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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S.J. MUKHOPADHAYA & THE HONOURABLE MR. JUSTICE M. VENUGOPAL
M/s. Mil Merin Gas Agencies & Another
Versus
M/s.TVS Finance & Services Ltd. & Another
O.S.A.NO.55 OF 2007
Decided on : 13-02-2008
Arbitration and Conciliation Act - Jurisdiction - Section 9
Fact of the Case:
The case involved a dispute over the sale of land and the jurisdiction of the court to pass orders under Section 9 of the Arbitration and Conciliation Act, 1996. The appellant challenged the order allowing the sale of land to the 2nd respondent.
Finding of the Court:
The court found that the orders passed by the learned Judge for the sale of the immovable property were without jurisdiction and declared them illegal. The court also rejected the objection of res judicata raised by the respondents.
Issues: The main issues were the jurisdiction of the court to pass orders under Section 9 of the Arbitration and Conciliation Act and the applicability of the principle of res judicata.
Ratio Decidendi: The court held that an order passed without jurisdiction is a nullity and cannot be protected by the principle of res judicata. The court also emphasized that Section 9 of the Act provides for interim measures of protection and not all-time or permanent protection.
Final Decision: The court set aside the order for the sale of the immovable property and declared all earlier orders for the sale as illegal. The appeal was allowed, and the court directed the learned Judge to pass appropriate orders for the refund of any deposited amount by the 2nd respondent.
S.J. Mukhopadhaya, J.
This appeal has been preferred by M/s.Mil Merin Gas Agencies (hereinafter referred to as M/s.Mil Merin) against the order dated 6th March, 2007, passed by learned Judge in Application No.1569/04 in Application No.800/03. By the said order, Advocate Commissioner has been allowed to sell the land measuring an extent of 12.22 acres in
S. No.12/1A, 1C, 1A2 located at Valparai Village, Valparai Taluk, Annamalai Hills, Coimbatore District to the 2nd respondent, R.Muralikrishnan.
2. The appellant has raised the question of jurisdiction of learned single Judge to pass such order u/s 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act).
On the other hand, according to counsel for the respondents, the appeal is barred by principle of res judicata, the earlier order appointing advocate commissioner for sale of property in question having reached finality.
3. For determination of the issues, it is necessary to discuss all the facts, except the relevant ones as shown hereunder.
Pursuant to an agreement reached on 9th Sept., 1999, the 1st appellant, M/s.Mil Merin, obtained a sum of Rs.25 lakhs from Harita Finance Ltd., (HFL), the respondent in the present case with the changed name of M/s.TVS Finance & Services Ltd., (hereinafter referred to as M/s.TVS Finance). Demand promissory notes were executed; letters of guarantee were executed by 2nd appellant Ms.Mercy Rajan and another S.P.Rajan; the title deeds of immovable property belonging to S.P.Rajan and the 2nd appellant, Ms.Mercy Rajan were also deposited with the 1st respondent as security in the event of non-payment of loans. Letters were sent by the 1st respondent from time to time showing the particulars of loan availed by the 1st appellant, M/s.Mil Merin, who agreed to extend the security over the immovable property for receiving further amount of Rs.25 lakhs apart from the earlier loan. Further agreement was entered into on 2nd Nov., 1999 in that regard. Fresh demand promissory note was executed in favour of M/s.Mil Merin; again letter of guarantee was executed for such further loan amount of Rs.25 lakhs by S.P.Rajan and Mercy Rajan in favour of the 1st respondent on 2nd Nov., 1999.
On 4th Oct., 2000, the 1st respondent, M/s. TVS Finance asked the 1st appellant, M/s.Mil Merin to pay dues of Rs.44,36,716.67 immediately as full and final settlement. In reply, M/s.Mil Merin forwarded letter promising to liquidate the entire dues by 15th Sept., 2000, which was followed by correspondence asking for more time. Pursuant to a letter of the 1st respondent dated 14th Sept., 2000, M/s.Mil Marine forwarded two post-dated cheques total amounting to Rs.5 lakhs. In reply, the 1st respondent, by letter dated 23rd Oct., 2000, stated that the sum of Rs.2.5 lakhs paid by M/s.Mil Merin for the month of Oct., 2000, was not sufficient and asked it to settle the matter by the end of the month with one time settlement for Rs.16,49,460/=. Inspite of undertaking given by M/s.Mil Merin to liquidate its outstanding amount by Jan., 2001, the 1st appellant having failed to repay the amount, executed a registered power of attorney in March, 2001, for the immovable property in favour of the 1st respondent, possession of which was also handed over.
The 1st respondent filed an application u/s of the Arbitration and Conciliation Act, 1996, on 14th Dec., 2002, before this Court in O.A. No.842/02 for interim injunction and application No.5072/02 was filed for appointment of advocate commissioner to ensure sale of property in question. Notice was issued on M/s.Mil Merin, the 1st appellant, which having not appeared, the Court, vide order dated 27th Feb., 2003, allowed the application and appointed one Mr.S.M.Sambath as advocate commissioner to call for offers and sell the immovable property on or before 24th April, 2003 through the Court. Advertisement was published in the newspaper, Coimbatore edition on 26th April, 2003, calling for offers for purchase of
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