Madras High Court
M.Srinivasan vs M/S Shriram Transport Finance Company ... on 11 August, 2018
Author: Abdul Quddhose
Bench: Abdul Quddhose
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 11.08.2018
CORAM
THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE
O.P.No.427 of 2015
1. M.Srinivasan
D.No.1/452,
4th Arignar Anna nagar,
Kennalpuram,
Neelankarai,
Chennai-41.
2. V.Thangapandian
Old No.131A, New No.4/338,
CLRI Nagar,
1st street,
Neelannkarai,
Chennai-41. ..Petitioners
Vs
1. M/s Shriram Transport Finance Company Ltd,
Rep by its authorised representative Mr.S.Varadhan
Mookambika Complex, 3rd floor,
No:4, Lady Desika Road,
Mylapore,
Chennai 600 004.
2. M.Pughazhendi
Sole Arbritator
No.6, First Street,
Kuinji Nagar,
West Tambaram,
Chennai-45. .. Respondents
PRAYER: Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the exparte Award dated 28.08.2014 in Arbitration Case No.118 of 2014 passed by the Second Respondent and direct the first respondent to pay the costs of the Petition.
For Petitioner : Mr. R .Vasudevan
For Respondents : Mr.K.S.Ramakrishnan for R1
: R2-Arbitrator
ORDER
The instant petition has been filed under section 34 of the Arbitration and Conciliation act, challenging the Arbitral Award dated 28.08.2014 passed against the petitioners.
2. The brief facts leading to the filing of the instant petition are as follows;
(i) The first petitioner entered into a loan-cum-hypothecation agreement dated 06.03.2013 with the first respondent and availed a loan for the purchase of a Tempo Traveller Vehicle bearing Registration No.TN-20-AL-0852. The total amount payable under the loan agreement was repayable in 24 monthly instalments commencing from 05.04.2013 and ending on 05.03.2015. The second petitioner stood as a guarantor for the due performance of the loan agreement by the first petitioner.
(ii) According to the first respondent, the first petitioner committed default in the repayment of the loan. In view of the default, there arose disputes between the parties and the said dispute was referred to Arbitration by the first respondent who appointed the second respondent as sole-arbitrator to decide the disputes on merits. The sole-arbitrator entered upon the reference and after issuing notice to the parties to the dispute, passed an Arbitral Award dated 28.08.2014 directing the petitioners jointly and severally to pay a sum of Rs.2,93,356/- interest and costs.
(iii) Aggrieved by the Arbitral Award dated 28.08.2014, the instant petition has been filed.
3. Heard Mr.R.Vasudevan, learned Counsel for the petitioners and Mr.K.S.Ramakrishnan, learned Counsel for the first respondent.
4. According to the learned Counsel for the petitioner, the main grounds for challenge in the instant petition are as follows:
a) The Arbitrator has sent a notice dated 19.03.2014 to the petitioners even before the petitioners were given an opportunity to respond to the lawyer's notice dated 05.04.2014 sent by the first respondent calling upon the petitioners to pay the demanded amount within a period of ten days from the date of receipt of the said notice.
b) The first respondent has repossessed the vehicle within one month from the date of loan agreement. The loan agreement was entered into on 06.03.2013 and the first respondent has repossessed the vehicle from the first petitioner in April 2013.
c) In so far as the first submission made by the learned Counsel for the petitioners is concerned, he drew the attention of this Court to the notice dated 19.03.2014 received from the sole-arbitrator intimating the petitioners that the second respondent/sole-arbitrator has been appointed as Arbitrator by the first respondent and he has fixed the date of the first hearing of the Arbitration on 10.05.2014. Thereafter the learned Counsel for the petitioners drew the attention of this Court to the lawyer's notice dated 05.04.2014 sent by the first respondent calling upon the petitioners to pay a sum of Rs.2,93,356/- together with interest within 10 days from the date of receipt of the said notice failing which, the first respondent has intimated the petitioners that they will be appointing the second respondent as sole-arbitrator to decide the dispute between the parties.
d) The learned Counsel for the petitioners then drew the attention of this Court to the reply dated 05.05.2014 sent by the lawyer's of the petitioners to the notice dated 05.04.2014 sent by the Counsel for the first respondent. In that reply, he referred to the paragraph wherein they have categorically informed the first respondent that the petitioners have received a notice dated 19.03.2014 from the Arbitrator even before the dispute was referred to Arbitration.
e) The learned Counsel for the petitioners also drew the attention of this Court to the Arbitral Award wherein the date of repossession of the vehicle and the date of the sale of the vehicle and the person to whom the vehicle was sold have not been disclosed by the Arbitrator. Therefore according to the learned Counsel for the petitioners, the findings of the Arbitrator are perverse and consequently, the Arbitral Award is patently illegal.
5. The learned Counsel for the first respondent is unable to give a proper explanation to the submissions made by the learned Counsel for the petitioners. He also does not dispute the documents referred to by the learned Counsel for the petitioners.
6. This Court, after having considered the materials available on record and after examining the Arbitral Award and after hearing the submissions of the respective Counsels observes the following:
a) The second respondent/sole-arbitrator has issued notice to the petitioners informing them about his appointment as sole-arbitrator by the first respondent even before the petitioners could comply with the demand made by the first respondent through the legal notice dated 05.04.2014.
b) In the legal notice dated 05.04.2014, the first respondent has called upon the petitioners to pay a sum of Rs.2,93,356/- together with interest within ten days from the date of receipt of the said notice, failing which, they have intimated the petitioners that they will be appointing the second respondent as the sole-arbitrator to decide the dispute between the parties. But as seen from the Arbitration notice sent by the second respondent/sole-arbitrator on 19.03.2014, the Arbitrator has fixed the date of the first hearing of the Arbitration on 10.05.2014.
c) In the Arbitral Award, the date of repossession of the vehicle, the date of sale of the vehicle, the person to whom the vehicle was sold are all not revealed. The first respondent has filed six documents in support of its claim which are marked as exhibits C1,C2,C3,C4,C5 and C6. As seen from the exhibits, the notice sent by the first respondent to the petitioners on the fact of repossession of the vehicle and the notice sent to the petitioners about the sale of the vehicle have not been marked as exhibits by the first respondent in the Arbitration.
d) If the notice informing the petitioners about the fact of repossession of the vehicle was given, there is a possibility that the petitioners may have settled the claim or may have given a better offer for the sale of the vehicle. In the instant case, as seen from the Arbitral Award, no such notice was given to the petitioners.
7. From the observations recorded above, this Court is of the considered view that the Arbitral Award is patently illegal. Accordingly the Arbitral Award dated 28.08.2014 passed against the petitioners by the second respondent Arbitrator is set aside and the petition is allowed. No costs.
8. The first respondent is given liberty to initiate fresh Arbitration against the petitioners in accordance with law.
11.08.2018 msr/arb ABDUL QUDDHOSE, J.
msr/arb O.P.No.427 of 2015 11.08.2018