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2013 Supreme(Mad) 1545
High Court of Judicature at Madras
VINOD K. SHARMA, J.
M/s. Dhandapani Finance Ltd rep by its Assistant Manager (Legal) Chennai
Versus
B.T. Ravi & Others
A.No.1936 of 2010 & A.No. 5536 of 2012
Decided On : 08-04-2013
Failure to initiate arbitration proceedings as directed and illegal seizure and sale of the vehicle without permission
Headnote:
Arbitration and Conciliation Act - Seizure of Vehicle - Section 9
Fact of the Case:
M/s.Dhandapani Finance Limited seized a vehicle from the respondent due to non-payment of loan installments. The respondent claimed that the seizure was illegal and sought the return of the vehicle.
Finding of the Court:
The court found that the applicant failed to initiate arbitration proceedings as directed, and the seizure of the vehicle was not conducted in good faith. The court dismissed the application and ordered the finance company to compensate the respondent for the illegal seizure and sale of the vehicle.
Issues: Irregular loan payments, failure to initiate arbitration proceedings, illegal seizure and sale of the vehicle
Ratio Decidendi: The court held that custody of the vehicle by the Advocate Commissioner was legal custody, and the applicant's failure to initiate arbitration proceedings led to the dismissal of the application. The court also ruled that the seizure and sale of the vehicle without permission was illegal.
Final Decision: A.No.1936 of 2010 was dismissed with costs, and A.No.5536 of 2012 was allowed with modified relief for the respondent.
Vinod K. Sharma, J.
A.No.1936 of 2010:M/s.Dhandapani Finance Limited has moved this application under Section 9 of the Arbitration and Conciliation Act to appoint an Advocate Commissioner with a direction to seize 2006 Model Bajaj Tempo Traveller bearing Regn.No.TN-48-F-2553, Chassis No.T58018935A06 and Engine No.D18006391.
A.No.5536 of 2012:Mr.B.T.Ravi / applicant has moved this application under Section 9 of the Arbitration and Conciliation Act to direct the respondent / M/s.Dhandapani Finance Limited to return the schedule mentioned vehicle to the applicant, as the seizure and custody of vehicle with the respondent had become bad in law due to non compliance of the order dated 06.04.2010 passed by this Court in A.No.1936 of 2010.
A.No.1936 of 2010(M/s.Dhandapani Finance Limited vs. B.T.Ravi)
2. In support of the application, it is pleaded, that the applicant is a non banking company financial company having its retail finance division, which is engaged in the business of granting loan, hire purchase and leasing of industry equipment, machinery trucks and other equipment and vehicles.
3. The respondent approached the applicant's branch office at Trichy during the month of June, 2008 and requested for loan to purchase 2006 Model Bajaj Tempo Traveller. The respondent was advanced a loan of Rs.4,25,000/-(Rupees Four Lakhs and Twenty Five Thousand only) for purchase of Bajaj Tempo Traveller and the amount was agreed to be repaid back in 36 monthly installments of Rs.16,463/-(Rupees Sixteen Thousand Four Hundred and Sixty Three only) and the Tempo was hypothecated in favour of the applicant.
4. The submission of applicant is that the respondent was irregular in making payment, which resulted in foreclosing the account of applicant. It is pleaded, that on 28.02.2010, a sum of Rs.5,17,520.61 (Rupees Five Lakhs Seventeen Thousand Five Hundred Twenty and Paise Sixty One only) towards installments and additional finance charges were outstanding against respondent.
5. In the affidavit, it is stated, that the applicant has no other option but to raise dispute invoking arbitration clause to resolve the disputed. It is also pleaded, that applicant has been taking to appoint an Arbitrator.
6. This Court, in view of the averment made in the affidavit, passed an exparte order, appointing an Advocate Commissioner to seize the vehicle. While appointing Advocate Commissioner, directions were issued to the applicant to invoke arbitration clause within three weeks of the passing of order.
7. is now well settled law, that custody of vehicle by Advocate Commissioner is legal custody, which the applicant was supposed to retain till finalization of the arbitration proceedings.
8. Inspire of the specific directions by this Court, applicant has failed to initiate arbitration proceedings to adjudicate the dispute. Therefore, interim order passed by this Court deserves to be recalled in view of law laid down by the Hon'ble Supreme Court in Firm Ashok Traders vs. Gurumukh Das Saluja, AIR 2004 SC 1433.
9. The papers filed on record show, that it was only on 25.04.2010, that Mr.P.Madhan was appointed as Arbitrator, but this letter was not endorsed to the respondent and respondent was kept in dark about appointment of Arbitrator.
10. The respondent has also placed on record notice issued by the Advocate dated 23.12.2010, pointing out that the applicant has failed to comply with the direction issued by this Court to initiate arbitration proceedings.
11. The appointed Arbitrator did not proceed with the matter till December, 2010 because the applicant was unable to produce the original document to prove the claim. This itself shows the bias of the arbitration, as under law or acceptance of appointment, it was duty of the Arbitrator to enter reference and issue notice to both the parties and not act as agent of appointing party.
12. It is not understood under which law, the Arbitrator was to wait for the applicant to complete their papers e
