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2022 Supreme(Gau) 1407

IN THE HIGH COURT OF GAUHATI
Devashis Baruah, J.
Mukut Kalita - Appellant
Versus
Hdfc Bank Ltd - Respondent
CRP No. 71 of 2022
Decided On : 20-07-2022

Advocates:
Advocate Appeared:
I.Choudhury, Advocate, A.A. Choudhury, Advocate, M. Sharma, Advocate

Compliance with Sec. 31(5) of the Act of 1996 regarding the delivery of the arbitration award to each party is crucial in commencing the period of limitation for filing objections under Sec. 34(3) of the Act of 1996. The executing court has the jurisdiction to decide on compliance with Sec. 31(5) of the Act of 1996.

Headnote:

Arbitration Award - Compliance with Sec. 31(5) of the Act of 1996 - Sec. 31(5), Sec. 34(3), Sec. 3 - The court found that the arbitration award was not delivered to the petitioner as required by Sec. 31(5) of the Act of 1996. The court emphasized the importance of the delivery of the signed copy of the award to each party and the legal fiction created by Sec. 3(1) regarding the receipt of written communications. The court also highlighted the significance of compliance with Sec. 31(5) in commencing the period of limitation for filing objections under Sec. 34(3) of the Act of 1996. The judgment emphasized the necessity of evidence to show the delivery or attempt to deliver the award to the party, and the court held that the executing court has the jurisdiction to decide on compliance with Sec. 31(5) of the Act of 1996.

Fact of the Case:

The petitioner, a guarantor for a loan, challenged the execution proceedings, claiming that the arbitration award was not delivered to him as required by Sec. 31(5) of the Act of 1996. The petitioner alleged that he only learned about the arbitration proceedings and the award in 2018, and as no signed copy of the award was furnished, he was unable to file an application under Sec. 34 of the Act of 1996. The respondent contended that the award was duly delivered to the petitioner's address as per the loan agreement.

Finding of the Court:

The court found that the arbitration award was not delivered to the petitioner as required by Sec. 31(5) of the Act of 1996. The court emphasized the importance of compliance with Sec. 31(5) in commencing the period of limitation for filing objections under Sec. 34(3) of the Act of 1996. The court held that the executing court has the jurisdiction to decide on compliance with Sec. 31(5) of the Act of 1996.

Issues: The main issue was whether the arbitration award was delivered to the petitioner as required by Sec. 31(5) of the Act of 1996, and whether the executing court had the jurisdiction to decide on compliance with Sec. 31(5).

Ratio Decidendi: The court emphasized the necessity of evidence to show the delivery or attempt to deliver the award to the party, and the legal fiction created by Sec. 3(1) regarding the receipt of written communications. The court held that the executing court has the jurisdiction to decide on compliance with Sec. 31(5) of the Act of 1996.

Final Decision: The impugned order was set aside, and the case was remanded to the executing court to decide afresh the objections filed by the petitioner under Order XXI Rule 26 read with Sec. 47 of the Code in the light of the observations made by the court.

JUDGMENT :

DEVASHIS BARUAH, J.

Heard Mr. I Choudhury, the learned senior counsel assisted by Mr. A Chowdhury, the learned counsel appearing on behalf of the petitioner and Mr. M Sharma, learned counsel appearing on behalf of the respondent, HDFC Bank Ltd.

2. This is an application under Article 227 of the Constitution challenging the order dtd. 27/4/2022 passed by the Court of the Additional District Judge No.1, Kamrup (M) in Money Execution Case No.241/2016, whereby the objection filed by the petitioner was rejected. By way of the instant proceedings, the petitioner had also challenged the Money Execution Case No.241/2016.

3. The facts of the instant case is that the one Santanu Narayan Bora (since deceased) had taken a loan from the respondent Bank on 28/8/2012 amounting to Rs.9,50,000.00for purchase of a vehicle i.e., Eicher 11.10 HD RHDH bearing Registration No.AS-01-EC-0592. For the purpose of securing the said loan, late Santanu Narayan Bora had requested the petitioner to be the guarantor for the said loan. The petitioner being acquainted with late Santanu Narayan Bora agreed to such request and accordingly became the guarantor of the loan amount of Rs.9,50,000..00 Accordingly, an agreement was executed between late Santanu Narayan Bora and the respondent Bank on 28/8/2012, wherein the petitioner stood as a guarantor.

4. It is the further case of the petitioner that the petitioner lost contact with late Santanu Narayan Bora and was completely unaware about any dealings with late Santanu Narayan Bora and the respondent Bank. In the year 2018, the petitioner received a notice dtd. 6/11/2017 issued by the Additional District and Sessions Judge No.4, FTC Kamrup Metro, Guwahati in Money Execution Case No.241/2016, whereby the petitioner was directed to appear before the said Court. The petitioner on receipt of the said notice entered appearance in the said Money Execution Case. Upon entering appearance in the said case, the petitioner alleges that for the first time he came to learn about the fact that late Santanu Narayan Bora had defaulted in making payment of the loan in respect to which the petitioner was the guarantor. The petitioner also came to learn for the first time that upon such default made by late Santanu Narayan Bora, the respondent Bank had appointed an arbitrator and an arbitral award dtd. 23/5/2012 was passed, which directed payment of a sum of Rs.6,98,325.64 to the Respondent Bank jointly and severely by the petitioner and the late Santanu Narayan Bora. The petitioner thereafter tried to contact late Santanu Narayan Bora however, without any success. The petitioner thereafter upon further enquiry came to learn that the vehicle in question was infact stolen on 25/3/2014 and accordingly, an FIR was also lodged in West Police Station, Dimapur on 25/3/2014.

5. Thereafter, the petitioner filed an application under Sec. 47 read with Order XXI Rule 26 of the CPC in Money Execution Case No.241/2006. In the said objection filed on 31/6/2018, it was the specific case of the petitioner that no copy of the award as is mandatorily required under Sec. 31 (5) of the Arbitration and Conciliation Act, 1996 (in short, "the Act of 1996") was served upon the petitioner for which the petitioner was not in a position to file an application under sec. 34 for setting aside the award. It was the further contention of the petitioner that the award could be put to execution and/or enforced only after the lapse of 3 (three) months from the date of receipt of the said award in terms with Sec. 31 (5) of the Act of 1996 and in the instant case as the said award was not furnished to the petitioner, the filing of the application under Sec. 36 of the Act of 1996 read with Order XXI by the respondent was premature and not maintainable. On the basis thereof, the petitioner sought for rejection of the application filed by the respondent under Order XXI on being defective and premature in nature.

6. To the said objection-cum-application filed by

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