Karnataka High Court
Sriram Transport Finance Company Ltd vs M.Ghouse S/O Shaik Maheboob on 11 April, 2018
Author: B.Veerappa
Bench: B.Veerappa
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IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 11TH DAY OF APRIL, 2018
BEFORE
THE HON'BLE MR. JUSTICE B.VEERAPPA
CRP.NO.200017/2016
BETWEEN:
Sriram Transport Finance Company Ltd.,
Station Road, Opposite, Ram Mandir,
Raichur
Represented by its Manager
... Petitioner
(By Sri A.M.Nagaral, Advocate)
AND:
M.Ghouse S/o Shaik Maheboob
Age: 53 years, Occ: Owner of Lorry No.KA-14/6436,
Ashok Leyland,
R/o. H.No.12-12-61,
Arab Mohalla, Raichur - 584102.
... Respondent
(By Sri Sachin M.Mahajan., Advocate)
This Civil Revision Petition is filed under Section 115
of C.P.C. praying to set-aside the order passed in I.A.No.II in
O.S.No.462/2013, by the II Additional Civil Judge, Raichur,
and allow the application of the petitioner, as prayed for the
application filed by the petitioner.
This petition coming on for orders this day, the Court
made the following:
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ORDER
This Civil Revision Petition is filed against the order dated: 23-11-2015 on I.A.No.II made in O.S.No.462/2013 rejecting the application filed by the defendant under section 8 of the arbitration and conciliation Act, 1996 read with section 189 of Code of Civil Procedure.
2. The present respondent who is the plaintiff in O.S. NO.462/2013 filed the suit for mandatory injunction directing the defendant to restore, hand-over deliver and put in possession of the plaintiff's seized and detained lorry Ashok Leyland bearing Reg. No.KA-14- 6436 under H.P.A finance by the defendant and shall not cause any sort of interference into the peaceful carrying on the transportation business by the plaintiff with said lorry in future and further direct the defendant to pay and indemnify damages for the illegal 3 seizer and detention of the plaintiff's lorry into their custody.
3. The plaintiff has contended that, he is permanent resident of Raichur and he is lorry driver holding valid heavy license from the RTO, the plaintiff is professing transportation business through means of lorry. The plaintiff was interested in purchasing the lorry and therefore purchased the lorry bearing Reg. No.KA-14-6439 from one Mehaboob Khan S/o Nawab Khan resident of Manvi by availing finance from defendant. The defendant has transferred the finance of Mehaboob Khan to the plaintiff and by virtue of the defendant finance hire purchase agreement with defendant Sriram Transport Finance Company was availed by the plaintiff on the lorry amounting to Rs.1,50,000/- dated: 04-01-2010.
4. It was further contended that, the lorry bearing Reg. NO.KA-14-6436 purchased by the plaintiff 4 under hypothecation by the defendant for an amount of Rs.1,50,000/-. The H.P.A finance under Loan Account No.RCHU20011290020 commenced with effect from 04- 01-2010 and from the date of availing the finance and delivery of the vehicle from the previous owner the plaintiff lawfully and legally carrying on and conducting the transportation lorry business in Raichur city. The lorry purchased under the finance Ashok Leyland of l1989 mode is old lorry chassis No.AIEN230873 Engine No.AIENI07703 Diesel fuel engine lorry. It was further contended that, the plaintiff has paid regular installments on the H.P.A loan of the lorry to the defendant at the rate of Rs.6,250/- regularly upto 15- 07-2013 which is acknowledged by the defendant finance under valid receipt which are produced before the kind perusal of the Hon'ble Court under list of documents and there is no default in the payment of the installments by the plaintiff to defendant in respect of the loan finance availed on the lorry. It is the bound and 5 duty of the defendant that in case of any default is occurred, the defendant shall issue default notice mandatory and final show cause notice for attachment or seizer of the lorry as per the H.P.A without due process of law and rules and regulations of H.P.A. The defendant cannot either stop running the lorry nor has right to seize and detain the lorry owned by the plaintiff under finance. It was further contended that, the defendant lorry finance office is situated on station road Raichur at a distance of half kilometer from the house location of the plaintiff. The defendant is a rich and influential person having men and machinery to do any act on the contrary the plaintiff is alone and helpless because of the loan of the lorry.
5. It was further contended that, after closure of transportation business park the vehicle lorry bearing Reg. NO.KA-14-6436 near and beneath the water tank location at Lal Pahdi Raichur. The defendant on 19-07- 6 2013 stealthily and consolingly without any intimation and without the knowledge of the plaintiff, without due process of law, without issue of any notice, show cause notice by taking law into their hands and by unlawful assembly alongwith their staff and gunda people during the night when the lorry was parked during the night hours the defendant gang people finance have lifted, seized by illegal method and took their finance detained in their custody without any right. Finally the plaintiff approached the defendant in the first week of August 2013 as it was presumed and apprehended by the plaintiff that because of the meager and small arrears amount of finance the defendant's possibilities of seizer and detention. On 05-10-2013 once again the plaintiff requested the defendant to release the lorry then he will pay the balance amount within a couple of months but the defendant refused etc. Therefore he filed suit for the relief sought for.
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6. The defendant filed application under section 8 of the Arbitration and Conciliation Act 1996 R/w section 89 of Code of Civil Procedure to refer the matter to the Arbitration in view of clause 15 of the loan
-cum-hypothecation agreement dated: 29-11-2010, contending that, the defendant financial institution is a non-banking institution engaged in the commercial vehicle finance busines. On 29-11-2010, the plaintiff has borrowed a loan from our financial institution under the gurarantorship of one Mr.Md. Basha to purchase the schedule vehicle by exercising a loan cum- hypothecation agreement in favour of the financial institution. The plaintiff has no locus-standi to file the present petition against the company without exhausting the remedy available under the agreement. He further contended that, under clause 15 of the loan- cum-hypothecation agreement executed by the plaintiff in respect of schedule vehicle, which provides to get resolve the disputes by process of arbitration. 8 According to clause 5(a) of the agreement, the event of default is defined. Further in the event of default according to clause 6(b) of the agreement. The suit is barred by section 5 of the Arbitration and Conciliation Act. Therefore, the defendant sought to refer the matter to Arbitration and Conciliation.
7. The said application was opposed by the plaintiff by filing the objection by reiterating the averments made in the plaint.
8. The trial court considering the application and objections, by the impugned order dated: 23-11- 20135 rejected I.A.No.II filed by the defendant under section 8 of the Arbitration & Conciliation Act 1986 read with section 189 of Code of Civil Procedure. Hence the present civil revision petition is filed.
9. I have learned counsel for the parties to the lis.
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10. Sri.A.M.Nagral learned counsel appearing for revision petitioner vehemently contended that, the impugned order passed by the trial court rejecting the application filed under section 8 of the Arbitration & Conciliation Act 1986 read with section 189 of Code of Civil Procedure is erroneous and contrary to the material on record. He would further contend that, in view of clause 15 of the Arbitration & Conciliation Act, hypothecation agreement in dispute with regard to the vehicle, the matter is referred to the arbitration in view of specific clause in the loan-cum-hypothecation agreement dated: 29-11-2010, the trial court ought not to have rejected the application. He would further contend that, the trial court proceeded to reject the application mainly on the ground that, the name of the arbitrator is not mentioned in the application. He would further contend that, as long as back the arbitration clause incorporated in the agreement entered into between the parties, there cannot be any dispute to 10 refer the matter to the arbitrator, the same has not been considered by the trial court. Therefore, he sought to allow the revision petition by setting aside the impugned order. In support of his arguments he relied upon the dictum of Hon'ble Apex Court in case of M/s Sundaram Finance Limited and another V/s T.Thankam reported in Civil Appeal No.2079 of 2005 dated: 20-02-2015.
11. Per contra, Sri.Sachin Mahajan learned counsel appearing for plaintiff sought to justify the impugned order passed by the trial court. He would further contend that, the plaintiff never agreed for incorporation of arbitration clause in the agreement and the arbitration agreement was made by playing fraud on the plaintiff. Therefore, he sought to dismiss the revision petition.
12. Having heard to the learned counsel appearing for parties, it is not in dispute that, the 11 plaintiff filed suit for mandatory injunction to restore hand over, deliver, put in possession of the plaintiff's seized and detained lorry Ashok Leyland bearing Reg. No.KA-14-6436 on the ground that there was agreement between the plaintiff and defendant in respect of the said vehicle. It is also not in dispute that, the hypothecation cum loan agreement entered into between the parties dated: 29-11-2010 duly signed by the parties to the documents. The said hypothecation agreement clearly indicates that, the plaintiff has signed as borrower, guarantor M.D.Pasha and the amount spent by Shriram Transport Finance Company Limited. It is not the case of the defendant that, there was no agreement at all between the parties. Since he has purchased the lorry under the said agreement. Therefore, there is no dispute that there is hypothecation agreement existing between the parties. 12
Clause 15 of the hypothecation agreement clearly depicts that, all disputes, differences and / or claims arising out of these presents or as to the construction, meaning or effect here of a or as to the rights and liabilities of the parties are under shall be settled by arbitration to be held in Chennai in accordance with the provisions of the arbitration and conciliation Act, 1996 or any statutory amendments thereof or any statute enacted for replacement thereof and shall be referred to the sole arbitration of a person to be nominated / appointed by Shriram. Any proceedings to be initiated in any court of law in pursuance of this arbitration shall be instituted and held in the court at Chennai only.
13. In view of the said clause, the defendant filed application under section 8 of the Arbitration & Conciliation Act 1986 read with section 189 of Code of Civil Procedure to refer the matter to Arbitration. The trial court has rejected the said application mainly on the ground that, there is no mention of arbitrator i.e., who is the arbitrator or even designation of the person 13 who act as arbitrator, when the arbitration introducing the clause in the hypothecation agreement is not disputed between the parties, once arbitration entered into between the parties to refer the dispute and differences arisen out of the agreement to arbitration. The trial court cannot reject the application mainly on the ground that, the name of the arbitrator is not mentioned i.e. as to who is the arbitrator or even the designation of the person to act as a arbitrator.
14. The Hon'ble Supreme Court of India in case of M/s Sundaram Finance Limited and another V/s T. Thankam reported in Civil Appeal No.2079 of 2015 dated: 20-02-2015 has held as under:-
10. Once there is an agreement between the parties to refer the disputes or differences arising out of the agreement to arbitration, and in case either party, ignoring the terms of the agreement, approaches the civil court and the other party, in terms of the Section 8 of the Arbitration Act, moves the court for referring the parties to arbitration before the first statement on 14 the substance of the dispute is filed, in view of the peremptory language of Section 8 of the Arbitration Act, it is obligatory for the court to refer the parties to arbitration in terms of the agreement, as held by this Court in P. Anand Gajapathi Raju and others v. P.V.G. Raju (Dead) and others[1]
15. Once an application in due compliance of Section 8 of the Arbitration Act is filed, the approach of the civil court should be not to see whether the court has jurisdiction. It should be to see whether its jurisdiction has been ousted. There is a lot of difference between the two approaches. Once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the procedure prescribed under a special statue, the civil court should first see whether there is ouster of jurisdiction in terms or compliance of the procedure under the special statute. The general law should yield to the special law - generalia specialibus non derogant. In such a situation, the approach shall not be to see whether there is still jurisdiction in the civil court under the general law. Such approaches would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court.
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16. The order dated 21.06.2010 passed by the trial court and order dated 17.03.2014 passed by the High Court, are set aside. The trial court is directed to pass fresh orders on the application filed by the appellant- defendant under Section 8 of the Arbitration Act. The needful shall be done within a period of two months from the date of receipt of this order.
15. In view of the admitted facts stated supra and in view of the existence of hypothecation agreement between the parties and in view of the clause 15 of the hypothecation agreement, the trial court is not justified in rejecting the application solely on the ground that, non-mentioning the name of the arbitrator, if the matter is referred. It is for both the parties to mention, nominate the arbitrator and it is for the court to refer the matter to arbitration, the same has not been done in the present case.
16. In view of the aforesaid reasons, the impugned order passed by the trial court dated: 23-11- 2015 on I.A.No.2 made in O.S. No.462/2013 on the file 16 of II Addl. Civil Judge & JMFC, Raichur is set a side. The matter is remanded to the trial court to consider the application afresh in the light of the clause 15 of the Arbitration & Conciliation Act agreement entered into between the parties and in the light of the observation made by the Hon'ble Supreme Court of India and pass the order strictly in accordance with law.
Ordered accordingly.
Sd/-
JUDGE MWS CT/VK