Delhi District Court
M/S Routes Car Rentals (India) Pvt. Ltd vs M/S Reliance Capital Ltd on 2 January, 2013
: 1 :
IN THE COURT OF DR. NEERA BHARIHOKE : ADDITIONAL DISTRICT JUDGE01 :
SOUTH DISTRICT : SAKET COURTS : NEW DELHI
Arbitration No. 231/11
In the matter of :
1 M/s Routes Car Rentals (India) Pvt. Ltd.
508, Jyoti Shikhar,
District Centre, Janak Puri,
New Delhi - 110 058.
2 Mr. Syed Akhtar Arshad
508, Jyoti Shikhar,
District Centre, Janak Puri,
New Delhi - 110 058.
.......Petitioners
VERSUS
M/s Reliance Capital Ltd.
Available at 260261,
Dev House Building Tribhuvan Complex,
Ishwar Nagar, New Friends Colony,
New Delhi.
..........Respondent
DATE OF INSTITUTION: 18.11.2011
RESERVED ON: 03.12.2012
ORDER PASSED ON : 02.01.2013
ORDER :
Vide this order, I shall dispose off the petition under Section 34 of M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....1 of 25 : 2 :
Arbitration & Conciliation Act, 1996 filed for setting aside the impugned arbitration award dated 12.06.2010.
2 Petitioner No.1 is a private limited company incorporated under the Companies Act and the present petition has been filed by Mr. Gurminder Singh who is the duly authorized person of petitioner No.1 to sign, verify and institute the present petition on behalf of petitioner No.1 in terms of Board Resolution dated 28.10.2011. Petitioner No.1 company was engaged in the business of providing cars on rentals / radio taxi cabs. 3 Respondent is a nonbanking finance company duly registered under Companies Act and is engaged in the business of finance and Hire Purchase. 4 Petitioner No.1 entered into loan agreement No. RLNCDEL000031909 dated 01.10.2007 for an asset of make Maruti Esteem LX1 Registration No. DL1RX9132 with respondent whereby petitioner No.1 availed financial facility from the respondent. Petitioners have submitted that the respondent got the agreement executed but the copies of the same were not given to the petitioners. Petitioners have further submitted that petitioners were also made to sign certain blank documents which the petitioners suspect to have been filled by the respondent to add covenants to which the petitioner company did not consent. 5 Petitioner No.1 availed loans for purchasing the vehicles to be used as radio taxi. Petitioner company was unable to repay some of the installments and the respondent repossessed the vehicles.
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6 Petitioners have submitted that the officials of the respondent assured that since the vehicles were in absolutely good condition, it will fetch enough amount to clear the entire liability of the respondent. However, respondent is stated to have manipulated the accounts. Petitioners have submitted that they were under the bonafide impression that upon surrender of vehicles, the matter stands closed which was allegedly also suggested by the officials of the respondent at the time of repossessing the vehicle. 7 However, in the last week of July, 2011, when petitioner No.2 went to his Chennai residence, he was surprised to find letter dated 15.06.2011 on behalf of respondent. However, no address or details of the respondent were mentioned on the said letter. Despite several attempts, respondent did not provide necessary details nor supplied copies of the award and consequently petitioner No.2 requested one Mr. A.K. Goel to contact officials of respondent to take necessary details pursuant to which in last week of August, 2011, one Mr. Anindya K. Majumdar sent copies of eight awards which were all exparte awards, however, the respondent did not provide certified copy. 8 On 15.09.2011, petitioners requested Ld. Arbitrator to send the same by letter dated 10.09.2011. Ld. Arbitrator vide his letter dated 28.09.2011 apprised the petitioners that he has passed awards in 33 cases and certified true copies of the awards were ready with him and advised petitioners to collect the awards from his office on 05.10.2011. Ld. Arbitrator apprised the charges for suppling a certified copy and petitioner went to his office on 15.10.11 for collecting the certified copy after payment of charges and the petitioners collected the same. The counsel inspected some of the files but due to M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....3 of 25 : 4 :
shortage of space and bulky record, entire inspection could not be carried out. The counsel again requested the arbitrator for inspection on 01.11.2011 but arbitrator apprised that he was not available till 3rd week of November, 2011. The petitioners have submitted that they, therefore, got the copies of the award on 15.10.2011. The present petition has been filed on 17.11.2011.
9 The grounds for challenging the award are that there was no arbitration agreement between the parties as the petitioners did not sign any such agreement. The impugned award is stated to be result of collusion between the respondent and Ld. Arbitrator as petitioners were never served/informed about the Arbitral proceedings and they never gave any consent for appointment of arbitrator.
10 The impugned award is stated to have been passed by allowing all the claims of the respondent without considering very substantial points of interest and carelessly ignoring some prima facie omissions done by the claimants / respondents. 11 The impugned award is stated to be against the public policy and law of arbitration prevailing in country as the amounts allegedly claimed by the respondent are not due and payable by the petitioners. The award is stated to be rendered by a machine programme by a routine print and the award has been passed without appreciation of facts and law.
12 Section 18 of Arbitration & Conciliation Act has been stated to have M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....4 of 25 : 5 :
been violated as petitioners had not been given a full opportunity to present their case. Petitioners have submitted that most of the correspondence were returned unserved from the petitioners who were an active service providers amongst the radio taxi service in the city and could have been located and contacted at the relevant addresses of office, shop, house, e mail, etc and Ld. Arbitrator ought to have served the petitioners by alternative means such as publication. It has also been submitted that after obtaining exparte award, notice dated 15.06.2011 was sent at residential address of petitioner No.2. Thus, the respondent was aware of address of petitioners but it chose not to send the notice at correct address of the petitioners, thus reflecting connivance of respondent and Ld. Arbitrator. Ld. Arbitrator could have sent the notices at residential address of petitioner No.2. 13 Petitioners have also contended that the impugned award was also deliberately not served at them despite respondent having correct address of the petitioners.
Petitioners have submitted that the respondent / Arbitrator was also aware of address of petitioners at Delhi at 508, Jyoti Shikar, District Centre, Janak Puri, New Delhi and email was sent by respondent in the last week of August, 2011 intimating about eight exparte awards and the same could have been done for intimating various proceedings carried on by the respondent.
14 Petitioners have submitted that u/s 21 of Arbitration & Conciliation Act, arbitral proceedings commence on the date on which a request for the dispute to be referred to arbitration is received by the respondent but the respondent did not intimate about commencement of arbitration proceedings. Letter of reference sent to Ld. Arbitrator was M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....5 of 25 : 6 :
never sent to the petitioners. Hence, the award could not have been passed exparte against the petitioners.
15 Ld. Arbitrator is stated to have been biased as he was under the control of respondent and he had not disclosed his connections with the respondent as he regularly acts as an arbitrator for various financial companies including respondent. Thus, Ld. Arbitrator is stated to have violated section 12(1) of Arbitration & Conciliation Act. 16 Petitioners have submitted that the impugned reference was made to the Ld. Arbitrator on 14.02.2009 and after about two months, petitioners were claimed to be intimated vide notice dated 02.04.2009 to appear before Ld. Arbitrator on 06.05.2009. However, thereafter, proceedings were held on regular interval and the impugned award was passed with undue haste on 12.06.2010. It is also submitted that the value of the re possessed vehicle was more than the outstanding amount and the loan facility was a secured liability which had already been requisitioned by the respondent but only a vague amount in the detail of outstanding amount has been given in the impugned award claiming to justify the sale of repossessed vehicle and nowhere in the arbitral proceedings, the claimants have given the details pertaining to repossession / status / valuation of assets and no proof of sale / auction of vehicle has been taken on record by Ld. Arbitrator which could justify a meager sale price of Rs.1,18,518/ 17 Change in Font and fashion on page No.8 of the impugned award giving the details of outstanding and net recoverable amount is stated to reveal the fact that M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....6 of 25 : 7 :
Ld. Arbitrator has done a copy and paste job without any application of his own mind.
18 Petitioners have submitted that petitioner No.2 has been wrongly impleaded in the matter as he is a Director and is not personally liable for the dues of the company as there was no arbitration agreement personally between petitioner No.2 and the respondent and has prayed for setting aside the award against petitioner No.2. 19 Petitioners have submitted that since the impugned award has been received by them on 15.10.2011, the present petition has been filed within period of limitation.
20 Respondent has filed a detailed reply and has submitted that the present petition is badly time barred u/s 34(3) of Arbitration & Conciliation Act as petitioners were not under any incapacity and they got proper notice of appointment of Ld. Sole Arbitrator and the arbitral proceedings as all the notices and exchange of letters was made at the only and last known address of the petitioners as furnished by them at the time of applying for loan facility.
21 Composition of Arbitral Tribunal was in accordance with arbitration agreement executed between the parties and Ld. Arbitrator has dealt with only those disputes which fall within the scope of submission to arbitration and in terms of the submission. Impugned award is stated to be not in conflict with public policy of India and petitioners are stated to have concealed material facts from the court.
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22 Respondent has denied all the contentions of the petitioners except those which are matter of record and has referred to articles of the loan agreement with respect to repossessing the vehicle, selling of the same, arbitration clause and clauses requiring the petitioners to inform the respondent about the change in address, if any, within 10 days of such change as well as about manner of serving of notice under the agreement. 23 Respondent has referred to section 3 of Arbitration & Conciliation Act in support of due service of arbitral proceedings on the petitioners. Respondent has also submitted that petitioners were throughout aware of the arbitration proceedings as well as passing of the award as Ld. Arbitrator had been sending the minutes of all the proceedings to the petitioners. It has been denied that the award was served on 15.10.2011 and petitioners had stated so just to cover up the issue of period of limitation. 24 Respondent has denied that the impugned award has been passed in collusion or that the award has been passed by a machine programme by routinely print mindless awards and it is stated to have been passed in terms of the contract / agreement executed between the parties. Petitioners are stated to have played fraud on respondent by not giving new address to it and the letter dated 15.06.2011 is stated to have been sent immediately on getting to know the said additional address.
25 The proceedings of passing the award are stated to have been passed duly and not in undue haste. It has also been denied that vehicle was sold deliberately at a very low rate and repossession is stated to have been done under Article 8 of the agreement M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....8 of 25 : 9 :
and arbitration proceedings were filed after adjusting the amount of sale proceeds towards the outstanding dues and accordingly, the details of sale of vehicle were not part of arbitration proceedings. No assurance was ever given by officials of respondent that the vehicle would fetch value more than outstanding of petitioners or that the matter shall stand closed. Respondent has further submitted that the impugned award was passed after careful perusal and consideration of loan agreement and statement of loan amount and whatever charges were levied by respondent were according to the agreement.
26 With respect to change in Font and Fashion in para 8 of award, respondent has submitted that the terms and conditions of agreement / contract were similar in all cases and all the clauses being similar, the awards are based on similar contents, however, the amounts have been calculated as per statement of account of respective petitioners maintained by respondent in its usual and ordinary course of business. Repayment schedule shows the clear view of total amount of money along with interest charged also indicating details of installments including principal component and interest component. Respondent has also denied with respect to petitioner No.2 having been wrongly impleaded as petitioner No.1 was sued through its Director. Respondent has prayed for dismissal of the present petition.
27 Petitioners have submitted that the respondent had not supplied them the copy of the agreement or Loan Application Form and had also made them sign some blank forms which petitioners apprehend that respondent may misuse them. However, the said submission is untenable in absence of any police complaint against the respondent or M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....9 of 25 : 10 :
issuance of any notice by the petitioners to the respondent to provide the same.
28 Ld. Counsel for petitioners argued that petitioners did not execute any arbitration agreement and petitioners were not given notice about appointment of arbitrator or commencement of any arbitral proceedings. Ld. Counsel for respondent contended that while availing loan facility by petitioners, petitioners agreed with the terms and conditions of the loan agreement containing arbitration clause wherein it is provided that in the event of any dispute arising between the parties, such dispute shall be resolved by the arbitrator and the said arbitrator shall be appointed by Respondent.
29 A perusal of the Loan Agreement reveals that Article 17(e) of the Loan Agreement provides for arbitration as follows :
"In the event of any dispute or differences arising under this agreement including any dispute as to any amount outstanding, the real meaning or purport hereof ("dispute"), such dispute shall be finally resolved by arbitration. Such arbitration shall be conducted in accordance with the provisions of the Indian Arbitration & Conciliation Act, 1996 or any amendment or reenactment thereof by a single arbitrator to be appointed by the lender. The venue of the arbitration shall be as decided by the lender and the arbitration shall be conducted in English language."
30 Thus the Loan Agreement contained a valid arbitration clause and the Loan Agreement has admittedly been executed by the petitioners. It also provides for appointment of sole arbitrator by the respondent only which was duly appointed in the present M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....10 of 25 : 11 :
matter also as per terms of the arbitration clause. Petitioners cannot be allowed to turn around to deny the existence of the arbitration agreement or to challenge the process of appointment of arbitrator to which it had voluntarily agreed. Just because the same person is acting as arbitrator in other matters of the respondent, the said fact in itself does not establish or point towards any collusion between the arbitrator and the respondent.
31 Ld. Counsel for the petitioners argued that a reading of the award reveals that Ld. Arbitrator has not recorded his satisfaction in regard to service of the arbitral proceedings on the petitioner. He further submitted that the Postal receipts are there on record and the envelopes containing the notices and the awards were received back with the report 'left without address'. Ld. Counsel for the petitioner argued that Ld. Arbitrator should have ordered for substituted means of service on the petitioners. 32 Ld. Counsel for respondent in response submitted that the service on the petitioners was duly affected and the original postal receipts bearing the stamp of the post office are there on record as well as the envelopes in support of service of notice as well as award were received back with the report 'left without address' but since the envelopes bear the address of the petitioners furnished in the loan application, under section 27 of General Clauses Act, it shall be deemed that service on the petitioners was duly affected. Ld. Counsel for respondent drew attention to the Clause 5.1(d) of the agreement whereby the petitioners had covenanted that they shall notify the respondent of any change in its residential status within 10 days of such change. It was also argued that Ld. Arbitrator on all the dates specifically ordered for service of arbitral proceedings and of award on petitioners and the M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....11 of 25 : 12 :
award was not passed in haste.
33 I find force in the submissions of the counsel for respondent. A perusal of the postal receipts and a reading of the arbitral award clearly reveals that arbitrator was conscious of the significance of the participation of the petitioners in the arbitral proceedings and Ld. arbitrator caused service of the petitioners affected at address of the petitioners which was furnished by the petitioners in the loan agreement as substantiated by not only the postal receipts placed on record but also on the returned envelopes containing the notice of arbitral proceedings as well as copy of award.
34 When the Ld. Arbitrator entered the reference, notice dated 02.04.2009 was duly dispatched to the respondent under Speed Post directing the lenders / respondent herein to file its statement of claim duly supported by documents so that copies of the same be sent to the petitioners herein to file their statement of defence, if any, supported by documents. On 06.05.2009, when the respondent filed its statement of claim along with an application u/s 31(6) r/w section 17 of Arbitration & Conciliation Act with copies of the order dated 10..02.2009 and 08.04.2009 passed by Sh. A.K. Arya, Ld. ADJ, Patiala House Courts disposing the petition of the respondents filed u/s 9 of Arbitration & Conciliation Act seeking interim award / permission for disposal of vehicle bearing registration No. DL1RX9132 in terms of the agreement. Mr. Subhash Gosai was appointed as Receiver vide order dated 10.02.2009 to take possession of the said vehicle and it was accordingly repossessed by him and kept in godown of respondent in the custody of receiver. The order dated 08.04.2009 had a direction that further direction with respect to the said vehicle be obtained from the M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....12 of 25 : 13 :
Arbitrator. The advocate for the respondent prayed for sale of vehicle as it was depreciating day by day multiplying financial loss of respondent. Since clause No. 8 of the agreement had a specific provision for sale of repossessed vehicle, ld. Arbitrator directed for issuance of notice to the petitioner at its last registered address for the application of respondent seeking permission to sell the vehicle. However, the same was received back with remarks 'This company and addressee vacated the plot'. The application of the respondent was allowed with the direction of adjusting the sale proceeds against the outstanding claim and in case the claim is found to be more than sale proceeds, then file an amended claim and in case it exceeds, the same be refunded to the petitioner. Copy of statement of claim was not sent through oversight to the petitioner with notice dated 09.05.2009 and the same was sent by another letter making the same as part of notice dated 09.05.2009. The next meeting was decided to be held on 05.06.2009. Notice sent to the petitioner at its last registered address was received back as undelivered with postal remarks 'addressee vacated the plot'. 35 Respondent filed evidence by way of an affidavit on 05.06.2009. The matter was adjourned for last and final meeting on 09.07.2009 by issue of a formal notice sending therewith a photocopy of evidence and directing the petitioners herein finally to arrange to file their statement of objections/defence, if any, with documents by way of an affidavit before NDOH. None attended on behalf of petitioners on 09.07.2009. Notice 06.06.2009 sent to petitioner at its last registered address was received back as undelivered with postal remarks 'addressee vacated the plot'. However, respondent pleaded keeping the matter in reserve for making an award till the vehicle in question is disposed off and ld.
Arbitrator agreed to the same till hearing from the respondent regarding disposal of the M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....13 of 25 : 14 :
vehicle. On 08.06.2010, the respondent informed about the disposing off and filed another statement of account and urged for an award on the ground of noncooperation of petitioner. Ld. Arbitrator specifically noted that the amount claimed by the respondent was made after adjusting its losses and adjusting the amount received by sale of repossessed vehicle and thereafter the exparte award was passed against the petitioners. 36 In the matter of M/s Madan and Co. Vs. Wazir jaivir Chand, AIR 1989 SCC 630, Hon'ble Supreme Court has observed that if a registered letter addressed to a person at his residential address does not get served in the normal course and is returned, it can only be attributed to the addressee's own conduct. If he is staying away for some time all that he has to do is to leave necessary instructions with the postal authorities either to detain the letters addressed to him for some time untill he returns or to forward to them to the address where he has gone or to deliver them to some other person authorized by him.
However, the petitioners in the present matter did not leave any such instructions with the postal authorities. Petitioners have failed miserably to establish fraud on part of ld. Arbitrator or collusion between the Ld. Arbitrator and respondent. Thus, there is no violation of section 12 or section 21 of Arbitration & Conciliation Act.
37 Thus, ld. Arbitrator was conscious of participation of petitioners in the arbitral proceedings and directed for their service on each date of hearing for the relevant proceedings. Ld. Counsel for the petitioners has also argued that the arbitrator held the meetings of arbitral proceedings in haste without satisfying himself about the due service being affected on the opposite party. A reading of award, as detailed in the earlier part of this M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....14 of 25 : 15 :
order, establishes that ld. arbitrator emphasised the due service of notice on the petitioners on all dates of hearing as well as with respect to delivery/service of award, establishing that the arbitrator did not act in haste. Respondent is a financial institution and the amount involved in these recovery matters is of the investors who are paid regular returns on their investment in these institutions and in my considered opinion, there is nothing wrong on part of Ld. arbitrator in proceeding exparte in the facts of the case.
38 A perusal of loan agreement reveals that the petitioners had supplied the address of Rajokari in the loan application form and address of petitioner no.2 of Gurgaon was furnished. In the common declarations at the end of the application form, at declaration no.10, petitioners had specifically undertaken that they shall inform the respondent regarding any changes in their address or employment or profession. As per Article 5.1 (d) of the Loan Agreement, the petitioners had convenanted that they shall notify the respondent of any change in their residential status within 10 days of such change. Ld. Coounsel for petitioners have filed copy of email dated 19.12.12 in the court on 22.12.12 whereby it was informed that the last day of operations of petitioners in Delhi at Rajokari address was last week of December, 2008. However, admittedly the petitioners did not notify the respondent of the change of the said address.
39 Ld. counsel for petitioners argued that the registered office address of the petitioner is that of Janakpuri which is mentioned in the master data of last AGM held on 30.09.10, copy of which has been filed by the petitioners in the court on 22.12.12. However, no such intimation of change of address was given to the respondent. If the registered M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....15 of 25 : 16 :
address of the petitioners ever since the registration of the same was the one of Janakpuri, non mentioning of the said address in the loan application form establishes that the petitioners deliberately mentioned their wrong address on the form to evade their service. Petitioners have relied on judgment of Rajiv Stock Brokers Ltd. Smt. Saroj Bala, OMP No. 145/2008 and IA No. 2787/2008 decided on 17.08.09 in support of the fact that it is a company registered with the ROC and its address was available with the ROC and no efforts were made to serve the petitioner at the said address and accordingly no proper notice was served on them.
40 In my considered opinion, the said judgment is not applicable to the facts of the case as in the present matter there was specific obligation imposed on the petitioners as per Article 5.1 (d) of the Loan Agreement and they had also undertaken by declaration mentioned at serial no. 10 that they would inform the respondent about the change in address which they did not inform. In such a case, they cannot take advantage on their own wrong.
41 Petitioners have also relied on Sona Finance Pvt. Ltd. Vs. Tirpupati Paper Mills Pvt. Ltd. & Anr, 106 (2003) DLT 653, where Hon'ble High Court of Delhi held that if despite repeated efforts, the respondents were not served, the appellant could have made an application before the arbitrator or before the court for service of the respondents by publication. The said decision has been given in a matter based under the provisions of Arbitration Act 1940. However, the present award has been passed under provisions of Arbitration and Conciliation Act 1996, which specifically provides in Section 3 (a) as "any M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....16 of 25 : 17 :
written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address", and
(b) "if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it". There was no parallel provision in the Arbitration Act, 1940 and thus the decision relied upon by petitioners is not relevant to the facts of the case. Further Article 16 of the Loan Agreement specifically provides:
"Any notice or request required or permitted to be given or made under this agreement to lender or to the borrower shall be given in writing. Such notice or request shall be deemed to have been duly given or made when its hall be delivered by hand, mail or telegram to the party to which it is required or permitted to be given or made at such party's address specified below or at such other address as such party shall have designated by notice to the party giving such notice or making request."
42 I concur with the observations of Ld. Arbitrator in support of petitioners having been duly served based on the law laid down in the impugned award. Ld. Arbitrator has observed as "Reliance is placed on M/s Madan and Co. Vs. Wazir jaivir Chand, AIR 1989 SCC 630, Hon'ble Supreme Court has further observed in this case that if a registered letter M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....17 of 25 : 18 :
addressed to a person at his residential address does not get served in the normal course and is returned, it can only be attributed to the addressee's own conduct. If he is staying away for some tie all that he has to do is to leave necessary instructions with the postal authorities either to detain the letters addressed to him for some time untill he returns or to forward to them to the address where he has gone or to deliverd them to some other person authorized by him. The Apex Court in State of M.P. Vs. Hiral Lal & Ors (1996) 7 SCC 523, has again upheld that the notices returned with postal remarks "Not available in the House", "House Locked", and "Shop Closed", it must be deemed that the notices have been served on the respondents. The Hon'ble Supreme Court in the case of Chief Commissioner of Income Tax Vs. V.K. Gururaj and Ors, 1996 (7) SCC 275, held that notice sent by Registered Post, neither unserved envelopes nor AD card received back shall be deemed served. Further, it is to be pointed out that Section 3 of the Arbitration and Conciliation Act, 1996 provides three methods of delivery of communication and if any of the three methods of delivery be followed the communication would be treated as received on the date of delivery. In the light of these observations of the Apex Court, I record that the notices were served upon the respondent since the same were dispatched at the address given by the respondent to the claimant at the time of taking loan."
43 Since the notices were sent at the addresses mentioned by the petitioners in the Loan Application Form and as admittedly, the petitioners did not inform the change in their address to the respondent, the petitioners shall be deemed to have been duly served on the respective dates when the letters actually reached at the addresses furnished by them. All the envelopes containing the notices and award posted at both the addresses are M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....18 of 25 : 19 :
there in arbitral record. Original postal receipts are also there. In view of the provisions of Arbitration and Conciliation Act read with judgments relied upon by Ld. Arbitrator and the Clauses of Loan Agreement and provisions of Arbitration and Conciliation Act, the respondents were duly served with the notice of arbitration proceedings at different stages and also of arbitral award.
44 The impugned award has been challenged on ground of being against the Public Policy of India as allegedly the amounts claimed before Ld. Arbitrator were not outstanding against the petitioners. A perusal of the arbitral record reveals that respondent has filed all relevant documents alongwith statement of accounts of the petitioners reflecting outstandings of petitioners to be payable to respondent and the respondent filed an amended claim after adjusting the sale proceeds of the vehicle in question sold after seeking permission of Ld. Arbitrator and the impugned award has been passed by taking into consideration the same. Ld. Arbitrator has dealt with only those disputes which fall within the scope of submission to arbitration and in terms of the submission. 45 With respect to nonmentioning or nonasking of the documents in support of sale of repossessed vehicle by Ld. Arbitrator, as observed earlier, the claim petition filed by the respondent was amended and the final claim was raised after adjusting the amount recovered after selling the repossessed vehicle and thus there was no need for the ld. Arbitrator to have asked for the same. Ld. Arbitrator had allowed the application for sale of repossessed vehicle after giving due notice of the application to the petitioner. Further, the validity or irregularity of the said sale was not a part of terms of reference to Ld. M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....19 of 25 : 20 :
Arbitrator. Respondent was duly authorized to repossess the financed vehicle and to sell the same as per Article 8, (remedies of the lender) of the Loan Agreement. Clause 8.1 (1)(ii) is as follows :
"On the happening of any of events of default, RCL may by a notice in writing to the borrower and without prejudice to the right and remedies available to RCL under the loan terms or any other transaction document or other (a) call upon the borrower to pay all the borrower's dues in respect of the loan and otherwise, and / or (b) declare the security, if any, created in terms of / pursuant to the loan terms and / or the other transaction documents to be enforceable, and RCL, its representatives and / or such other person in favour of whom such security or any part thereof is created shall have, interalia the following rights (notwithstanding anything to the contrary in the loan terms and / or the other transaction documents and irrespective of whether or not the entire loan or borrower's due has / have been recalled) namely :
i To enter upon and take possession of the car in accordance with the provisions of loan terms; and / or ii Transfer or deal with the car in accordance with the provisions of the loan terms.
46 Thus the act of repossessing the vehicle and to sell it was a part of the loan agreement and the respondent acted accordingly.
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47 Reliance has been placed by petitioners on ONGC Vs. Saw Pipes Ltd., AIR 2003 SC 2629, where it was held that an award passed in violation of Section 24, 28 or 31 of Arbitration and Conciliation Act is liable to be set aside as it is against the Public Policy of India. Section 24 requires that parties shall be given sufficient advance notice of any hearing and of any meeting of arbitral tribunal for the purpose of inspection of documents, goods or other property. It also requires that all statements, documents or other information supplied to or applications made to arbitral tribunal by one party shall be communicated to the other party. In the present matter Ld. Arbitrator had duly complied with requirements of Section 24.
48 Section 28 requires that the arbitral tribunal shall decide the dispute in accordance with the substantive law for the time being in force in India. A perusal of the award reveals that Ld. Arbitrator has taken into consideration the terms and conditions of Loan Agreement as well as has decided the claim after recording that petitioner no.1 had committed default in making the payment and allowed the claim of the respondent raised as per the terms of the Loan Agreement. With respect to objection of the petitioners that it has been recorded in copy and paste form mechanically, I differ with petitioners. Since the contents and covenants of Loan Agreement were same in the 33 matters as well as the address of the parties and the service of the arbitral proceedings were same in all the matters, Ld. Arbitrator has reproduced the contents, however, the award specifically mentions the correct outstanding amount in the impugned award containing the correct Loan Agreement number and its date as well as the different dates of proceedings, specific particulars of the vehicle and the terms of Loan Agreement and specific calculation with M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....21 of 25 : 22 :
respect to the facts of the petitioner no.1 in the present case, I do not find that Ld. Arbitrator has not applied his mind. Further, the awards in 33 matters have been passed on different dates ranging from November, 2009 to May, 2011. Ld. Arbitrator has passed the award on the basis of evidence filed by the respondent before him and he has duly appreciated and considered the same. Thus, there is no violation of Section 28 of Arbitration and Conciliation Act.
49 Section 31 requires the arbitral award to be in writing and signed by Ld. Arbitrator and to be a reasoned award. As observed in the preceding paragraph Ld. Arbitrator has passed an award in writing signed by him and the award is a speaking award. The amounts have been calculated as per statement of account of respective petitioners maintained by respondent in its usual and ordinary course of business. Repayment schedule shows the clear view of total amount of money along with interest charged also indicating details of installments including principal component and interest component. Thus there is no violation of Section 31 of Arbitration and Conciliation Act. Thus the impugned award is not against the Public Policy of India.
50 Ld. Counsel for respondent argued that the present application is badly time barred as petitioners no. 1 and 2 failed to file the objections to impugned award within prescribed period of three months and have filed the present petition after expiry of more than three months of the passing of award. Petitioners have relied on their having been served with the signed copy of the award by Ld. arbitrator on 15.10. 2011 and have argued period of limitation prescribed under Section 34 (3) of Arbitration and Conciliation Act had not M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....22 of 25 : 23 :
commenced prior to that.
51 In the present matter, the award was served on petitioners which was made and signed on 12.06.2010 and was duly posted as supported with postal receipts on record bearing date 21.06.2010. Dispatch of award is corroborated by its postal receipts on record. In view of observations made above, there was due service of the signed copy of the award by the Ld. arbitrator on the petitioners maximum by the first week of July, 2010. The petitioners filed the present petition on 17.11.2011 while the award was passed by the Ld. Arbitrator on 21.06.2010 much after the expiry of period of limitation prescribed under section 34(3) of Arbitration and Conciliation Act for challenging the award. 52 Section 34 (3) of Arbitration & Conciliation Act, 1996 reads as:
" An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33 from the date on which that request had been disposed of by the Arbitral Tribunal :
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within the further period of 30 days, but not thereafter.
53 In the case of Union of India Vs Popular Construction Company (2001) 8 SCC 470, it has been held by the Hon'ble Supreme Court that :
"As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are 'but not thereafter' used in the proviso to sub Section (3). In our opinion this phrase would amount to an express exclusion within the meaning of M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....23 of 25 : 24 :
section 29 (2) of the Limitation Act and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase 'but not thereafter' wholly otiose. No principle of interpretation would justify such a result."
54 Thus an arbitral award can in no circumstances be challenged after the expiry of three months, extendable with the further period of thirty days if applicant was prevented by sufficient cause for making the application within these three months. 55 In light of the law laid down in "Union of India Vs Popular Construction Company" (supra) and provisions of Section 34 (3), the present petition is badly time barred and is therefore nonmaintainable.
56 Petitioners have challenged the impleadment of petitioner no. 2 and his liability with respect to the impugned award. Respondent has submitted that petitioner no.2 has only been impleaded only for the purpose of suing petitioner no. 1 and petitioner no. 1 was sued through petitioner no.2. A perusal of the award also reveals that the impugned award has been passed only against petitioner no. 1 and petitioner no. 2 has only been mentioned as an additional person for purpose of suing by his address and petitioner no. 2 has not been impleaded as a separate respondent in the claim petiition in which the impugned award has been passed. and there is only one respondent, i.e. petitioner no. 1 herein, in the claim petition filed by the the respondent/claimant and the award has also been passed against petitioner no. 1 only. It is hereby reaffirmed that the impugned award has been passed against petitioner no. 1 only and the liability under the award is that of M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....24 of 25 : 25 :
petitioner no. 1 only.
57 The present petition is accordingly disposed off as dismissed. File be consigned to record room after necessary compliance.
Dictated and announced in the open court on 02.01.2013 (Dr. Neera Bharihoke) ADJI(South) Saket Courts 02.01.2013 M/s Routes Car Rentals (I) Pvt. Ltd. & Ors. Vs. M/s Reliance Capital Ltd. Contd.....P....25 of 25