner
Versus
Phoneix Arc Pvt. Ltd.
(Trustees of Phoenix Trust FY 123)
Company & Having its Registered Office at
7th Floor, Dani Compound, 159A, CST Road,
Kalina, Santacruz (E), Mumbai - 400098
Branch Office at:
G9, First Floor,
Vikas Puri, Delhi - 110018
........ Respondent
Date of institution: 9.10.2014
Judgment Reserved on: 6.5.2015
Judgment Pronounced on: 12.5.2015
JUDGMENT (Oral):
(1) These objections under Section 34 of the Arbitration and Conciliation Act, 1996 have been by the petitioner Deepak Singhal against the Exparte Award dated 12.3.2014 passed by the Sole Arbitrator Sh. M.S. Sabharwal. Various grounds have been raised in the petition which I am Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 1 not repeating for the sake of brevity.
(2) According to the petitioner he came to know about the passing of the impugned award in the month of September 2014 and received a copy of the same on 17.9.2012 after which the present objections have been filed challenging the award passed by the Arbitrator. It is submitted that the Exparte Award is against the public policy and against the principles of natural justice. It is pleaded that the petitioner had acquired the knowledge of the impugned award only when the execution petition filed by the respondent which is pending before the Court of Sh. Kuldeep Narayan, Ld. ADJ, Delhi. Ld. Counsel for the petitioner had submitted that no notice of execution/ Arbitration proceedings was communicated to the petitioner and it is highly inconceivable that the respondents managed to contact the petitioner only when they personally came to the residence of the petitioner on a Saturday on 16.8.2014 at 3:45 PM, with a Court Receiver to attach the movable property of the petitioner. Ld. Counsel has also pointed out that the original claim filed by the respondent is hopelessly barred by limitation since the cause of action, if any, arose more than three years back. It is further submitted that the impugned award is bad in the eyes of law as there is no privity of contract between the petitioner and the respondent nor the petitioner ever agreed for the appointment of the Arbitrator. It is pointed out that no legitimate proofs of expenditure have been attached by the respondents in the arbitral record and the expense detail so relied upon by the Arbitrator are only on plain papers with no legible or legitimate Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 2 vouchers. Ld. Counsel has also pointed out that the Ld. Arbitrator failed to appreciate that neither the AD nor the envelope was ever returned back which fact has been duly observed and recorded by the Ld. Arbitrator in the impugned award but he erroneously presumed that the notice had been duly served which is against the law. Reliance has been placed by the Ld. Counsel for the petitioner on the provisions of Section 3 of the Arbitration and Conciliation Act, 1996 and also on the judgment in the case of State of M.P. Vs. Hira Lal reported in JT 1996(1) SC 669 and in the case of Anil Jani Vs. Madhunam Appliances Pvt. Ltd. reported in 1997 (2) Arb. LT 325 Del. It is further pointed out that the Sole Arbitrator has not complied with the said provisions which are reflected from the Arbitration Award in view of the fact that on page 37 of the Arbitration Record the business address of the petitioner has been clearly mentioned but no attempt of service was ever done on the said address. It is pointed out that the petitioner has supplied his voting card as well as residential identity proof but the respondent dispatched all the notices on the wrong address. (3) It is further pointed out that the complete arbitration proceedings have been conducted with regard to the wrong card number which was never approved by the respondent bank. It is submitted that the Credit Card bearing No. 4339482648629784 was allotted to the petitioner, however, the arbitration proceedings had been conducted in respect of card No. 4339502000006741. Ld. Counsel for the petitioner has further pointed out that there is no adherance to the principles of Natural Justice in view of the Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 3 fact that the Sole Arbitrator had affected the service via newspaper summons/ postings which is not a valid mode of communication. In this regard reliance is placed on the judgment in the case of Union of India Vs. Bhatia Tanning Industires, Kanpur reported in AIR 1986 DEL 195. (4) On the other hand the Ld. Counsel for the respondent has vehemently argued that the attempt of the petitioner is only to mislead and confuse this Court as regards the address of the petitioner and the service affected upon it. The case of the respondent is that it is a non banking finance company incorporated and registered under the Companies Act, 1956 and is offering a wide range of financing facilities to its customers. The respondent is denying all the allegations made in the petition and it is pleaded that not only the objections are highly time barred but there is no ground as the case does not stand covered within the provisions of Section 34 of the Arbitration and Conciliation Act, 1996. It is submitted that in order to invoke the jurisdiction of this Court under Section 34 for setting aside arbitral award, an application 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 of the Act, from the date on which that request had been disposed off by the arbitral tribunal. It is pointed out that the award had been passed on 12.3.2014 and the application/ objection has been filed on 17.9.2014 and hence from the application itself it is apparent that the objections are time barred and liable to be rejected. In this regard reliance is being placed in Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 4 the case of Union of India Vs. Popular Construction Co. reported in 2001 (3) Arb.LR 345 (SC) and in Consolidated Engineering Enterprises Vs. The Principle Secretary (Irrigation Department) and Ors. reported in 2008 (2) Arb.LR 139. It is submitted that the objections are neither maintainable nor competent and there is no ground, much less justifiable or tenable, which would invite the setting aside of the arbitral award dated 16.2.2014 passed by the Sole arbitrator. It is argued that the objection cannot be substituted for an appeal which is even otherwise, not provided for under the Act. Ld. Counsel has placed his reliance on the following judgments:
1. Maya Devi Vs. Nirmal Chand & Anr. reported in 2002 (2) Arb. L.R. 30 (Delhi).
2. UP State Electricity Board Vs. Sear Sole Chemicals Ltd. reported in II (2002) SLT 314.
3. Puri Construction Pvt. Ltd. Vs. Union of India reported in AIR 1989 SC 777.
4. National Thermal Power Corporation Vs. R.S. Avtar Singh & Co.
reported in 2002 (2) Arb. LR 135 (DELHI).
5. Bharat Heavy Electricals Ltd. Vs. Globe Hi Fabs Ltd. reported in 2004 (3) Arb. LR (DELHI) (DB).
6. Bharat Coking Coal Ltd. Vs. L.K. Ahuja reported in Arb. LR 652 (SC).
Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 5
7. Ramachandra Reddy & Co. Vs. State of AP reported in 2001 (1) Arb. LR 643 (SC).
8. V.K. Mittal Vs. DDA & Anr. reported in 2001 (Suppl.) Arb, LR 52 (DELHI).
(5) I have considered the rival contentions and there are two aspects on which I am inclined to intervene. Firstly I may observe that the entire arbitration proceedings are in respect of Credit Card bearing No. 4339502000006741 whereas according to the Credit Card Application Form duly relied upon by the Respondent no.1/ Claimant and placed before the Ld. Arbitrator and admittedly filled in by the petitioner, the card number so allotted to the petitioner is 4339482648629784 and not 4339502000006741 for which the proceedings were initiated. (6) Secondly the perusal of the record of the Arbitration proceedings show that the Statement of Account as well as the Legal Notice dated 24.1.2013 are all in respect of the Credit Card No. 4339502000006741 and not 4339482648629784 so allotted and used by the petitioner. (7) Thirdly the reference made to the Arbitrator by the respondent was also in respect of the same Credit Card bearing No. 4339502000006741 and not in respect of the Credit Card No. 4339482648629784 allotted to the petitioner Deepak Singhal. (8) Fourthly even otherwise assuming that the petitioner was the user of this Credit Card bearing No. 4339502000006741 though there is Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 6 nothing on record to show that this credit card had been issued to the petitioner and was being used by him, yet the record reveals that the entire claim so raised by the respondent is beyond the period of limitation. The plea of the petitioner is that the proceedings conducted before the Arbitrator were beyond the period of Limitation and there was no legally recoverable dues. It goes without saying that the principles of Limitation Act and the limitation provided there under would apply to all the proceedings conducted under the Arbitration and Conciliation Act, 1996. The initiation of proceedings regarding recovery of dues should be legally recoverable dues within the period of limitation i.e. Three Years. In the present case the claim had been filed by the respondent no.1 which is a Limited Liability Company and had obtained a certificate of registration as a Securitization and Asset Reconstruction Company from the Reserve Bank of India pursuant to Section 3 of the SARFESI Act. It was alleged that pursuant to the default committed by the petitioner in the payment to the respondent, his account was classified as Non Performing Asset in the books of Barclays Bank and thereafter vide a Deed of Assignment dated 20.12.2011 Barclays Bank had assigned/ sold/ transferred all the receivables in the Credit Card Account in favour of the Trust of which the claimant/ respondent no.1 is the trustee. The perusal of the entire arbitration award reveals that no Statement of Account duly certified under the Bankers Books of Evidence Act was placed on record as regards the use of Credit Card facility bearing No. 4339482648629784 so allocated to the petitioner, Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 7 which would establish the last use of credit facility by the petitioner so as to bring the claim within the period of limitation of three years. (9) Sixthly the only Statement of Account on which the Ld. Arbitrator had relied upon, is the statement of account dated 31.10.2011 which only shows the outstanding dues on the said date but not the last use of the said card bearing No. 4339502000006741 (which otherwise is not issued to the petitioner) which does not indicate how the claim raised is within the period of Limitation. No other material has been placed before the Ld. Arbitrator to confirm the last or earlier use of the Credit Card facility in respect of Credit Card No. 4339502000006741 by the petitioner (which Credit Card otherwise is not shown to be issued to the petitioner) and the continuous operation of the account thereafter. Even otherwise, the statement of account which has been placed on record of the arbitrator is only a computer generated document which is not even certified under the Bankers Book of Evidence Act and is not supported by any certificate under Section 65B of Evidence Act. Also, there is no unequivocal acknowledgment of debt by the petitioner pursuant to the alleged service of legal notice which would have the effect of extending the limitation. (10) Lastly, it was necessary for the Arbitrator to have specifically asked for the details when the account of the petitioner was classified as Non Performing Asset (NPA) which was not done. Rather, the fact that the account of the petitioner had been declared as NPA confirms that the account was not in use. Despite this objection having been raised before Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 8 this Court by the petitioner, the respondent no.1 has not placed on record the relevant details to establish that the claim made by them before the Arbitrator was within the period of Limitation.
(11) This being the background, the impugned award being in respect of Credit Card not so issued to the petitioner (the petitioner having been issued Credit Card No. 4339482648629784) and the claim otherwise being primafacie beyond Limitation, is contrary to the fundamental policy of the Indian Law and is in violation of the Public Interest, for which it is required to be set aside. Reference in this regard is made to the case of Indian Tourism Development Corporation Ltd. Vs. Buddiraja Electrical reported in 2003 (2) RAJ 216 (Delhi); Renu Sagar Power Co. Ltd., Vs. General Electric Co. reported in AIR 1994 SC 860; Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd. reported in AIR 2003, Supreme Court, 2629; Bhagwati Oxygen Ltd. Vs. Hindustan Copper Ltd. reported in AIR 2005 SC 2071; Kesar Enterprises Vs. D.C.M. Shriram Industries Ltd. & Another reported in 2000 VII Apex Decisions (Delhi) 794 and in the case of M/s Sundaram Finance Ltd. Vs. M/s. NEPC India Ltd., reported as AIR 1999, SC 565.
(12) The impugned award is in respect of the Credit Card not shown to be issued to the petitioner who in fact was issued Credit Card No. 4339482648629784 as per the claim of the respondent, is not binding upon the petitioner being a stranger to the said credit facility in respect of which Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 9 the Arbitration proceedings were conducted. Even otherwise, the award on the face of it is also contrary to the existing law of India i.e. Limitation Act which provides for a limitation of three years for recovery of dues particularly when the account was not a running account but had admittedly been declared a Non Performing Asset.
(13) This being the background, the objections filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 are allowed and I hereby set aside the impugned award dated 12.3.2014.
(14) File be consigned to Record Room. Announced in the open court (Dr. KAMINI LAU) Dated: 12.5.2015 ADJII(CENTRAL)/ DELHI Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 10 Deepak Singhal Vs. Phoenix Arc Ltd. CS No. 303/2014 12.5.2015 Present: Proxy counsel for the petitioner. Proxy counsel for the respondent.
Advocates are abstaining from work today on the issue of Pecuniary Jurisdiction.
Proxy Counsel from the Bar Association.
Vide my separate detail order dictated and announced in the open court but not yet typed, the objections filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 are allowed and I set aside the impugned award dated 12.3.2014.
File be consigned to Record Room.
(Dr. Kamini Lau) ADJII(Central)/ 12.5.2015 Deepak Singhal Vs. Phoenix Arc (P) Ltd., CS No. 303/2014 Page No. 11