Madras High Court
M/S.V.V.Home Makers Pvt Ltd vs M/S.Shriram City Union Finance Limited
Author: Abdul Quddhose
Bench: Abdul Quddhose
IN THE HIGH COURT OF JUDICATURE AT MADRAS RESERVED ON: 12.07.2018 DELIVERED ON: 24.07.2018 CORAM: THE HON'BLE MR. JUSTICE ABDUL QUDDHOSE OP Nos.438 to 444 of 2018 1.M/s.V.V.Home Makers Pvt Ltd., Mr.Veeraragavan R Director, No.6, Rangarajapuram Main Road, Kodambakkam, Chennai 600 024. 2.Mr.Veeraghavan R ...Petitioners in all OPs vs. 1.M/s.Shriram City Union Finance Limited, Represented by its Authorised, Representative D.Senthil Kumaran, Having their office at No.4/289, 1st Floor, Pycrafts Road, Triplicane, Chennai 600 005. 2.Mr.Balakrishnan 3.Mrs.Mallika ...Respondents in all OPs Prayer in all OPs: Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the ex parte award passed by the sole arbitrator dated 18.04.2016, to set aside the ex parte award passed by the sole arbitrator dated 17.10.2014, to set aside the ex parte award passed by the sole arbitrator dated 31.01.2015, to set aside the ex parte award passed by the sole arbitrator dated 20.04.2016, to set aside the ex parte award passed by the sole arbitrator dated 31.01.2015, to set aside the ex parte award passed by the sole arbitrator dated 17.10.2014 and to set aside the ex parte award passed by the sole arbitrator dated 17.10.2014. For petitioners in all OPs : Mr.M.Theiva Kumar For Respondents in all OPs : Mr.T.V.Ramanujam, Senior Counsel for M/s.Sri and Sankar Associates COMMON ORDER
1.OP Nos.438 to 444 of 2018 have been filed by the same petitioners challenging the seven different Arbitral Awards passed against them.
2.Since in all the original petitions, the petitioners and the respondents are one and the same and the grounds raised by the petitioners for challenging the respective Awards are also identical, this Court is disposing of all the original petitions by a common order.
3.The details of the Arbitral Awards passed by the Sole Arbitrators in favour of the first respondent against the petitioners are detailed hereunder:
OP No. Date of Arbitral Award Relief granted under the Award 438 of 2018 18.04.2016 The petitioners and the guarantors directed to pay the first respondent jointly and severally a sum of Rs.76,25,521/- together with interest at 18% per annum from 12.08.2015 till its realization and Rs.5,000/- towards the cost of Arbitration.
439 of 2018 17.10.2014 The petitioners and the guarantors directed to pay the first respondent jointly and severally a sum of Rs.27,63,631/- together with interest on Rs.19,99,236/- at 18% per annum from 08.05.2013 till its realization and Rs.5,000/- towards the cost of Arbitration.
440 of 2018 31.01.2015 The petitioners and the guarantors directed to pay the first respondent jointly and severally a sum of Rs.67,43,943/- together with interest on Rs.18,78,000/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration.
441 of 2018 20.04.2016 The petitioners and the guarantors directed to pay the first respondent jointly and severally a sum of Rs.34,29,211/- together with interest at 18% per annum from 05.02.2016 till its realization and Rs.5,000/- towards the cost of Arbitration.
442 of 2018 31.01.2015 The petitioners and the guarantors directed to pay the first respondent jointly and severally a sum of Rs.1,34,74,890/- together with interest on Rs.37,56,000/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration.
443 of 2018 17.10.2014 The petitioners and the guarantors directed to pay the first respondent jointly and severally a sum of Rs.67,43,943/- together with interest on Rs.18,78,000/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration.
444 of 2018 17.10.2014 The petitioners and the guarantors directed to pay the first respondent jointly and severally a sum of Rs.16,93,290/- together with interest on Rs.7,39,387/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration.
4.In the event of default to pay the amounts awarded by the learned Arbitrator within the stipulated period of time, the first respondent was permitted to sell the mortgaged property by calling for sealed tenders or by way of private treaty from the prospective buyers and sell the same to the highest bidder and adjust the sale proceeds towards the amount due. In the event of sale proceeds falling short of the amount due, the first respondent was permitted to recover the same by executing the Award and if the sale proceeds exceeds the dues, the Arbitrator directed the first respondent to refund the balance amount to the first petitioner.
5.The brief facts leading to the filing of the instant petitions are as follows:
(i)The first petitioner availed trade loan facility from the first respondent under seven separate loan agreements. The second petitioner as well as the second and third respondents stood as guarantors for the due repayment of the loan by the first petitioner. The details of the loan availed by the first petitioner under seven separate loan agreements and the corresponding original petitions are detailed hereunder:
OP No. Date of loan agreement Loan availed in Rs.
No.of instalments 438 of 2018 01.11.2012 40,00,000 36 months 439 of 2018 04.06.2010 40,00,000 36 months 440 of 2018 01.11.2012 50,00,000 36 months 441 of 2018 28.03.2012 50,00,000 36 months 442 of 2018 01.11.2012 1,00,00,000 60 months 443 of 2018 01.11.2012 50,00,000 36 months 444 of 2018 18.12.2009 50,00,000 36 months
(ii)According to the first respondent, the petitioner committed default in the repayment of the loan under all the seven loan agreements. In view of the dispute between the parties, the dispute under each of the loan agreements was referred to Arbitration by the first respondent by appointing a separate arbitrator to decide separately the dispute under each of the loan agreements. The respective arbitrators acted upon the reference and after issuing notice to the parties to the dispute and after considering the materials available on record, passed the above mentioned Arbitral Awards in favour of the first respondent.
(iii)Aggrieved by the respective Arbitral Awards, the first petitioner who is the borrower and the second petitioner who is the Managing Director of the first petitioner and a guarantor under all the loan agreements have filed the instant petitions challenging the respective Arbitral Awards.
6.Heard. Mr.M.Theiva Kumar, learned Counsel for the petitioners and Mr.T.V.Ramanujam, learned Senior Counsel assisted by Mr.C.Umashanker for the first respondent.
7.The learned Counsel for the petitioners submits that the petitioners did not receive any pre Arbitration notice from the first respondent and they also did not receive any notice in the Arbitral proceedings from the Arbitrator and the signed copy of the Arbitral Award was also not delivered by the Arbitrator to the petitioners. According to him, the petitioners received notice only in the execution petition filed by the first respondent to execute the Arbitral Award which is the subject matter of challenge.
8.The learned Counsel for the petitioners further submit that the petitioners appeared before the execution Court and gave a letter dated 21.11.2016 to the first respondent calling upon them to furnish a copy of the Arbitral Award and the execution petition. According to the learned Counsel for the petitioners despite several reminders, the first respondent did not serve a copy of the Arbitral Award to the petitioners. Further, the learned Counsel for the petitioners would submit that the petitioners sent a notice dated 08.08.2017 to the Arbitrator seeking for certified copy of the Arbitral Award enclosing a Demand draft for a sum of Rs.500 towards the expenses but, till date the Arbitrator has not furnished a copy of the Arbitral Award.
9.According to the learned Counsel for the petitioners, the first respondent served a copy of the Arbitral Award to the petitioners only after several reminders were sent by the petitioners. The learned Counsel for the petitioners submit that the petitioners only after perusing the copy of the Arbitral Award received in the execution proceedings come to know about the illegal Arbitral Award passed against the petitioner. According to the learned Counsel for the petitioner, the Arbitral Award was made available only on 26.10.2017. Therefore, the petitions filed by the petitioners under Section 34 of the Arbitration and Conciliation Act, 1996 is well within the limitation period of 90 days.
10.The learned Counsel for the petitioners drew the attention of this Court to the Arbitral Award and submitted that the reasons adduced by the learned Arbitrator are contrary to facts and law. According to him, the Award passed by the respective learned Arbitrator is against the fundamental policy of Indian Law and Public Policy. According to him, there is no valid Arbitration agreement between the petitioners and the first respondent. The learned Counsel further, submitted that the petitioners did not receive the claim petition or the foreclosure/termination notice from the first respondent till date.
11.The learned Counsel for the petitioners would further submit that a Mortgage Award cannot be passed by the Arbitrator. But, in all the Awards, the Arbitrator on failure to pay, the Arbitrator has directed the sale of the immovable properties which is not permissible under law. The learned Counsel further, submitted that the learned Arbitrator has not revealed the details of the appointment of the Arbitrator and the same has not been marked as a document in the Award.
12.Per contra, Mr.T.V.Ramanujam, learned Senior Counsel for the first respondent assisted by Mr.C.Umashanker submitted the following:
(1)The O.P.s filed by the petitioners to set aside the award passed by the learned Arbitrators in favour of the first respondent are not maintainable and are liable to be dismissed in limine on the following among other grounds:
a)The Original Petitions are barred by the Law of Limitation as the same were filed after the time frame contemplated under Section 34(3) of the Arbitration and Conciliation Act.
b)The primary ground of Challenge to the awards passed by the learned Arbitrator is that no notice was served on the petitioners by the Arbitrator including the Award. The Arbitration records submitted before this Court by the Arbitrator would prove that the petitioners were served with the Letter of Reference cum Nomination of the Arbitrator, Notice issued by the learned Arbitrator and finally the awards passed by the Arbitrator; hence the petitions are liable to be dismissed on that score.
c)Without prejudice, only the money claim under the respective agreements were referred by the first respondent for adjudication by the Arbitral Tribunal and no relief touching the Mortgaged Property was sought for before the Arbitral Tribunal. Hence the money award passed by the learned Arbitrator is in line with the claim filed by the first respondent is valid and sustainable in the eye of Law.
d)Without prejudice, the relief granted by the learned Arbitrator to the first respondent to sell the property mortgaged alone be severed from the award as per Proviso to Section 34(2) of the Act and be set aside on the ground that the award pertains to a matter which was neither referred to Arbitration nor Arbitrable.
e)Further the first respondent has filed execution petitions before this Hon'ble Court and before the City Civil Court, Chennai considering the Award only as a money decree and no relief based on the Mortgage Award passed by the learned Arbitrator was prayed for before the Competent Courts in the execution proceedings.
2)The averments made by the petitioners that they have not received the award passed by the learned Arbitrator are incorrect and frivolous. The said averment was made solely with intention to maintain these petitions before this Court. In the arbitration proceeding initiated by the first respondent before the learned Arbitrator, the petitioners have not appeared before the Arbitral Tribunal despite service of notice. Hence the learned Arbitrator, based on the documents filed and the evidence adduced, passed an award in favour of the first respondent, directing the petitioners and other guarantors to pay the awarded amount together with interest and cost. It is pertinent to note that the learned Arbitrator has sent a copy of the award to the petitioners and other parties concerned and the same was acknowledged by the petitioners. Section 34(3) of the Arbitration and Conciliation Act, specifically says that an application for setting aside the Award may not be made after three months have elapsed from the date the party making the application had received the arbitral Award. The first respondent has filed the Original proof of service of award received from the Arbitral Tribunal. Since the award itself was served on the petitioners by the Arbitrator himself, the present petition which was filed in 31.05.2018, that too after the period of limitation is not at all maintainable and liable to be dismissed on that score itself. In view of the fact that the O.P. was filed on frivolous averments, the O.P. itself has to be struck off.
3)Further the Hon'ble Apex Court while considering the scope of the Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 after the period of limitation, in Union of India -Vs-Popular Constructions Co (2001) 8 SCC 470 at Para 16, has held that the application challenging the award filed beyond the period mentioned in Section 34(3) would not be an application in accordance with Sub Section (3) as required under Section 34(1) of the Act. Hence the present petitions which were filed beyond the period of limitation is not application as per Section 34 (1) of the Act and the same are deserves to be dismissed.
4)The petitioners by repeatedly saying that they have not served with any notice from the Arbitrator in the Arbitral proceeding including the award has prayed for setting aside the awards. The said averments are frivolous and concocted. It is pertinent to note that, in all the cases, the Letter of Reference cum Nomination of the Arbitrator was served on the Petitioners and the other parties to the Arbitration proceeding. It is apt to point out that, in all acknowledgement cards, the Seal of the first petitioner was affixed and signature was also appended to that. Further, the learned Arbitrator, issued a notice, directing the petitioners and the parties to appear before the Arbitral Tribunal fixing the hearing date. The said notice was also served on the petitioners and others and the proof of service was also filed before the Arbitrator which is also produced before this Court. Therefore, as per Section 3 of the Arbitration and Conciliation Act, there is a valid and sufficient service of notice on the petitioners in the Arbitration proceedings. Having failed to appear before the Arbitrator despite service of notice, the petitioners are estopped from taking the plea that no notice was served on them by the Arbitrator and the petitions are liable to be dismissed on that score.
5)Without prejudice to above submissions, the Learned Senior Counsel submitted that the first respondent have not filed any claim before the Arbitral Tribunal touching upon the Property Mortgaged. It is pertinent to note that as per the Letter of Reference cum Nomination invoking the Arbitration Clause was made only for adjudication of money claim due under the respective agreements entered into by the petitioners with the first respondent. Further the Statement of Claim under the respective reference was also filed only for adjudication of the money claim under the respective agreements. In none of the contracts, the first respondent has prayed for any relief regarding enforcement of the mortgage or touching the property mortgaged. The letter of reference cum nomination and the Statement of Claim filed in the above cases would prove the said fact. Hence the money award passed by the learned Arbitrator based on the documents filed and evidence adduced by the first respondent are valid and enforceable in accordance with law. In view of the said fact, the Law laid down by the Hon'ble Apex Court in Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 is not applicable to the instant case before this Hon'ble Court.
6)Further without prejudice to above submissions the learned Senior Counsel submitted that the Arbitrator, after passing the money award, has permitted the first respondent to sell the mortgaged property in the event of non compliance and to adjust the sale proceeds towards the amount due under the award. Hence, the award regarding the sale of the mortgaged property is beyond the Scope of reference made to the Arbitration and the same may be severed and the award touching upon the immovable property alone be set aside as per the Proviso to Section 34(2) of the Arbitration and Conciliation Act. The Doctrine of Severability of the Award was upheld by the Hon'ble Apex Court in
a)Associate Builders Vs Delhi Development Authority 2015 (3) SCC 49 (Para 36)
b)ONGC-Vs-Western GECO-2014(9)SCC 263; and the High Court of Bombay in
c)M/s.R.S.Jiwani-Vs-Government of India Undertaking Laws (Bom) 2009 12-109
7)Further, the first respondent being the Secured Creditor as a Mortgage in a Deed of Mortgage, by invoking the Doctrine of Election, can elect either to file a suit for the enforceability of the Mortgage or for recovery of money without seeking for any relief against the mortgage property. This itself would prove that the Claim in respect of the amount due under the Mortgage and the suit for enforceability of the Mortgage are severable and a Decree be passed either compositely or separately as prayed for. Further under the Scheme of Mortgage under Order XXXIV of the Code of Civil Procedure, 1908, the first respondent is entitled to file a separate suit for enforcing the Mortgage so created in their favour even after obtaining a money award from the Arbitrator as held by the Hon'ble High Court of Bombay in Deccan Chronicle-Vs-L & T Finance Limited. Therefore the claim and the money award passed by the Arbitrator is valid in the eye of Law.
8)Further, the first respondent, even in the execution petitions which were filed to enforce the award passed by the learned Arbitrator has not prayed for any relief based on the Mortgage Decree passed by the Arbitrator. The execution petitions were filed for arrest of the second petitioner and for attachment and sale of the property considering the award only as a money award. Hence, the first respondent, even by their act, has considered the award only as a money award and filed petitions to enforce it only as a money award.
Discussion:
Since there are seven separate Arbitral Awards challenged by separate petitions, this Court after examining individually the Awards and the materials available on record observes the following:OP No.438 of 2018
13.The loan agreement dated 01.11.2012, contains an Arbitration clause. On examination of the Arbitration clause, this Court is satisfied that the first respondent has referred the dispute to Arbitration by appointing a Sole Arbitrator only in accordance with the Arbitration clause. Therefore, the petitioners cannot contend that there is no Arbitration clause under the loan agreement.
14.The notice for appointment of the Sole Arbitrator Mr.C.M.Seetharaman was sent by the first respondent on 26.06.2015, to the petitioners which was duly acknowledged by the petitioners. The notice dated 26.06.2015 and the acknowledgement cards signed by the petitioners were filed by the first respondent in their typed set of documents filed before this Court on 04.07.2018. Therefore, the first respondent has complied with the requirements of Section 21 of the Arbitration and Conciliation Act.
15.A copy of the notice dated 12.08.2015, sent by the Arbitrator to the petitioners informing them of his appointment as the Arbitrator by the first respondent has also been filed by the first respondent before this Court. The acknowledgement card received from the petitioners for the receipt of the notice dated 12.08.2015, sent by the Arbitrator is also produced before this Court by the first respondent.
16.The Arbitrator has given a categorical finding that the petitioners have been served with the notice of the Arbitrator dated 12.08.2015 for the hearing 12.09.2015. Therefore, the petitioners cannot now contend that no notice was received in the Arbitral proceedings.
17.The acknowledgement cards from the petitioners for the receipt of the signed copy of the Arbitral Award dated 18.04.2016, from the Arbitrator is also produced before this Court. Therefore, the petitioners have complied with the requirements of Section 31(5) of the Arbitration and Conciliation Act.
18.In view of the above findings, this Court is of the considered view that the contention of the petitioners that they received the certified copy of the Award only from the execution Court on 26.10.2017, is a false statement.
19.As seen from the post office seal, the Arbitral Award dated 18.04.2016, was sent by the Arbitrator to the petitioners in June 2016 itself, whereas OP No.438 of 2018 was filed only on 31.05.2018, which is beyond the period of limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act, which stipulates that the Arbitral Award has to be challenged within three months from the date of receipt of the Award with a grace period of one month to be condoned by the Court on providing sufficient reasons. Since it is trite law that Section 5 of the Limitation Act is not applicable to a petition under Section 34 of the Arbitration and Conciliation Act, the instant petition filed on 31.05.2018, is hopelessly barred by the law of limitation.
20.Despite receipt of the notice in the Arbitration, the petitioners have failed to enter appearance and defend the claim of the first respondent before the Arbitrator. At this stage, in a petition under Section 34 of the Arbitration and Conciliation Act, the petitioners cannot now contend that the Arbitrator did not reveal details of his appointment in the Arbitral proceedings.
21.The claim made by the first respondent against the petitioners before the Arbitrator is only for recovery of money and no mortgage relief was sought for by the first respondent. Even though, the Arbitrator has granted money Award as well as a mortgage Award, in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 that mortgage relief cannot be granted in Arbitration, the respondent has given up the mortgage Award and has filed the execution petition only to execute the money Award by seeking arrest of the judgement debtors. Under the proviso to Section 34(2) of the Arbitration and Conciliation Act, 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. Since the claim of the first respondent was only for recovery of money, the Arbitral Award granting a mortgage relief in favour of the first respondent will have to be set aside and the money Award which is in accordance with law cannot be disturbed by this Court under Section 34 of the Arbitration and Conciliation Act. Applying the proviso to Section 34(2) of the Act, the mortgage Award can be separated from the money Award and therefore, the mortgage Award alone has to be set aside and the money Award is confirmed by this Court.
22.The petitioners have also admitted their default in payment of the instalments to the respondent in paragraph 6 of their counter affidavit filed before the execution Court which reads as follows:
I state that I have paid Rs.4,88,250/- till date and due to the sudden market condition, our business was not doing well and our company went to huge loss due to which I was unable to pay the balance instalments.
23.Under the instant loan agreement, the petitioners availed a loan of Rs.40,00,000/-, which is repayable with interest. The Award was passed on 18.04.2016 for a sum of Rs.76,25,521/-, together with interest at 18% per annum from 12.08.2015 till its realization and Rs.5,000/- towards the cost of Arbitration.
24.The first respondent has also filed proof affidavit before the Arbitrator and exhibits A1 to A6 were marked on the side of the first respondent before the Arbitrator. The exhibits include a)copy of authorization of letter, b)statement of account, c)copy of three Arbitration notice, d)copy of acknowledgement/returned covers, e)paper publication, f)mortgage title deed dated 18.02.2008, executed by the petitioners in favour of the respondent.
25.The Arbitrator has considered each and every exhibit filed in support of the claim and only thereafter has passed an Arbitral Award dated 18.04.2016 for a sum of Rs.76,25,521/- together with interest and cost in favour of the first respondent. Therefore, the contention of the petitioners that the Award is against the fundamental policy of Indian Law and Public Policy cannot be countenanced. The second portion of the Award which is a mortgage Award is set aside under proviso to Section 34(2) in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 which held that a mortgage relief which is an action in rem cannot be granted by an Arbitral Tribunal.
26.Excepting for the illegality of the mortgage Award granted by the Arbitrator in view of the Hon'ble Supreme Court judgement cited supra, the other portions of the Award which is entirely a money Award is perfectly a valid Award, which is enforceable against the petitioners.
27.For the foregoing reasons, this Court is of the considered view that there is no merit in the petition insofar as, the money Award is concerned. But the mortgage Award, which is the second portion of the Award alone will have to be set aside by this Court in view of the decision in Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532.
OP No.439 of 201828.The loan agreement dated 04.06.2010, contains an Arbitration clause. On examination of the Arbitration clause, this Court is satisfied that the first respondent has referred the dispute to Arbitration by appointing a Sole Arbitrator only in accordance with the Arbitration clause. Therefore, the petitioners cannot contend that there is no Arbitration clause under the loan agreement.
29.The notice for appointment of the Sole Arbitrator Mr.C.M.Seetharaman was sent by the first respondent on 29.04.2013, to the petitioners which was duly acknowledged by the petitioners. The notice dated 29.04.2013 and the acknowledgement cards signed by the petitioners were filed by the first respondent in their typed set of documents filed before this Court on 04.07.2018. Therefore, the first respondent has complied with the requirements of Section 21 of the Arbitration and Conciliation Act.
30.A copy of the notice dated 06.06.2013, sent by the Arbitrator to the petitioners informing them of his appointment as the Arbitrator by the first respondent has also been filed by the first respondent before this Court. The acknowledgement card received from the petitioners for the receipt of the notice dated 06.06.2013, sent by the Arbitrator is also produced before this Court by the first respondent.
31.The Arbitrator has given a categorical finding that the petitioners have been served with the notice of the Arbitrator dated 06.06.2013 for the hearing 20.06.2013. Therefore, the petitioners cannot now contend that the no notice was received in the Arbitral proceedings.
32.The acknowledgement cards from the petitioners for the receipt of the signed copy of the Arbitral Award dated 17.10.2014, from the Arbitrator is also produced before this Court. Therefore, the petitioners have complied with the requirements of Section 31(5) of the Arbitration and Conciliation Act.
33.In view of the above findings, this Court is of the considered view that the contention of the petitioners that they received the certified copy of the Award only from the execution Court on 26.10.2017, is a false statement.
34.As seen from the post office seal, the Arbitral Award dated 17.10.2014, was sent by the Arbitrator to the petitioners in February 2015 itself, whereas OP No.439 of 2018 was filed only on 31.05.2018, which is beyond the period of limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act, which stipulates that the Arbitral Award has to be challenged within three months from the date of receipt of the Award with a grace period of one month to be condoned by the Court on providing sufficient reasons. Since it is trite law that Section 5 of the Limitation Act is not applicable to a petition under Section 34 of the Arbitration and Conciliation Act, the instant petition filed on 31.05.2018, is hopelessly barred by the law of limitation.
35.Despite receipt of the notice in the Arbitration, the petitioners have failed to enter appearance and defend the claim of the first respondent before the Arbitrator. At this stage, in a petition under Section 34 of the Arbitration and Conciliation Act, the petitioners cannot now contend that the Arbitrator did not reveal details of his appointment in the Arbitral proceedings.
36.The claim made by the first respondent against the petitioners before the Arbitrator is only for recovery of money and no mortgage relief was sought for by the first respondent. Even though, the Arbitrator has granted money Award as well as a mortgage Award, in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 that mortgage relief cannot be sought for in Arbitration, the first respondent has given up the mortgage Award and has filed the execution petition only to execute the money Award by seeking arrest of the judgement debtors. Under the proviso to Section 34(2) of the Arbitration and Conciliation Act, 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. Since the claim of the first respondent was only for recovery of money, the Arbitral Award granting a mortgage relief in favour of the first respondent will have to be set aside and the money Award which is in accordance with law cannot be disturbed by this Court under Section 34 of the Arbitration and Conciliation Act.Applying the proviso to Section 34(2) of the Act, the mortgage Award can be separated from the money Award and therefore, the mortgage Award alone has to be set aside and the money Award is confirmed by this Court.
37.The petitioners have also admitted their default in payment of the instalments to the first respondent in paragraph 2 of their counter affidavit filed before the execution Court which reads as follows:
I submit that I have paid a sum of Rs.37,60,832 till date and due the sudden various market conditions our business was not doing well and our company went into a huge loss, due to which I was unable to pay the balance instalment.
38.Under the instant loan agreement, the petitioners availed a loan of Rs.40,00,000/-, which is repayable with interest. The Award was passed on 17.10.2014 for a sum of Rs.27,63,631/-, together with interest on Rs.19,99,236/- at 18% per annum from 08.05.2013 till its realization and Rs.5,000/- towards the cost of Arbitration.
39.The first respondent has also filed proof affidavit before the Arbitrator and exhibits A1 to A8 were marked on the side of the first respondent before the Arbitrator. The exhibits include a)copy of the authorization letter, b)Copy of the loan Agreement, c)copy of the Demand promissory Note, d)copy of the Receipt, e)Statement of Accounts, f)Copy of the Pre-Arbitration Notice, g.)Copy of the Ack/Returned covers, h.)mortgagee title deed dated 04.06.2010, executed in favour of the claimant company by the Respondents.
40.The Arbitrator has considered each and every exhibit filed in support of the claim and only thereafter has passed an Arbitral Award dated 17.10.2014 for a sum of Rs.27,63,631/- together with interest on Rs.19,99,236/- at 18% per annum from 08.05.2013. Therefore, the contention of the petitioners that the Award is against the fundamental policy of Indian Law and Public Policy cannot be countenanced. The second portion of the Award which is a mortgage Award is set aside under proviso to Section 34(2) in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 which held that a mortgage relief which is an action in rem cannot be granted by an Arbitral Tribunal.
41.Excepting for the illegality of the mortgage Award granted by the Arbitrator in view of the Hon'ble Supreme Court judgement cited supra, the other portions of the Award which is entirely a money Award is perfectly a valid Award, which is enforceable against the petitioners.
42.For the foregoing reasons, this Court is of the considered view that there is no merit in the petition insofar as, the money Award is concerned. But the mortgage Award, which is the second portion of the Award alone will have to be set aside by this Court in view of the decision in Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532.
OP No.440 of 201843.The loan agreement dated 01.11.2012, contains an Arbitration clause. On examination of the Arbitration clause, this Court is satisfied that the first respondent has referred the dispute to Arbitration by appointing a Sole Arbitrator only in accordance with the Arbitration clause. Therefore, the petitioners cannot contend that there is no Arbitration clause under the loan agreement.
44.The notice for appointment of the Sole Arbitrator Mr.C.M.Seetharaman was sent by the first respondent on 08.08.2013, to the petitioners which was duly acknowledged by the petitioners. The notice dated 08.08.2013 and the acknowledgement cards signed by the petitioners were filed by the first respondent in their typed set of documents filed before this Court on 04.07.2018. Therefore, the first respondent has complied with the requirements of Section 21 of the Arbitration and Conciliation Act.
45.A copy of the notice dated 07.02.2014, sent by the Arbitrator to the petitioners informing them of his appointment as the Arbitrator by the first respondent has also been filed by the first respondent before this Court. The acknowledgement card received from the petitioners for the receipt of the notice dated 07.02.2014, sent by the Arbitrator is also produced before this Court by the first respondent.
46.The Arbitrator has given a categorical finding that the petitioners have been served with the notice of the Arbitrator dated 07.02.2014 for the hearing 22.02.2014. Therefore, the petitioners cannot now contend that the no notice was received in the Arbitral proceedings.
47.The acknowledgement cards from the petitioners for the receipt of the signed copy of the Arbitral Award dated 31.01.2015, from the Arbitrator is also produced before this Court. Therefore, the petitioners have complied with the requirements of Section 31(5) of the Arbitration and Conciliation Act.
48.In view of the above findings, this Court is of the considered view that the contention of the petitioners that they received the certified copy of the Award only from the execution Court on 26.10.2017, is a false statement.
49.As seen from the post office seal, the Arbitral Award dated 31.01.2015, was sent by the Arbitrator to the petitioners in March 2016 itself, whereas OP No.440 of 2018 was filed only on 31.05.2018, which is beyond the period of limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act, which stipulates that the Arbitral Award has to be challenged within three months from the date of receipt of the Award with a grace period of one month to be condoned by the Court on providing sufficient reasons. Since it is trite law that Section 5 of the Limitation Act is not applicable to a petition under Section 34 of the Arbitration and Conciliation Act, the instant petition filed on 31.05.2018, is hopelessly barred by the law of limitation.
50.Despite receipt of the notice in the Arbitration, the petitioners have failed to enter appearance and defend the claim of the first respondent before the Arbitrator. At this stage, in a petition under Section 34 of the Arbitration and Conciliation Act, the petitioners cannot now contend that the Arbitrator did not reveal details of his appointment in the Arbitral proceedings.
51.The claim made by the first respondent against the petitioners before the Arbitrator is only for recovery of money and no mortgage relief was sought for by the first respondent. Even though, the Arbitrator has granted money Award as well as a mortgage Award, in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 that mortgage relief cannot be sought for in Arbitration, the first respondent has given up the mortgage Award and has filed the execution petition only to execute the money Award by seeking arrest of the judgement debtors. Under the proviso to Section 34(2) of the Arbitration and Conciliation Act, 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. Since the claim of the first respondent was only for recovery of money, the Arbitral Award granting a mortgage relief in favour of the first respondent will have to be set aside and the money Award which is in accordance with law cannot be disturbed by this Court under Section 34 of the Arbitration and Conciliation Act. Applying the proviso to Section 34(2) of the Act, the mortgage Award can be separated from the money Award and therefore, the mortgage Award alone has to be set aside and the money Award is confirmed by this Court.
52.The petitioners have also admitted their default in payment of the instalments to the first respondent in paragraph 6 of their counter affidavit filed before the execution Court which reads as follows:
I state that I have paid a sum of Rs.3,53,300/- till date and due the sudden various market conditions our business was not doing well and our company went into a huge loss, due to which I was unable to pay the balance instalment.
53.Under the instant loan agreement, the petitioners availed a loan of Rs.50,00,000/-, which is repayable with interest. The Award was passed on 31.01.2015 jointly and severally for a sum of Rs.67,43,943/-, together with interest on Rs.18,78,000/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration.
54.The first respondent has also filed proof affidavit before the Arbitrator and exhibits A1 to A7 were marked on the side of the first respondent before the Arbitrator. The exhibits include a)copy of the authorization letter, b)Copy of the loan Agreement, c)copy of the Demand promissory Note, d)copy of the Receipt, e)Statement of Accounts, f)Copy of the Pre-Arbitration Notice, g) Mortgagee title deed dated 01.08.2008, executed in favour of the claimant company by the first respondent.
55.The Arbitrator has considered each and every exhibit filed in support of the claim and only thereafter has passed an Arbitral Award dated 31.01.2015 for a sum of Rs.67,43,943/- together with interest on Rs.18,78,000/- at 18% per annum from 06.02.2014. Therefore, the contention of the petitioners that the Award is against the fundamental policy of Indian Law and Public Policy cannot be countenanced. The second portion of the Award which is a mortgage Award is set aside under proviso to Section 34(2) in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 which held that a mortgage relief which is an action in rem cannot be granted by an Arbitral Tribunal.
56.Excepting for the illegality of the mortgage Award granted by the Arbitrator in view of the Hon'ble Supreme Court judgement cited supra, the other portions of the Award which is entirely a money Award is perfectly a valid Award, which is enforceable against the petitioners.
57.For the foregoing reasons, this Court is of the considered view that there is no merit in the petition insofar as, the money Award is concerned. But the mortgage Award, which is the second portion of the Award alone will have to be set aside by this Court in view of the decision in Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532.
OP No.441 of 201858.The loan agreement dated 28.03.2012, contains an Arbitration clause. On examination of the Arbitration clause, this Court is satisfied that the respondent has referred the dispute to Arbitration by appointing a Sole Arbitrator only in accordance with the Arbitration clause. Therefore, the petitioners cannot contend that there is no Arbitration clause under the loan agreement.
59.The notice for appointment of the Sole Arbitrator Mr.C.M.Seetharaman was sent by the respondent on 11.12.2015, to the petitioners which was duly acknowledged by the petitioners. The notice dated 11.12.2015 and the acknowledgement cards signed by the petitioners were filed by the first respondent in their typed set of documents filed before this Court on 04.07.2018. Therefore, the first respondent has complied with the requirements of Section 21 of the Arbitration and Conciliation Act.
60.A copy of the notice dated 05.02.2016, sent by the Arbitrator to the petitioners informing them of the learned Arbitrator Mr.C.A.Ravichandran appointment as the Arbitrator by the first respondent has also been filed by the first respondent before this Court. The acknowledgement card received from the petitioners for the receipt of the notice dated 05.02.2016, sent by the Arbitrator is also produced before this Court by the first respondent.
61.The Arbitrator has given a categorical finding that the petitioners have been served with the notice of the Arbitrator dated 05.02.2016 for the hearing 24.02.2016. Therefore, the petitioners cannot now contend that the no notice was received in the Arbitral proceedings.
62.The acknowledgement cards from the petitioners for the receipt of the signed copy of the Arbitral Award dated 20.04.2016, from the Arbitrator is also produced before this Court. Therefore, the petitioners have complied with the requirements of Section 31(5) of the Arbitration and Conciliation Act.
63.In view of the above findings, this Court is of the considered view that the contention of the petitioners that they received the certified copy of the Award only from the execution Court on 26.10.2017, is a false statement.
64.As seen from the post office seal, the Arbitral Award dated 20.04.2016, was sent by the Arbitrator to the petitioners in April 2016 itself, whereas OP No.441 of 2018 was filed only on 31.05.2018, which is beyond the period of limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act, which stipulates that the Arbitral Award has to be challenged within three months from the date of receipt of the Award with a grace period of one month to be condoned by the Court on providing sufficient reasons. Since it is trite law that Section 5 of the Limitation Act is not applicable to a petition under Section 34 of the Arbitration and Conciliation Act, the instant petition filed on 31.05.2018, is hopelessly barred by the law of limitation.
65.Despite receipt of the notice in the Arbitration, the petitioners have failed to enter appearance and defend the claim of the first respondent before the Arbitrator. At this stage, in a petition under Section 34 of the Arbitration and Conciliation Act, the petitioners cannot now contend that the Arbitrator did not reveal details of his appointment in the Arbitral proceedings.
66.The claim made by the first respondent against the petitioners before the Arbitrator is only for recovery of money and no mortgage relief was sought for by the first respondent. Even though, the Arbitrator has granted money Award as well as a mortgage Award, in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 that mortgage relief cannot be sought for in Arbitration, the first respondent has given up the mortgage Award and has filed the execution petition only to execute the money Award by seeking arrest of the judgement debtors. Under the proviso to Section 34(2) of the Arbitration and Conciliation Act, 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. Since the claim of the first respondent was only for recovery of money, the Arbitral Award granting a mortgage relief in favour of the first respondent will have to be set aside and the money Award which is in accordance with law cannot be disturbed by this Court under Section 34 of the Arbitration and Conciliation Act. Applying the proviso to Section 34(2) of the Act, the mortgage Award can be separated from the money Award and therefore, the mortgage Award alone has to be set aside and the money Award is confirmed by this Court.
67.The petitioners have also admitted their default in payment of the instalments to the first respondent in paragraph 6 of their counter affidavit filed before the execution Court which reads as follows:
I state that I have paid a sum of Rs.50,88,000/- till date and due the sudden various market conditions our business was not doing well and our company went into a huge loss, due to which I was unable to pay the balance instalment.
68.Under the instant loan agreement, the petitioners availed a loan of Rs.50,00,000/-, which is repayable with interest. The Award was passed on 20.04.2016 jointly and severally for a sum of Rs.34,29,211/-, together with interest at 18% per annum from 05.02.2016 till its realization and Rs.5,000/- towards the cost of Arbitration.
69.The first respondent has also filed proof affidavit before the Arbitrator and exhibits A1 to A7 were marked on the side of the first respondent before the Arbitrator. The exhibits include a)copy of the authorization letter, b)Copy of the loan Agreement, c)copy of the Demand Promissory Note, d)copy of the Receipt, e)Copy of Pre-Arbitration Notice, f)Copy of the Ack/Returned Covers, g) Property/Other Documents executed in favour of the claimant company by the first respondent.
70.The Arbitrator has considered each and every exhibit filed in support of the claim and only thereafter has passed an Arbitral Award dated 20.04.2016 for a sum of Rs.34,29,211/- together with interest at 18% per annum from 05.02.2016. Therefore, the contention of the petitioners that the Award is against the fundamental policy of Indian Law and Public Policy cannot be countenanced. The second portion of the Award which is a mortgage Award is set aside under proviso to Section 34(2) in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 which held that a mortgage relief which is an action in rem cannot be granted by an Arbitral Tribunal.
71.Excepting for the illegality of the mortgage Award granted by the Arbitrator in view of the Hon'ble Supreme Court judgement cited supra, the other portions of the Award which is entirely a money Award is perfectly a valid Award, which is enforceable against the petitioners.
72.For the foregoing reasons, this Court is of the considered view that there is no merit in the petition insofar as, the money Award is concerned. But the mortgage Award, which is the second portion of the Award alone will have to be set aside by this Court in view of the decision in Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532.
OP No.442 of 201873.The loan agreement dated 01.11.2012, contains an Arbitration clause. On examination of the Arbitration clause, this Court is satisfied that the first respondent has referred the dispute to Arbitration by appointing a Sole Arbitrator only in accordance with the Arbitration clause. Therefore, the petitioners cannot contend that there is no Arbitration clause under the loan agreement.
74.The notice for appointment of the Sole Arbitrator Mr.C.M.Seetharaman was sent by the first respondent on 08.08.2013, to the petitioners which was duly acknowledged by the petitioners. The notice dated 08.08.2013 and the acknowledgement cards signed by the petitioners were filed by the first respondent in their typed set of documents filed before this Court on 04.07.2018. Therefore, the first respondent has complied with the requirements of Section 21 of the Arbitration and Conciliation Act.
75.A copy of the notice dated 07.02.2014, sent by the Arbitrator to the petitioners informing them of his appointment as the Arbitrator by the first respondent has also been filed by the first respondent before this Court. The acknowledgement card received from the petitioners for the receipt of the notice dated 07.02.2014, sent by the Arbitrator is also produced before this Court by the first respondent.
76.The Arbitrator has given a categorical finding that the petitioners have been served with the notice of the Arbitrator dated 07.02.2014 for the hearing 22.02.2014. Therefore, the petitioners cannot now contend that the no notice was received in the Arbitral proceedings.
77.The acknowledgement cards from the petitioners for the receipt of the signed copy of the Arbitral Award dated 31.01.2015, from the Arbitrator is also produced before this Court. Therefore, the petitioners have complied with the requirements of Section 31(5) of the Arbitration and Conciliation Act.
78.In view of the above findings, this Court is of the considered view that the contention of the petitioners that they received the certified copy of the Award only from the execution Court on 26.10.2017, is a false statement.
79.As seen from the post office seal, the Arbitral Award dated 31.01.2015, was sent by the Arbitrator to the petitioners in March 2016 itself, whereas OP No.442 of 2018 was filed only on 31.05.2018, which is beyond the period of limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act, which stipulates that the Arbitral Award has to be challenged within three months from the date of receipt of the Award with a grace period of one month to be condoned by the Court on providing sufficient reasons. Since it is trite law that Section 5 of the Limitation Act is not applicable to a petition under Section 34 of the Arbitration and Conciliation Act, the instant petition filed on 31.05.2018, is hopelessly barred by the law of limitation.
80.Despite receipt of the notice in the Arbitration, the petitioners have failed to enter appearance and defend the claim of the first respondent before the Arbitrator. At this stage, in a petition under Section 34 of the Arbitration and Conciliation Act, the petitioners cannot now contend that the Arbitrator did not reveal details of his appointment in the Arbitral proceedings.
81.The claim made by the first respondent against the petitioners before the Arbitrator is only for recovery of money and no mortgage relief was sought for by the first respondent. Even though, the Arbitrator has granted money Award as well as a mortgage Award, in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 that mortgage relief cannot be sought for in Arbitration, the first respondent has given up the mortgage Award and has filed the execution petition only to execute the money Award by seeking arrest of the judgement debtors. Under the proviso to Section 34(2) of the Arbitration and Conciliation Act, 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. Since the claim of the first respondent was only for recovery of money, the Arbitral Award granting a mortgage relief in favour of the first respondent will have to be set aside and the money Award which is in accordance with law cannot be disturbed by this Court under Section 34 of the Arbitration and Conciliation Act. Applying the proviso to Section 34(2) of the Act, the mortgage Award can be separated from the money Award and therefore, the mortgage Award alone has to be set aside and the money Award is confirmed by this Court.
82.The petitioners have also admitted their default in payment of the instalments to the first respondent in paragraph 6 of their counter affidavit filed before the execution Court which reads as follows:
I state that I have paid a sum of Rs.7,06,300/- till date and due the sudden various market conditions our business was not doing well and our company went into a huge loss, due to which I was unable to pay the balance instalment.
83.Under the instant loan agreement, the petitioners availed a loan of Rs.1,00,00,000/-, which is repayable with interest. The Award was passed on 31.01.2015 jointly and severally for a sum of Rs.1,34,74,890/-, together with interest on Rs.37,56,000 at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration.
84.The first respondent has also filed proof affidavit before the Arbitrator and exhibits A1 to A7 were marked on the side of the first respondent before the Arbitrator. The exhibits include a)copy of the authorization letter, b)Copy of the loan Agreement, c)copy of the Demand Promissory Note, d)copy of the Receipt, e)Statement of Accounts f)Copy of Pre-Arbitration Notice, g)Mortgage title deed dated 01.08.2008 executed in favour of the claimant company by the first respondent.
85.The Arbitrator has considered each and every exhibit filed in support of the claim and only thereafter has passed an Arbitral Award dated 31.01.2015 for a sum of Rs.1,34,74,890/- together with interest on Rs.37,56,000/- at 18% per annum from 06.02.2014. Therefore, the contention of the petitioners that the Award is against the fundamental policy of Indian Law and Public Policy cannot be countenanced. The second portion of the Award which is a mortgage Award is set aside under proviso to Section 34(2) in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 which held that a mortgage relief which is an action in rem cannot be granted by an Arbitral Tribunal.
86.Excepting for the illegality of the mortgage Award granted by the Arbitrator in view of the Hon'ble Supreme Court judgement cited supra, the other portions of the Award which is entirely a money Award is perfectly a valid Award, which is enforceable against the petitioners.
87.For the foregoing reasons, this Court is of the considered view that there is no merit in the petition insofar as, the money Award is concerned. But the mortgage Award, which is the second portion of the Award alone will have to be set aside by this Court in view of the decision in Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532.
OP No.443 of 201888.The loan agreement dated 01.11.2012, contains an Arbitration clause. On examination of the Arbitration clause, this Court is satisfied that the first respondent has referred the dispute to Arbitration by appointing a Sole Arbitrator only in accordance with the Arbitration clause. Therefore, the petitioners cannot contend that there is no Arbitration clause under the loan agreement.
89.The notice for appointment of the Sole Arbitrator Mr.C.M.Seetharaman was sent by the first respondent on 08.08.2013, to the petitioners which was duly acknowledged by the petitioners. The notice dated 08.08.2013 and the acknowledgement cards signed by the petitioners were filed by the first respondent in their typed set of documents filed before this Court on 04.07.2018. Therefore, the first respondent has complied with the requirements of Section 21 of the Arbitration and Conciliation Act.
90.A copy of the notice dated 07.02.2014, sent by the Arbitrator to the petitioners informing them of his appointment as the Arbitrator by the first respondent has also been filed by the first respondent before this Court. The acknowledgement card received from the petitioners for the receipt of the notice dated 07.02.2014, sent by the Arbitrator is also produced before this Court by the first respondent.
91.The Arbitrator has given a categorical finding that the petitioners have been served with the notice of the Arbitrator dated 07.02.2014 for the hearing 22.02.2014. Therefore, the petitioners cannot now contend that the no notice was received in the Arbitral proceedings.
92.The acknowledgement cards from the petitioners for the receipt of the signed copy of the Arbitral Award dated 17.10.2014, from the Arbitrator is also produced before this Court. Therefore, the petitioners have complied with the requirements of Section 31(5) of the Arbitration and Conciliation Act.
93.In view of the above findings, this Court is of the considered view that the contention of the petitioners that they received the certified copy of the Award only from the execution Court on 26.10.2017, is a false statement.
94.As seen from the post office seal, the Arbitral Award dated 17.10.2014, was sent by the Arbitrator to the petitioners in February 2015 itself, whereas OP No.443 of 2018 was filed only on 31.05.2018, which is beyond the period of limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act, which stipulates that the Arbitral Award has to be challenged within three months from the date of receipt of the Award with a grace period of one month to be condoned by the Court on providing sufficient reasons. Since it is trite law that Section 5 of the Limitation Act is not applicable to a petition under Section 34 of the Arbitration and Conciliation Act, the instant petition filed on 31.05.2018, is hopelessly barred by the law of limitation.
95.Despite receipt of the notice in the Arbitration, the petitioners have failed to enter appearance and defend the claim of the first respondent before the Arbitrator. At this stage, in a petition under Section 34 of the Arbitration and Conciliation Act, the petitioners cannot now contend that the Arbitrator did not reveal details of his appointment in the Arbitral proceedings.
96.The claim made by the first respondent against the petitioners before the Arbitrator is only for recovery of money and no mortgage relief was sought for by the first respondent. Even though, the Arbitrator has granted money Award as well as a mortgage Award, in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 that mortgage relief cannot be sought for in Arbitration, the first respondent has given up the mortgage Award and has filed the execution petition only to execute the money Award by seeking arrest of the judgement debtors. Under the proviso to Section 34(2) of the Arbitration and Conciliation Act, 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. Since the claim of the first respondent was only for recovery of money, the Arbitral Award granting a mortgage relief in favour of the first respondent will have to be set aside and the money Award which is in accordance with law cannot be disturbed by this Court under Section 34 of the Arbitration and Conciliation Act. Applying the proviso to Section 34(2) of the Act, the mortgage Award can be separated from the money Award and therefore, the mortgage Award alone has to be set aside and the money Award is confirmed by this Court.
97.The petitioners have also admitted their default in payment of the instalments to the first respondent in paragraph 6 of their counter affidavit filed before the execution Court which reads as follows:
I submit that I have paid a sum of Rs.3,53,300/- till date and due the sudden various market conditions our business was not doing well and our company went into a huge loss, due to which I was unable to pay the balance instalment.
98.Under the instant loan agreement, the petitioners availed a loan of Rs.50,00,000/-, which is repayable with interest. The Award was passed on 17.10.2014 jointly and severally for a sum of Rs.67,43,943/-, together with interest on Rs.18,78,000/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration.
99.The first respondent has also filed proof affidavit before the Arbitrator and exhibits A1 to A7 were marked on the side of the first respondent before the Arbitrator. The exhibits include a)copy of the authorization letter, b)Copy of the loan Agreement, c)copy of the Demand Promissory Note, d)copy of the Receipt, e)Statement of Accounts f)Copy of Pre-Arbitration Notice, g)Mortgage title deed dated 04.06.2010 executed in favour of the claimant company by the first respondent.
100.The Arbitrator has considered each and every exhibit filed in support of the claim and only thereafter has passed an Arbitral Award dated 17.10.2014 for a sum of Rs.67,43,943/- together with interest on Rs.18,78,000/- at 18% per annum from 06.02.2014. Therefore, the contention of the petitioners that the Award is against the fundamental policy of Indian Law and Public Policy cannot be countenanced. The second portion of the Award which is a mortgage Award is set aside under proviso to Section 34(2) in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 which held that a mortgage relief which is an action in rem cannot be granted by an Arbitral Tribunal.
101.Excepting for the illegality of the mortgage Award granted by the Arbitrator in view of the Hon'ble Supreme Court judgement cited supra, the other portions of the Award which is entirely a money Award is perfectly a valid Award, which is enforceable against the petitioners.
102.For the foregoing reasons, this Court is of the considered view that there is no merit in the petition insofar as, the money Award is concerned. But the mortgage Award, which is the second portion of the Award alone will have to be set aside by this Court in view of the decision in Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532.
OP No.444 of 2018103.The loan agreement dated 18.12.2009, contains an Arbitration clause. On examination of the Arbitration clause, this Court is satisfied that the first respondent has referred the dispute to Arbitration by appointing a Sole Arbitrator only in accordance with the Arbitration clause. Therefore, the petitioners cannot contend that there is no Arbitration clause under the loan agreement.
104.The notice for appointment of the Sole Arbitrator Mr.C.M.Seetharaman was sent by the first respondent on 08.08.2013, to the petitioners which was duly acknowledged by the petitioners. The notice dated 08.08.2013 and the acknowledgement cards signed by the petitioners were filed by the first respondent in their typed set of documents filed before this Court on 04.07.2018. Therefore, the first respondent has complied with the requirements of Section 21 of the Arbitration and Conciliation Act.
105.A copy of the notice dated 07.02.2014, sent by the Arbitrator to the petitioners informing them of his appointment as the Arbitrator by the first respondent has also been filed by the first respondent before this Court. The acknowledgement card received from the petitioners for the receipt of the notice dated 07.02.2014, sent by the Arbitrator is also produced before this Court by the first respondent.
106.The Arbitrator has given a categorical finding that the petitioners have been served with the notice of the Arbitrator dated 07.02.2014 for the hearing 22.02.2014. Therefore, the petitioners cannot now contend that the no notice was received in the Arbitral proceedings.
107.The acknowledgement cards from the petitioners for the receipt of the signed copy of the Arbitral Award dated 17.10.2014, from the Arbitrator is also produced before this Court. Therefore, the petitioners have complied with the requirements of Section 31(5) of the Arbitration and Conciliation Act.
108.In view of the above findings, this Court is of the considered view that the contention of the petitioners that they received the certified copy of the Award only from the execution Court on 26.10.2017, is a false statement.
109.Even though the Arbitral Award dated 17.10.2014, was sent by the Arbitrator to the petitioners, OP No.444 of 2018 was filed only on 31.05.2018, which is beyond the period of limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act, which stipulates that the Arbitral Award has to be challenged within three months from the date of receipt of the Award with a grace period of one month to be condoned by the Court on providing sufficient reasons. Since it is trite law that Section 5 of the Limitation Act is not applicable to a petition under Section 34 of the Arbitration and Conciliation Act, the instant petition filed on 31.05.2018, is hopelessly barred by the law of limitation. The Petitioners have also not stated in the petition as to when they have received the arbitral award.
110.Despite receipt of the notice in the Arbitration, the petitioners have failed to enter appearance and defend the claim of the first respondent before the Arbitrator. At this stage, in a petition under Section 34 of the Arbitration and Conciliation Act, the petitioners cannot now contend that the Arbitrator did not reveal details of his appointment in the Arbitral proceedings.
111.The claim made by the first respondent against the petitioners before the Arbitrator is only for recovery of money and no mortgage relief was sought for by the first respondent. Even though, the Arbitrator has granted money Award as well as a mortgage Award, in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 that mortgage relief cannot be sought for in Arbitration, the first respondent has given up the mortgage Award and has filed the execution petition only to execute the money Award by seeking arrest of the judgement debtors. Under the proviso to Section 34(2) of the Arbitration and Conciliation Act, 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. Since the claim of the first respondent was only for recovery of money, the Arbitral Award granting a mortgage relief in favour of the first respondent will have to be set aside and the money Award which is in accordance with law cannot be disturbed by this Court under Section 34 of the Arbitration and Conciliation Act. Applying the proviso to Section 34(2) of the Act, the mortgage Award can be separated from the money Award and therefore, the mortgage Award alone has to be set aside and the money Award is confirmed by this Court.
112.Under the instant loan agreement, the petitioners availed a loan of Rs.50,00,000/-, which is repayable with interest. The Award was passed on 17.10.2014 jointly and severally for a sum of Rs.16,93,290/-, together with interest on Rs.7,39,387/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration.
113.The first respondent has also filed proof affidavit before the Arbitrator and exhibits A1 to A7 were marked on the side of the first respondent before the Arbitrator. The exhibits include a)copy of the authorization letter, b)Copy of the loan Agreement, c)copy of the Demand Promissory Note, d)copy of the Receipt, e)Statement of Accounts f)Copy of Pre-Arbitration Notice, g)Mortgage title deed dated 04.06.2010 executed in favour of the claimant company by the first respondent.
114.The Arbitrator has considered each and every exhibit filed in support of the claim and only thereafter has passed an Arbitral Award dated 17.10.2014 for a sum of Rs.16,93,290/- together with interest on Rs.7,39,387/- at 18% per annum from 06.02.2014. Therefore, the contention of the petitioners that the Award is against the fundamental policy of Indian Law and Public Policy cannot be countenanced. The second portion of the Award which is a mortgage Award is set aside under proviso to Section 34(2) in view of the decision of the Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532 which held that a mortgage relief which is an action in rem cannot be granted by an Arbitral Tribunal.
115.Excepting for the illegality of the mortgage Award granted by the Arbitrator in view of the Hon'ble Supreme Court judgement cited supra, the other portions of the Award which is entirely a money Award is perfectly a valid Award, which is enforceable against the petitioners.
116.For the foregoing reasons, this Court is of the considered view that there is no merit in the petition insofar as, the money Award is concerned. But the mortgage Award, which is the second portion of the Award alone will have to be set aside by this Court in view of the decision in Booz Allen and Hamilton Inc-Vs-SBI Home Finance Limited reported in (2011) 5 SCC 532.
Conclusion:
a)In the result, OP No.438 of 2018 is partly allowed by this Court that the Award dated 18.04.2016, insofar as the direction to the petitioners to pay jointly or severally a sum of Rs.76,25,521,/- together with interest at 18% per annum from 12.08.2015 till its realization and Rs.5,000/- towards the cost of Arbitration is confirmed and insofar as the second portion of the Award which reads as follows:
In non - compliance thereof the claimant may by sale of the equitable mortgage of the property which is marked as Exhibit A6 as per the schedule hereunder, in the event default to pay the amounts by the Respondents within a stipulated period of time, by calling for sealed tenders or by way of private treaty from the prospective buyers and sell the same to the highest bidder and adjust the sale proceeds towards the amount due. In the event of sale proceeds falling short of the amount due. Under this Award, the Claimant may recover the same by executing this award, and if the sale proceeds exceeds the dues, the balance shall be refunded to the First Respondent. Proceed further by executing this award for recovery of the amount due from the Respondents.
is set aside under proviso to Section 34(2) of the Arbitration and Conciliation Act.
b)In the result, OP No.439 of 2018 is partly allowed by this Court holding that the Award dated 17.10.2014, insofar as the direction to the petitioners to pay jointly or severally a sum of Rs.27,63,631/- together with interest on Rs.19,99,236/- at 18% per annum from 08.05.2013 till its realization and Rs.5,000/- towards the cost of Arbitration is confirmed and insofar as the second portion of the Award which reads as follows:
In non - compliance thereof the claimant may by sale of the equitable mortgage of the property which is marked as Exhibit A-8 as per the schedule hereunder, in the event default to pay the amounts by the Respondents within a stipulated period of time, by calling for sealed tenders or by way of private treaty from the prospective buyers and sell the same to the highest bidder and adjust the sale proceeds towards the amount due. In the event of sale proceeds falling short of the amount due. Under this Award, the Claimant may recover the same by executing this award, and if the sale proceeds exceeds the dues, the balance shall be refunded to the First Respondent. Proceed further by executing this award for recovery of the amount due from the Respondents.
is set aside under proviso to Section 34(2) of the Arbitration and Conciliation Act.
c)In the result, OP No.440 of 2018 is partly allowed by this Court holding that the Award dated 31.01.2015, insofar as the direction to the petitioners to pay jointly or severally a sum of Rs.67,43,943/- together with interest on Rs.18,78,000/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration is confirmed and insofar as the second portion of the Award which reads as follows:
In non - compliance thereof the claimant may by sale of the equitable mortgage of the property which is marked as Exhibit A-7 as per the schedule hereunder, in the event default to pay the amounts by the Respondents within a stipulated period of time, by calling for sealed tenders or by way of private treaty from the prospective buyers and sell the same to the highest bidder and adjust the sale proceeds towards the amount due. In the event of sale proceeds falling short of the amount due. Under this Award, the Claimant may recover the same by executing this award, and if the sale proceeds exceeds the dues, the balance shall be refunded to the First Respondent. Proceed further by executing this award for recovery of the amount due from the Respondents.
is set aside under proviso to Section 34(2) of the Arbitration and Conciliation Act.
d)In the result, OP No.441 of 2018 is partly allowed by this Court holding that the Award dated 20.04.2016, insofar as the direction to the petitioners to pay jointly or severally a sum of Rs.34,29,211/- together with interest at 18% per annum from 05.02.2016 till its realization and Rs.5,000/- towards the cost of Arbitration is confirmed and insofar as the second portion of the Award which reads as follows:
In non - compliance thereof the claimant may proceed further by executing this award for the recovery of amount due from the Respondents by selling the mortgaged immovable property by way of public auction by calling for public tender and to sell the mortgaged property to the highest bidder and if the sale consideration or the sale proceeds exceeds the award amount, the claimant shall repay the balance of the sale consideration to the Respondents and if the sale proceeds or the sale consideration is lesser than the award amount, the claimant may recover the balance award amount by executing this award AS CIVIL COURT DECREE.
is set aside under proviso to Section 34(2) of the Arbitration and Conciliation Act.
e)In the result, OP No.442 of 2018 is partly allowed by this Court holding that the Award dated 31.01.2015, in so far as the direction to the petitioners to pay jointly or severally a sum of Rs.1,34,74,890/- together with interest on Rs.37,56,000/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration is confirmed and insofar as the second portion of the Award which reads as follows:
In non - compliance thereof the claimant may by sale of equitable mortgage of the property which is marked as Exhibit A7 as per the schedule hereunder, in the event of default to pay the amounts to the Respondents within a stipulated period of time, by calling for sealed tenders or by way of private treaty from the prospective buyers and sell the same to the highest bidder and adjust the sale proceed towards the amount due . In the event of sale proceeds falling short of the amount due. Under this award, the claimant may recover the same by executing this award, and if the sale proceeds exceeds dues, the balance shall be refunded to the first Respondent. Proceed further by executing this award for the recovery of the amount due from the Respondents.
is set aside under proviso to Section 34(2) of the Arbitration and Conciliation Act.
f)In the result, OP.No.443 of 2018 is partly allowed by this Court holding that the Award dated 17.10.2014, in so far as the direction to the petitioners to pay jointly or severally a sum of Rs.67,43,943/- together with interest on Rs.18,78,000/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration is confirmed and insofar as the second portion of the Award which reads as follows:
In non - compliance thereof the claimant may by sale of equitable mortgage of the property which is marked as Exhibit A7 as per the schedule hereunder, in the event of default to pay the amounts to the Respondents within a stipulated period of time, by calling for sealed tenders or by way of private treaty from the prospective buyers and sell the same to the highest bidder and adjust the sale proceed towards the amount due . In the event of sale proceeds falling short of the amount due. Under this award, the claimant may recover the same by executing this award, and if the sale proceeds exceeds dues, the balance shall be refunded to the first Respondent. Proceed further by executing this award for the recovery of the amount due from the Respondents.
is set aside under proviso to Section 34(2) of the Arbitration and Conciliation Act.
g)In the result, OP.No.444 of 2018 is partly allowed by this Court holding that the Award dated 17.10.2014, in so far as the direction to the petitioners to pay jointly or severally a sum of Rs.16,93,290/- together with interest on Rs.7,39,387/- at 18% per annum from 06.02.2014 till its realization and Rs.5,000/- towards the cost of Arbitration is confirmed and insofar as the second portion of the Award which reads as follows:
In non - compliance thereof the claimant may by sale of equitable mortgage of the property which is marked as Exhibit A7 as per the schedule hereunder, in the event of default to pay the amounts to the Respondents within a stipulated period of time, by calling for sealed tenders or by way of private treaty from the prospective buyers and sell the same to the highest bidder and adjust the sale proceed towards the amount due . In the event of sale proceeds falling short of the amount due. Under this award, the claimant may recover the same by executing this award, and if the sale proceeds exceeds dues, the balance shall be refunded to the first Respondent. Proceed further by executing this award for the recovery of the amount due from the Respondents.
is set aside under proviso to Section 34(2) of the Arbitration and Conciliation Act. In all the OPs', there shall be no order as to costs.
24.07.2018 pam Internet: Yes Index: Yes Speaking order ABDUL QUDDHOSE, J.
pam OP Nos.438 to 444 of 2018 24.07.2018