Bombay High Court
Carnet Elias Fernandes And Everlyn C. ... vs Aditya Birla Finance Ltd on 3 May, 2019
Equivalent citations: AIRONLINE 2019 BOM 341
Author: G.S.Kulkarni
Bench: G.S.Kulkarni
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION NO.428 OF 2017
1.Mr.Carnet Elias Fernandes
2.Mrs.Everlyn C.Fernandes. ...Petitioners
Versus
Aditya Birla Finance Ltd. ...Respondent
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Mr.Atharva Dandekar I/b. Sonia Sunil, for the Petitioners.
Mr.Bhavik Manek with Nikhil Mehta I/b. KMC Legal Venture, for the
Respondent
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CORAM: G.S.KULKARNI, J.
DATE : 3rd May, 2019
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JUDGMENT:
This petition under Section 34 of the Arbitration and Conciliation Act,1996 (for short 'the Act'') challenges an award dated 5 October 2016 passed by the learned sole arbitrator adjudicating the disputes between the parties which had arisen under the loan facility agreement dated 9 October 2012. By the impugned award, the learned sole arbitrator has held that the petitioners are jointly and severally liable to pay to the respondent-claimant an amount of Rs.23,65,07,643/- for the default of the petitioners to make repayment of the outstanding loan amount under ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 2 carbp428-17.doc the said loan agreement. The arbitral award further directs the petitioners to pay to the respondent interest at the rate of 12.5% per annum from 1 April 2015 till the date of realization of the dues. The learned Arbitrator also has awarded cost of the arbitration proceeding at Rs.14,65,000/-.
2. The relevant facts are:
The respondent is a non banking financial company engaged in the business of advancing corporate finance. The respondent extended financial facilities to the petitioners to the tune of Rs.18 crores vide a sanction letter dated 27 September 2012 issued in favour of the petitioners. Accordingly a loan agreement dated 9 October 2012 (for short 'the said loan agreement') came to be executed between the parties setting out the terms and conditions governing the loan. The duration of the loan was of 96 months and the rate of interest payable was 12.50% per annum together with penal interest of 5.10% per annum. As per the said loan agreement further documents inter-alia like declaration-cum- confirmation deed dated 24 September 2012, recording creation of an equitable mortgage by deposit of title deeds of the immovable property (land and building situated at Tahsil Huzur, District Bhopal) came to be executed by the petitioners in favour of the respondent. Demand ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 3 carbp428-17.doc promissory notes, letter of continuity etc. were also executed by the petitioners in favour of the respondent.
3. The petitioners became irregular in the payment of the installments as also defaulted in repayment of the loan installments. Also the post dated cheques issued by the petitioners towards the installments of the loan were dishonoured when presented for payment. The respondent accordingly issued a notice dated 26 November 2014 under Section 138 of the Negotiable Instruments Act, calling upon the petitioners to pay the amounts under the dishonoured cheques. The respondent time and again made demands for payment of the outstanding amounts, however, despite all the efforts, the respondent was not successful in recovering any amounts.
4. The respondent thereafter issued advocate's notice dated 8 January 2015 to the petitioners and foreclosed the loan account of the petitioners and called upon the petitioners to repay the entire outstanding loan amount which was in the tune of Rs.22,91,51,703/- together-with further interest thereon. Despite receipt of the notice, the petitioners failed to clear the outstanding dues. Consequently as the loan agreement contained ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 4 carbp428-17.doc an arbitration clause, the respondent invoked arbitration. In the statement of claim the respondent made the following prayers:-
"A. The Respondents be awarded, ordered and decreed to jointly and severally pay to the Claimant, an amount of Rs.23,65,07,643/- (Twenty Three Crores Sixty Five Lacs Seven Thousand Six Hundred Forty Three only) as on 31 st March,2015 (as per the Particulars of claim at Exhibit "T" hereto) together with further interest @ 12.50% per annum from 1st April,2015 up to payment and/or realization thereof.
B. That pending the hearing and disposal of Arbitration proceedings, the Respondents jointly and severally be ordered and directed to deposit with this Arbitral Tribunal, the acknowledged and admitted liability to the extent of Rs.22,91,51,703/- (Twenty Two Crores Ninety One lacs fifty one thousand seven hundred three only) as on 8th January,2015 with further liberty to the Claimant to withdraw the same.
C. That the Respondents be directed to pay costs and expenses of the arbitration proceedings, Advocates and Arbitrator fees and all expenses incurred by the claimant incidental to the present Arbitration proceedings D. For such further and other relief/s as the Tribunal may deem fit and proper in the facts and circumstances of the present case."
5. The petitioners appeared before the arbitral tribunal after receipt of the notice of arbitration. The petitioners by their Advocate's letter dated 6 February 2015 raised a preliminary objection to the jurisdiction of the learned Arbitrator to hold the arbitration proceedings at Mumbai as the petitioners contended that the loan agreement was executed between the parties at Bhopal, as also the security interest namely of the residential ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 5 carbp428-17.doc house property was also situated at Bhopal. The petitioners contended that the agreement had categorically recorded that in respect of all disputes, venue of arbitration would be at Bhopal and the court situated at Bhopal will have jurisdiction in respect of the disputes arising out of the agreement. It was also contended that as the cause of action had arisen at Bhopal, the arbitral tribunal situated at Mumbai would not have jurisdiction and consequently the arbitration proceedings would be illegal and without any authority in law. It was contended that for these reasons the petitioners would refuse to participate in the arbitration proceedings as illegally commenced.
6. The learned Arbitrator held a meeting on 9 February 2015 wherein Mr.Mehta Advocate represented the respondent/claimant and Ms.Sonia Sunil Advocate represented the petitioners. The minutes of the meeting recorded that Ms.Sonia filed her vakalatnama on behalf of the petitioners and the same was taken on record. The minutes of the meeting also recorded that the letter dated 6 February 2015 was received by the Arbitrator as addressed on behalf of the petitioners from Mr.Ajay Mishra Advocate raising a preliminary objection to the jurisdiction of the learned ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 6 carbp428-17.doc arbitrator. The learned arbitrator considering the objection examined the loan agreement as produced by the respondent before the arbitral tribunal and observed that on a perusal of clause 22.1 of the said agreement , the jurisdictions of the Court was originally written as Bhopal but subsequently was scored and changed to Mumbai. It was observed that the signatures of the petitioners appear at the place where the changes have been made. It was also observed that clause 22.6 of the agreement dealt with the venue for conducting arbitration proceedings and in this clause also initially the word Bhopal was written which was scored and the word 'Mumbai' was substituted and signatures were put where the changes were made. It was observed that the learned Counsel Ms.Sonia Sunil appearing for the petitioners raised a plea which was not raised in the original objection letter dated 6 February 2015 of Mr.Ajay Mishra Advocate on behalf of the petitioners, namely that the word "Bhopal" as contained in the said clause of the agreement was inserted without consent of the respondent and that it was subsequently changed from "Bhopal" to add the word "Mumbai". On the other hand Mr.Mehta, learned counsel for the respondent had submitted before the learned arbitrator that the petitioners have initialed the correction and scoring off the word "Bhopal" ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 :::
pvr 7 carbp428-17.doc and in replacing it by "Mumbai". It was contended that the petitioners in fact had agreed to the change of jurisdiction to Mumbai. The learned arbitrator observed that he would pass a detailed reasoned order on the petitioners' application dated 6 February 2015 objecting to the jurisdiction however prima-facie opining that the arbitral tribunal would have jurisdiction to conduct the proceedings at Mumbai. The learned arbitrator thereafter passed a further order dated 13 February 2015 dealing with the second letter of the petitioner's Advocate dated 8 February 2015 which also questioned the jurisdiction of the arbitral tribunal to conduct the arbitration proceedings at Mumbai.
7. It transpired that during the pendency of the arbitral proceedings, the petitioners moved a writ petition before the Madhya Pradesh High Court at Jabalpur, (Writ Petition no.11671 of 2015) in which the petitioners asserted that the respondent was guilty of forgery in substituting the word "Mumbai" for "Bhopal" in the said clauses of the loan agreement and prayed for a criminal action to be taken against the respondent. The petitioners made the following prayers against the respondent in regard to the loan agreement dated 9 October 2012.:- ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 :::
pvr 8 carbp428-17.doc "(i) to issue a writ of mandamus directing respondent no.1 and 2 to take action against respondent no.3, in accordance with law.
(ii) to issue any other writ, order or direction to respondent no.1 and 2 to confiscate original Facility Agreement dated 09.10.2012 which is presently in possession of respondent no.3 and to act thereon in accordance with law."
8. On 27 July 2015 the petitioners pointed out before the arbitral tribunal that the petitioners had filed the said writ petition before the Madhya Pradesh High Court and prayed for an adjournment of the arbitral proceedings. The learned Arbitrator in the minutes of the meeting dated 27 July 2015 recorded that on the earlier occasion on 26 June 2015 last chance was given to the petitioners to file written statement alongwith compilation of documents on or before 27 July 2015. However, despite specific directions, the petitioners failed to file a written statement. It was also observed that there was no stay on the arbitral proceedings. The learned arbitrator however granted a final opportunity to the respondent to file their written statement on or before 21 August 2015. It was also observed that if on the adjourned date of hearing the petitioners did not file a written statement, it would be presumed that the petitioners are not interested in contesting the arbitration proceedings, and further time ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 9 carbp428-17.doc would not be granted to the petitioners to file a written statement, unless a specific order is produced of any court of a stay on the arbitration proceedings.
9. On 21 August 2015 petitioners filed written submissions before the learned arbitrator praying to keep the arbitration proceedings in abeyance till the criminal proceedings filed against the respondent are concluded. The petitioners interalia contended that the learned arbitrator had no authority to decide the issue relating to forgery of the document and same was strictly within the ambit of the criminal investigation and for which the writ petition was pending before Madhya Pradesh High Court. The learned arbitrator by an order dated 21 August 2015 rejected the petitioner's prayer to keep the arbitration proceedings in abeyance and decided to continue the arbitral proceedings.
10. The learned arbitrator thereafter held proceedings on 21 August 2015 when again the petitioners made a written application again pointing out filing of the said writ petition before Madhya Pradesh High Court and praying that the arbitration proceedings be kept in abeyance. The learned arbitrator passed a detailed order setting out that the ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 10 carbp428-17.doc petitioners were interested in delaying the arbitration proceedings on frivolous grounds and held that the petitioners were precluded from filing written statement and that the arbitration proceedings will continue. It is, however, observed that the right of the petitioners to cross examine the witness of the respondent-claimant shall remain open. The learned arbitrator also called upon the parties to submit draft issues on or before the adjourned date of hearing that is before 2 September 2015.
11. On 2 September 2015 again a written application was again made by the respondent contending not to continue the arbitration proceedings. In the absence of any stay to the arbitral proceedings from any competent court, the learned arbitrator proceeded to frame the issues and also issued directions to the claimant to file affidavit of evidence.
12. In the meantime assailing the orders passed by the learned arbitrator on 21 August 2015 the petitioners approached this Court by filing arbitration petition no.1579 of 2015. By an order dated 12 October 2015 the Court permitted the petitioners to withdraw the said petition with a liberty to challenge the impugned decision alongwith the arbitral award if it was to be adverse to the petitioners.
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13. The petitioners failed to file written statement and thereafter on 26 October 2015 the petitioners belatedly filed petitioners' advocate's letter before the learned arbitrator making several grievances in continuing the arbitration proceedings.
14. The petitioners thereafter filed another Arbitration Petition (lodg) no.2030 of 2015 before this Court challenging the mandate of the sole arbitrator under Section 14 of the Act raising a plea of bias of the arbitrator. The said petition was decided by this Court by an order dated 19 January 2016, whereby this Court dismissed the said petition, holding that once the arbitral tribunal has decided the application under Section 13(3) of the Act, petition under Section 14 of the Act on the same subject matter is not maintainable and the proper remedy for the petitioners would be to challenge the award under Section 34 of the Act. This Court however kept open the issue as raised in the said petition, to be challenged in the proceedings under Section 34 of the Act, in case the award was to be adverse to the petitioners. Thereafter the learned Arbitrator held proceedings in which the petitioners cross examined the witnesses of the respondent-claimant on 11 April 2016 and 12 April 2016. ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 :::
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15. The learned Arbitrator on 8 July 2016 passed a detailed order on the application of the petitioners under Section 16 of the Act on the objection of the petitioners, that the jurisdiction of the learned arbitrator would be Bhopal and not Mumbai. The learned Arbitrator considering the oral and documentary evidence on record has recorded a finding of fact that the parties had agreed for the venue of arbitral proceedings to be at Mumbai and not at Bhopal. The finding in that regard can be noted in the later part of this judgment. The learned arbitrator accordingly held that in view of the petitioners agreeing to the venue of the arbitration at Mumbai, the learned arbitrator had jurisdiction to try and dispose of the arbitration proceedings.
16. The learned arbitrator thereafter proceeded with the arbitral proceedings and pronounced the impugned award dated 5 October 2016 to the following effect:-
"A. The Respondents are jointly and severally liable to pay to the Claimants a sum of Rs.23,65,07,643/- (Rupees Twenty Three Crores Sixty Five Lacs Seven Thousand Six Hundred and Fourty Three only) together with interest thereon at the rate of 12.5% p.a. from 1-4-2015 till the date of payment/realization of the amount by the Claimants from the Respondents.
B. The costs of the Arbitration and the Arbitrators Fees are fixed at
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Rs.14,65,000/- which shall be paid by the Respondents to the Claimants."
The petitioners are accordingly before this Court in the present petition under Section 34 of the Act assailing the impugned award.
17. Mr.Dandekar, learned Counsel for the petitioners in assailing the impugned award has limited submissions. Firstly, Mr.Dandekar would contend that the learned Arbitrator was in an error in passing the order dated 8 July 2016 holding that the tribunal would have jurisdiction to conduct the arbitral proceedings at Mumbai and not at Bhopal. In supporting this submission Mr.Dandekar has drawn my attention to the Facility agreement dated 9 October 2012 as executed in pursuance of sanction letter of the respondent dated 27 September 2012 (page 72 of the paperbook), wherein according to him there is an interpolation by erasing the word "Bhopal" and by inserting the word "Mumbai" in clause 22.6 of the agreement which needs to be extracted:-
"22.6 The venue of conducting arbitration proceedings shall be Bhopal Mumbai India.
Mr.Dandekar would contend that by a letter dated 8 February 2015 of the ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 14 carbp428-17.doc petitioner's Advocate in paragraph 3 thereof, an objection was raised by the petitioners to specifically contend that in case of disputes under the Facility Agreement, the venue of the arbitration would be Bhopal and the Court situated at Bhopal would then have exclusive jurisdiction in respect of matters arising under the agreement. Mr.Dandekar states that the petitioners also stated that except the Courts at Bhopal, jurisdiction of all other courts was barred, as agreed between the parties. Mr.Dandekar thus submits that the findings as recorded by the arbitral tribunal to hold that the venue of the arbitration to be at Mumbai, is an illegal finding. Mr.Dandekar would submit that in the minutes of the meeting held by the learned arbitrator on 9 February 2015 ('Exhibit I', page 77 to the paperbook) the learned arbitrator ought not to have observed that this issue would require evidence to be led and an issue was required to be framed. The arbitrator ought not to have proceeded is the submission of Mr.Dandekar. It is thus submitted that the arbitrator had no jurisdiction to hold the arbitration proceedings at Mumbai and the same was contrary to the agreement.
18. The next submission of Mr.Dandekar is that the learned Arbitrator ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 15 carbp428-17.doc ought to have provided an opportunity to the petitioners to file statement of defence when clearly the petitioners have participated in the proceedings and was also permitted to cross examine the witnesses.
19. The third submission of Mr.Dandekar is that the award as pronounced by the arbitral tribunal is the award on no evidence. Mr.Dandekar would submit that the respondent/claimant has failed to prove its claim to be entitled for an award of the said amount. This submission is supported by Mr.Dandekar by referring to the observations in paragraph 46 of the award wherein the learned Arbitrator has observed that the document of loan and other documents as produced on behalf of the respondent-claimant have remained unchallenged and uncontroverted. Mr.Dandekar's submission is that such observations could not have been made as the claimant did not lead sufficient evidence to prove the facility agreement and thus the arbitral award is perverse and illegal.
20. On the other hand, learned Counsel for the respondent supported the award. It is submitted that the evidence on record of the arbitral tribunal was clear to the effect that the facility agreement was entered ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 16 carbp428-17.doc between the parties under which principal amount of Rs.18 crores was disbursed to the respondent for infusion of equity. It is submitted that further there was mortgage of property as security for repayment of loan by the petitioners in favour of the respondent. It is further submitted that it was also clear from record that there were repeated attempts on the part of the respondent in requesting the petitioners to make good the defaults and repayment of the loan amount. It is submitted that the cheques which were issued by the petitioners for repayment of the loan installment were also dishonoured. Respondent accordingly had recalled the loan to which there was no reply of the petitioners. It is submitted that the contentions as urged on behalf of the petitioners therefore, are wholly untenable inasmuch as the only case of the petitioners is on interpolation in regard to the venue of the arbitral proceedings and the jurisdiction of the Court, which is proved to be false, on evidence. It is submitted that the petitioners in making such an allegations had failed to prove before the arbitral tribunal that there was any interpolation in clauses 22.1 and 22.6 of the facility agreement.
21. Learned Counsel for the respondent drawing my attention to the ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 17 carbp428-17.doc orders passed by this Court in Arbitration Petition No.1118 of 2015 would submit that the Court had made a specific observation that Court at Mumbai would have jurisdiction to entertain section 9 petition. It is submitted that even the criminal proceedings which were filed by the petitioners before High Court at Madhya Pradesh on the very issue of interpolation came to be dismissed, by not accepting the case of the petitioners on interpolation. It is submitted that even the learned Single Judge of this Court in Arbitration Petition (Lodg) No.2030 of 2015 filed under Section 14 of the Act, did not find that there was any ex-facie illegality and permitted the petitioners to raise this ground in Section 34 petition challenging the award. Learned Counsel for the respondent would submit that the arbitral tribunal has taken into consideration the documentary and oral evidence on record and has recorded findings on fact and has accordingly pronounced the award which completely in accordance with law. It is submitted that thus the petitioners have not made out any case for this Court to interfere in the impugned award on any of the grounds as specified under Section 34 of the Act. Discussion and Conclusion
22. I have heard the learned Counsel for the parties. I have also perused ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 18 carbp428-17.doc the record and the impugned award. It appears to be clearly not in dispute that the petitioners have availed loan from the respondent in two parts i.e. on 9 October 2012 a sum of Rs.5,49,84,932 and on 23 November 2012 a sum of Rs.12,46,00,000/-. There were further three more facilities. The total amount under these facilities due and payable to the respondent was Rs.21,06,87,404/-. It also appears to be not in dispute that to secure loan, the petitioners mortgaged certain assets in favour of the respondent, under a declaration cum confirmation deed dated 24 September 2012 declaring and confirming the mortgage by depositing title deed in respect of immovable properties. The petitioners were in default in making payment of the loan installments. Also the cheques issued by the petitioners towards installments were dishonoured and consequently a loan recall notice was also issued to the petitioners by the respondent.
23. At this stage it is pertinent to note that the respondent has moved a petition under Section 9 of the Act, before this Court being Arbitration Petition no.1118 of 2015, praying for appointment of a Court Receiver in respect of the mortgaged property and for handing over physical and vacant possession of the said property being interim measures pending the ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 19 carbp428-17.doc arbitral proceedings. The petitioners appeared in the said proceedings and interalia opposed the said petition on several grounds. One of the grounds being that the Court at Mumbai had no jurisdiction to entertain and try this Section 9 petition as the jurisdiction would vest with the Bhopal court. This was opposed by the respondent on the ground that at the relevant time, the petitioners were operating from its Mumbai office situated at Ground floor, Central Plaza, 166, CST Road, Kalina, Santacruz(East), Mumbai-400098. The respondent contended that the petitioners at the relevant time were operating from Mumbai and the facility agreement also was accordingly executed by the respondent through his branch office at Mumbai and the parties intended to confer jurisdiction on the Mumbai Courts and the venue of the arbitration proceedings to be at Mumbai. However, when it was noticed that the seat of arbitration and jurisdiction of the Courts was inadvertently inserted as Bhopal, the same was mutually corrected to make it at Mumbai. Accordingly, the constituted attorney of the petitioners made corrections and made signatures at both the places where the said correction was made from Bhopal to Mumbai. The learned Single Judge of this Court considering the material on record by an order dated 4 September 2015 held that the Court would have jurisdiction to ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 20 carbp428-17.doc entertain the said petition. The observations of the learned Single Judge of this Court are required to be noted which read thus:-
"32. It is submitted by the learned counsel for the petitioner that at the relevant time, the respondents was operating from its Mumbai office situated at Ground Floor, Central Plaza, 166, CST Road, Kalina, Santacruz (East), Mumbai 400 098. It is submitted that since both the parties at the relevant time were operating from Mumbai and since the facility agreement was also being executed by the petitioner through its branch office at Mumbai as also the parties intended to confer jurisdiction to Courts at Mumbai, the concerned representative noticed that the seat of arbitration and jurisdiction of the Courts was being inadvertently inserted by the respondent no.1 at Bhopal requested the respondent no.1 to have corrected the same. The constituted attorney of the respondent no.1 accordingly made corrections and then got inserted signatures at both the places where the said correction was made i.e. Bhopal to Mumbai.
33. Learned counsel for the petitioner submits that the claim of the petitioner is not denied by the respondents in the affidavit in reply. He submits that learned senior counsel has not addressed to this court on merits of the matter. The respondents have not even filed the written statement before the learned arbitrator though adjournments have been taken by the respondents for filing written statement. He submits that the respondents are delaying the outcome of the arbitral proceedings and thus interim measures as prayed by the petitioner be granted.
34. Learned counsel for the petitioner also invited my attention to the other two loan agreements entered into between the parties which were between the sister companies of the respondents and the petitioner which were also signed by the same signatory on behalf of the respondents thereby conferring jurisdiction of the court at Mumbai in case of any dispute between the parties.
REASONS AND CONCLUSIONS
35. I shall first decide the issue raised by the respondents whether this court has jurisdiction to entertain, try and dispose off the present petition or not.
A perusal of the agreement entered into between the parties and more particularly clauses 22.1 to 22.6 clearly indicates that the parties have agreed that the dispute between the parties ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 21 carbp428-17.doc shall be referred to the arbitration. The venue for conducting the arbitration proceedings shall be at Mumbai. The dispute shall be subject to exclusive jurisdiction of the courts in the city of Mumbai. A perusal of the record indicates that the respondents had raised the issue of jurisdiction before the learned arbitrator which has been already negatived by the learned arbitrator. The said arbitration proceedings are still pending before the learned arbitrator.
36. Be that as it may, it is not in dispute that at the relevant time, the respondents were operating from its Mumbai office situated at Santacruz (East), Mumbai 400098. The respondents have not denied that the agreement was signed and executed by the petitioner through its branch office at Mumbai. All processes of approval/sanction had taken place through the office of the petitioner located at Mumbai. In my view since the material part of the cause of action had arisen within the jurisdiction of this court, this court has jurisdiction to entertain, try and dispose off the present petition in view of the agreement entered into between the parties. The place of arbitration is at Mumbai. The parties have agreed that dispute shall be subject to the jurisdiction of the Court at Mumbai. This court has thus jurisdiction to entertain, try and dispose off the present petition."
(emphasis supplied.)
24. It needs to be noted that although an appeal [Appeal (Lodg) No.725 of 2015] was filed against the above order passed by the learned Single Judge, a perusal of the orders dated 18 November 2015, 15 December 2015 and 22 December 2015 passed by the Division Bench of this Court in the said appeal it is clear that the Division Bench considered the issue on leave under Clause 12 of the Letters Patent and as the property is situated outside Mumbai. Thereafter, by an order dated 14 June 2016 the Division Bench of this Court admitted the appeal. However there was no stay granted on the arbitral proceedings.
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25. As noted above in the arbitral proceedings the petitioners raised an objection to the jurisdiction of venue of the arbitration to be at Mumbai on the basis of an alleged interpolation. The learned arbitrator in the minutes of the meeting on 9 February 2018 has observed thus:-
"In my opinion, this issue cannot be resolved by arguments, but requires evidence to be led and an issue to be framed in this regard. However, prima facie I am of the opinion that the jurisdiction of the Courts and the Arbitral Tribunal is Mumbai, hence, I shall proceed with the Arbitration Proceedings. I shall also give a detailed reasoned order on the application dated 06.02.2015 filed before me on behalf of the respondents. The copy of my reasoned order will be served upon the Advocates for the Claimants and the Respondents respectively."
Accordingly, the learned arbitrator by an extensive order dated 8 July 2016 passed under Section 16 of the Act and considering the evidence as led by the parties which included the cross examination of the respondent's witness, recorded a finding that the venue of the arbitration was agreed by the parties to be at Mumbai and that the arbitral tribunal will have jurisdiction to entertain, try and dispose of the the arbitration proceedings. The findings in paragraphs 17 and 18 of the award reads thus:-
"17. From the Affidavit of Evidence of Mr.Madhav Mehta and from the answers given by Mr.Madhav Mehta in his Cross Examination as narrated in Paragraph-17 herein above, it becomes amply clear that though initially ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 23 carbp428-17.doc in Clauses 22.1 & 22.6, the word "Bhopal" was written, subsequently the Secretary of the Respondent no.1 in presence of Respondent No.1 and the Witness of the Claimants Mr.Madhav Mehta made the change from Bhopal to Mumbai in both Clauses 22.1 & 22.6 and the initials of the Respondents were placed in Clauses 22.1 & 22.6 after the changes from Bhopal to Mumbai were made. Hence, it is proved beyond doubt from the Evidence of Mr.Madhav Mehta that the Respondents have agreed to the Jurisdiction of the Courts to be Mumbai and have also agreed to the Venue of the Arbitration to be at Mumbai, as it is proved from the Evidence of Mr.Madhav Mehta that the Respondents have initialed the change from Bhopal to Mumbai and have therefore agreed to the change of Jurisdiction and the Venue of Arbitration to be at Mumbai.
18. From what is stated herein above, despite more than sufficient time being granted to the Respondents to file the Affidavit of Evidence of their Witness on the Limited Issue of Jurisdiction, the Respondents have intentionally failed to do so and hence have admitted that the change of Jurisdiction and Venue of Arbitration from Bhopal to Mumbai has been agreed upon by the Respondents. At this juncture, I would like to observe that all throughout the Arbitration Proceedings, the Respondents have raised oral as well as written contentions to the effect that as there is a fraud committed by the Claimants, I as the Arbitrator am not competent to decide the Issue of Fraud. In this context, after perusing the Evidence of the Witness of the Claimants, I am of the opinion that absolutely no fraud has been committed by the Claimants especially in view of the fact that the Respondents have never denied having executed the Facility Loan Agreement, the Respondents have all along only contended that the Claimants have unilaterally changed the Jurisdiction Clause and the Venue of Arbitration clause in the Agreement by changing it from Bhopal to Mumbai. Hence, at the most this could be considered as case of fabrication of documents and not fraud. From the Evidence of Mr.Madhav Mehta as stated in Clause-17 herein above, it has become amply clear that there is no fabrication made by the Claimants in the Facility Loan Agreement, on the contrary in my opinion from the Evidence of Mr.Madhav Mehta, it is proved beyond any element of doubt that the change from Bhopal to Mumbai in the Jurisdiction Clause and the Venue of the Arbitration Clause has been made by the Secretary of the Respondent No.1 in presence of the Respondent No.1 and Mr.Madhav Mehta and also that after the change has been made from Bhopal to Mumbai, the Respondents have signed at the places where the changes were made from Bhopal to Mukmbai. Hence the Respondents have clearly agreed to the Jurisdiction and Venue of Arbitration to be at Mumbai.
From what is stated herein above, I therefore pass the following order under Section 16 of the Arbitration and Conciliation Act,1996. ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 :::
pvr 24 carbp428-17.doc I hold that in view of the Respondents agreeing to the Venue of Arbitration being at Mumbai, I have jurisdiction to entertain, try and dispose off the present Arbitration Proceedings."
26. Thus considering the above clear findings of fact which are based on evidence, learned Counsel for the petitioners would not be correct in his first submission that the arbitral tribunal had no jurisdiction to have the venue of the proceedings at Mumbai and for this reason the proceedings stood vitiated. The learned Arbitrator has recorded findings of fact based on evidence that the parties by their own volition had made appropriate modification to change the venue and the jurisdiction of the Court to be at Mumbai and appropriate signatures in that regard on the corrections were made. These being findings recorded on evidence cannot be re-appreciated and/or interfered by this Court in its jurisdiction under Section 34 of the Act.
27. As regards the second submission that the respondent has failed to prove their claim, also cannot be accepted. There were documents on record clearly eliciting that the petitioners were beneficiary of the financial facilities and defaulted in repayment of the installments. These documents were proved in evidence, there is no material ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 25 carbp428-17.doc whatsoever as produced on behalf of the petitioners to prove that the loan documents i.e. the mortgaged document, the cheques which were issued by the petitioners in repayment, dishonoured of cheques, promissory notes, were not sufficient evidence of the loan facilities being granted by the respondent and availed by the petitioners and that a default was not committed in servicing the loan. Further it was never the case before this Court in Arbitration Petition No.1118 of 2015 and the other proceedings that the petitioners had not availed the loan from the respondent. Thus, the contention as urged on behalf of the petitioners that this is a case of no evidence before the learned Arbitrator to publish an award against the petitioner, cannot be accepted. A perusal of the detailed award clearly indicates that there was sufficient material and evidence on the basis of which the claims could be awarded. In fact it is clear that the petitioners despite several opportunities available to them had failed to file a written statement and contest the case of the respondent despite repeated opportunities being granted by the arbitral tribunal to that effect. The arbitral tribunal considering the efficacy of the arbitral proceedings in the circumstances was required to proceed without written statement. No fault can be found on this approach of the arbitral tribunal. It is also not ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 26 carbp428-17.doc the case that the petitioners were not aware of the legal consequence of such defaults. The petitioners have availed the financial facility for infusion of equity. The petitioners had abundant knowledge of the consequence of the transaction and the consequences of the default under the transaction. The petitioners also at all material times had eminent legal advisers as can be seen from the notices addressed to the learned arbitrator, reply filed before the learned arbitrator as also the proceedings before this Court under Section 9 of the Act and the appeal filed before the Division Bench of this Court as also the subsequent application filed under Section 14 of the Act. It clearly appears that when it comes to repayment of the loan amounts and on discharging their liability under the loan agreement the petitioners intended to take every possible untenable defence so that they avoid making payments of the loan amounts and interest due and payable thereon to the respondent.
28. To conclude it can be clearly seen from the record that the learned Arbitrator in the impugned award has taken into consideration the documentary and oral evidence in regard to the facility loan agreement and has come to a conclusion that unimpeachingly the petitioners were defaulters and were liable to pay the amounts as awarded being the ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 ::: pvr 27 carbp428-17.doc outstanding amounts under the financial facilities extended by the respondent under the loan agreement. The impugned Award is a well reasoned award dealing with every factual aspect in regard to the materials which were placed on record. There is appropriate discussion in regard to all the documents and the reasons which are set out in the award are thus required to be considered on the basis of appreciation of all this material which is clearly available in the discussion rendered by the arbitral tribunal prior to paragraph 46 of the award. The learned arbitrator has dealt with each and every contention as urged on behalf of the petitioners including the objection to the jurisdiction and the contentions on merits. No fault can be found in the approach of the arbitral tribunal so as to hold that the arbitral award is perverse or on no evidence and in any manner against public policy or any other ground falling under Section 34 of the Arbitration and Conciliation Act.
29. Resultantly the petition fails. It is accordingly dismissed, however being a commercial cause with cost of Rs.25,000/- to be paid by the petitioners to the respondent within a period of four weeks from today.
(G.S.KULKARNI, J.) ::: Uploaded on - 04/05/2019 ::: Downloaded on - 05/05/2019 00:31:50 :::