Bangalore District Court
) M/S.Suvi Granite Exports vs M/S.Hdfc Bank Limited on 13 December, 2018
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY : (CCCH.11)
Dated this the 13th day of December, 2018
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City.
A.S.NO:33/2014
PLAINTIFFS : 1) M/s.Suvi Granite Exports
No.11/2, IBM Prakashana,
2nd Floor, 5th Main Road,
New JH Commercial Complex,
Gandhinagar, Bengaluru-560 009.
2) M/s.Suvi Granite,
No.11/2, IBM Prakashana,
2nd Floor, 5th Main Road,
New JH Commercial Complex,
Gandhinagar, Bengaluru-560 009.
No.1 and 2 are represented by its
Power of Attorney -
Mr.Rajagopal Thilak,
S/o.late Sri.S.Rajagopalan,
Aged about 56 years,
Working at New JH Commercial Complex,
Gandhinagar, Bengaluru-560 009.
[By Pleader Sri.N.Suresh]
/Vs/
AS.33/2014
2
DEFENDANT : M/S.HDFC BANK LIMITED
Retail Asset Division,
Golden Tower, Airport Road,
Kodihalli, Bengaluru-560 017.
Reptd.by its Authorized Signatory-
Sri.Yogesh.N
[By Pleader Sri.Mariappa.M.S]
--
JUDGMENT
This suit is filed by the Plaintiffs under Section 34(2) of the Arbitration and Conciliation Act, 1996 for setting aside the arbitration award dated 17.06.2011 passed in Arbitration Case No.13/2011.
2) The Plaintiffs' case in brief is that, as per the Defendant's version, the Plaintiffs were frequent defaulters in payment of monthly installments. The cheque was issued and the same was dishonoured and thereby, the Plaintiffs committed offence punishable under Section 138 of the Negotiable Instruments Act. The Plaintiffs did not pay the monthly installments as per the terms of Loan Agreement and committed default. The notice was AS.33/2014 3 issued to the Plaintiffs on 03.10.2010 through registered post, in spite of this, the Plaintiffs did not repay the outstanding loan amount. The Plaintiffs contend that as per the Defendant's version, the Plaintiffs had agreed to pay penal interest at rate of 2% per month on delayed payments. The Plaintiffs were liable to pay Rs.400/- being the charges of cheque. As per Defendant's version, the Defendant maintained accounts in its regular course of business and the Plaintiffs were in due of Rs.4,27,408/-. The Plaintiffs further contend that, during business transaction, they have repaid the loan amount and the Defendant during the business transaction has not maintained proper books of accounts. No prior notice was given to the Plaintiffs before referring the matter to the Arbitrator. The Plaintiffs also contend that, the Defendant has failed to observe the terms of the loan, which authorize the Defendant to renew the loan as per the guidelines of the Reserve Bank of India. The AS.33/2014 4 Arbitrator did not issue notice to the Plaintiffs, hence, the Plaintiffs could not establish their case before the Arbitrator. The award has been passed behind the back of the Plaintiffs by placing the Plaintiffs ex-parte. The Plaintiffs came to know of the award passed by the Arbitrator when the Defendant's officials visited the Plaintiffs premises on 20.02.2014 in execution proceedings. Immediately, the Plaintiffs obtained certified copy of the award in execution proceedings and came to know about the passing of the award. The Plaintiffs have challenged the award on the following grounds.
The award passed by the learned Arbitrator is illegal and opposed to law. No prior notice was issued to the Plaintiffs before referring the matter to Arbitration and no notice was issued to the Plaintiffs for appointing an Arbitrator. If notice were served to the Plaintiffs, they would have participated in the proceedings and contested the matter. The award AS.33/2014 5 thus rendered is one sided and it is illegal. The Arbitrator failed to take into consideration of the guidelines issued by the Reserve Bank of India, which authorize the Defendant to extend the loan period. The award passed is in violation of principles of natural justice, hence, prays for setting aside the arbitral award.
3) The Defendant entered his appearance through his counsel, but he has not chosen to file his written statement and contest the suit.
4) Heard. Perused the pleadings and the materials placed in this case.
5) The points that arise for my consideration are:-
(1) Whether Plaintiffs were duly represented in this suit?
(2) Whether the Plaintiffs have made out any of the grounds as enumerated in Section 34(2) of the Arbitration and Conciliation Act?
AS.33/2014 6 (3) Whether the suit is barred by limitation?
(4) What Order?
6) My answer to the above points are :-
Point No.1 - In the Negative;
Point No.2 - In the Negative;
Point No.3 - In the Affirmative;
Point No.4 - As per final order,
for the following :
REASONS
7) POINT NO.1 : The first question that arises
for consideration is, whether the Plaintiffs have been duly represented in this suit. The cause title of the plaint indicates that Plaintiffs No.1 and 2 are represented by its Power of Attorney holder Mr.Rajagopal Thilak. The Plaintiffs have produced the Power of Attorney, which has been executed by Mr.Vinod Kumar Krishnappa, the alleged Partner of M/s.Suvi Granite Exports-Plaintiff No.1 herein, in favour of Mr.Rajagopal Thilak, S/o.late AS.33/2014 7 Sri.S.Rajagopalan. The said Power of Attorney has been drafted on documentation sheet having face value of Rs.2/-. More important is that, the said Power of Attorney has not been duly attested before the Notary Public. First of all, it has not been drafted on requisite stamp paper as envisaged in Article 41(b) of the Karnataka Stamp Act. It states that, 'when authorizing one person or more to act in a single transaction, other than the case mentioned in Clause (a), the Power of Attorney shall be drafted on Rs.100/- stamp paper'. Here in this case, the Power of Attorney has been drafted on documentation sheet, having face value of Rs.2/- and the same has not been notarized before the Notary Public. An aspect of notarization is governed by provisions of Notaries Act, 1952. When the Power of Attorney is not notarized as per Section 8 of the Notaries Act, 1952, the presumption as to its execution and authentication cannot be drawn under Section 85 of the Indian Evidence Act, 1872.
AS.33/2014 8 More so, the first Plaintiff has not been duly represented in this suit. At this stage, it is relevant to reproduce the contents of Power of Attorney, which reads as follows :
" I Mr.Vinod Kumar Krishnappa partner M/s.Suvi granite hereby gives Power of Attorney to Mr.Rajagopal Thilak S/o of Late S.Rajagoplan aged about 56 years to represent against HDFC Bank cases filed in the courts. Any decision taken by him will be binding on us."
8) From reading the Power of Attorney, it is crystal clear that, the alleged partner has executed Power of Attorney in favour of one Mr.Rajagopal Thilak. The first Plaintiff is not represented by any one in this suit. More so, no document has been produced in this suit to show that Mr.Vinod Kumar Krishnappa, who executed Power of Attorney is the partner of Plaintiff No.2. Hence, I am of the opinion that, the Power of Attorney produced in this suit is not duly stamped and the same is not duly attested before the Notary Public as provided under law. Under such circumstances, no presumption can be AS.33/2014 9 drawn to its due execution and authenticity. Hence, this court comes to the conclusion that the Plaintiffs are not duly represented in this suit and the suit suffers for want of due representation; accordingly, I answer Point No.1 in the Negative.
9) POINT NO.2 : The Plaintiffs' main contention is that, the Arbitrator did not issue any legal notice to them. In case, the notice was served on the Plaintiffs, they would have participated in the proceedings and contested the same; thus, the award rendered is one sided and the same has been passed behind the back of the Plaintiffs. Since the award passed ex-parte, the Plaintiffs have lost chance of conducting the case and thereby, the principles of natural justice has been violated. In the back drop of the contention of the Plaintiffs, it is relevant to reproduce relevant portion of the arbitral award, which reads as follows:
"2. I have accepted the reference/nomination as Sole Arbitrator AS.33/2014 10 and caused my appearance and issued notices to the Respondent/s and Claimant as well. The 1st date of hearing was fixed on 08.04.2011 for appearance of the Respondents and also for their objections. The notices issued to Respondents had been served. Case called and no representation for Respondents placed as exparte............."
10) The arbitral award makes it clear that, the learned Arbitrator after accepting the reference of the arbitral dispute, issued notice to the Plaintiffs as well as Defendant, fixing the first date of hearing on 08.04.2011. In spite of service of notice, the Plaintiffs failed to appear before the learned Arbitrator and contest the same. Under such circumstances, it cannot be presumed that the Plaintiffs were not served with the notice issued by the learned Arbitrator, unless the Plaintiffs have placed materials before the court to substantiate their contention. If the Plaintiffs were not served with the notice, they would have produced the arbitral documents and proceedings which were AS.33/2014 11 taken before the learned Arbitrator to substantiate their case, but they have not taken any strain to prove their contention except their bare statement. When matter stood thus, it cannot be said that the Plaintiffs were not given opportunities to appear before the learned Arbitrator, since the Plaintiffs themselves chose not to appear before the learned Arbitrator. Under such circumstances, violating of principles of natural justice does not arise.
11) The next contention of the Plaintiffs is that, the learned Arbitrator has failed to observe the guidelines issued by the RBI. As per guidelines, the Defendant ought to have extended the time of loan period and the same has not been done in this case. Hence, the impugned award is illegal. This contention of the Plaintiffs is not supported by any material evidence. It is a mere assertion of the Plaintiffs, that's all. When the Plaintiffs entered into agreement with the Defendant agreeing to the terms and conditions thereof, they must be bound AS.33/2014 12 by it. On failure of the Plaintiffs' to pay the loan amount, the Defendant approached the Arbitrator as per the terms of the agreement to arbitrate the dispute. If the Plaintiffs were prompt and they were in constant touch with the Defendant, definitely, they could have made request to renew the loan transaction. It is not at all the case of the Plaintiffs that they had made request to the Defendant to renew the loan transaction. If really the Plaintiffs relied upon the RBI guidelines, they could have brought to the notice of the Defendant to comply with the same and also placed before the learned Arbitrator. But the Plaintiffs did not do so. Moreover, the Plaintiffs in this suit never placed any law or guidelines as contended, which bar the Arbitrator to pass the award. Under such circumstances, this court is of the opinion that, the contention of the Plaintiffs is nothing but evasive and the same does not hold good in the absence of materials.
AS.33/2014 13
12) Here in this case, the Plaintiffs never denied the loan transaction and the documents executed by them. Their only contention is that, they have repaid the loan amount and the Defendant has not maintained proper books of accounts. The Plaintiffs in one breath state that the Defendant has failed to renew the loan transaction as per RBI guidelines and in another breath they state that they have repaid the loan amount. This version of the Plaintiffs itself falsifies their case. The Plaintiffs cannot approbate or reprobate at the same time. When the Plaintiffs had repaid the loan amount, they could have agitated before the learned Arbitrator, but they have failed to appear before the learned Arbitrator. Be that as it may. The Plaintiffs could have produced before the court the payment receipts for having repaid the loan amount, but they did not do so. Under such circumstances, it can be said that the contention of the Plaintiffs that they repaid the loan amount, but proper books of AS.33/2014 14 accounts has not been maintained by the Defendant is nothing but devoid of merits and the same is not supported by any material evidence. Hence, I am of the opinion that, in spite of due notice of the arbitral proceedings, the Plaintiffs failed to appear before the learned Arbitrator and contest the arbitral proceedings; accordingly, I answer Point No.2 in the negative.
13) POINT NO.3 : Plaintiffs state that they came to know of the award passed against them only when the Defendant's officials visited their premises on 20.12.2014. They have stated that thereafter they obtained copy of the award from the court produced in Execution Case No.25356/11 and filed this suit immediately. The Plaintiffs have filed application under Section 5 of the Limitation Act, to condone the delay in filing the suit. In the affidavit, the Plaintiffs have taken the same contention. The award has been passed on 17.06.2011, the Plaintiffs have filed this suit on AS.33/2014 15 03.04.2014. The Plaintiffs have filed this suit after three years from the date of passing of the award. As per plaint averments, the Execution case was filed in the year 2011 itself. Here in this case, the Plaintiffs did not appear before the learned Arbitrator in spite of notice thus given in the arbitral proceedings. They also did not appear before the executing court. Even the execution case was filed in the year 2011 itself. The mere assertion of the Plaintiffs is that, they were not aware of the execution proceedings. This is also their ground to challenge the award.
14) Be that as it may. As per Section 34(3) of the Arbitration and Conciliation Act, the suit is required to be filed within three months from the date of receipt of the arbitral award. The proviso to Section 34(3) of the Act, provides 30 days grace period in case the application is not filed within three months. The court may allow the same within the grace period of 30 days, if sufficient cause is shown.
AS.33/2014 16 Here, except the pleadings of the Plaintiffs, nothing has been placed before the court to substantiate their contention that they came to the notice of the award only after visiting the Defendant's officials to their house. More so, the application filed under Section 5 of the Limitation Act, is not applicable to the application filed under Section 34 of the Arbitration and Conciliation Act, in view of the specific provision as contemplated under Section 34(3) of the Arbitration and Conciliation Act, to condone the delay, if any. Under the said provision, the petition under Section 34 of the Arbitration and Conciliation Act, can be entertained within grace period of 30 days, if it is filed after three months from the date of receipt of the award, if sufficient cause is shown. Here in this case, the award has been challenged after lapse of around 02 years 10 months, which cannot be condoned under Section 34(3) of the Arbitration and Conciliation Act. Hence, I am of the opinion that the suit is barred by AS.33/2014 17 limitation; accordingly, I answer Point No.3 in the affirmative.
15) POINT NO.4: For the foregoing discussions and answers to Point No.1 to 3, I proceed to pass the following :
ORDER The suit filed by the Plaintiffs under Section 34(2) of the Arbitration and Conciliation Act, 1996 to set aside the award dated 17.06.2011 passed by the sole Arbitrator in Arbitration Case No.13/2011; is hereby dismissed.
(Dictated to the Judgment Writer, transcribed and computerized by her, transcript thereof corrected and then pronounced by me in open court, dated this the 13th day of December, 2018.) (RAMA NAIK) VI Addl.City Civil & Sessions Judge, Bengaluru City.
AS.33/2014 18