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2017 Supreme(Mad) 380
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. VIMALA, J.
T. Sadavisam Naveen Senthooran, S/o. Mr. Thiyagarajan - Petitioner
Vs.
M/s. Sundaram Finance Limited & Ors. - Respondents
Original Petition Nos.713 to 715 of 2016
Decided On : 21-03-2017
For the Petitioner in all O.Ps.: M/s. T. Nirmal Eswar.
For the Respondents in all O.Ps.: M/s. T. Srinivasa Raghavan & Associates.
The court emphasized the importance of upholding contract terms and providing parties with sufficient opportunity to present evidence in arbitration proceedings.
Headnote:
Arbitration - Loan Agreements - Section 34 of the Act
Fact of the Case:
The petitioner, a borrower, and guarantor were directed to pay sums to the financier for vehicles purchased under loan agreements. The borrower objected to the vehicles' quality and condition, but the arbitrator relied on the loan agreements' clauses. The petitioner did not adduce evidence despite opportunities and sought to set aside the awards.
Finding of the Court:
The court found that the petitioner was given sufficient opportunity to present evidence and that the objections raised were considered by the arbitrator. The court also rejected the petitioner's contention regarding the vehicles' quality and condition, stating it was against the contract terms and fundamental principles of law.
Issues: The issues involved the quality and condition of the vehicles, the petitioner's failure to adduce evidence, and the grounds for setting aside the awards under Section 34 of the Act.
Ratio Decidendi: The court held that the petitioner had sufficient opportunity to present evidence and that objections were considered by the arbitrator. It also emphasized that setting aside the awards based on mis-appreciation of evidence or mis-application of law was unsustainable.
Final Decision: The awards were confirmed, and the petitions challenging the awards were dismissed.
Awards, dated 23.01.2015, have been passed, which are under challenge in O.P.Nos.713 to 715 of 2015, wherein, in each of the Awards there is a direction to the borrower (petitioner herein) and the guarantor to pay sums of Rs.26,46,978.10, Rs.26,60,027.16 and Rs.28,21,001.10, respectively, to the first respondent / financier, with interest at 18% per annum, from 09.06.2014 till realization with costs, which includes the value of Non-Judicial Stamp Papers and fees / expenses of the Arbitrator.
2. A perusal of the awards passed by the learned Arbitrator would go to show that the claimant (first respondent herein) has initiated the Arbitration Proceedings, based upon the loan agreements, which were entered into between the first respondent and the petitioner towards purchase of the vehicles (three in numbers), Kamaz Vectra 6540, 2012 Model, from the dealer, M/s.Kamaz Vectra Motors Ltd., Hosur, of which, the second respondent herein stood as Guarantor. The vehicles remained hypothecated with the claimant in terms of the agreements.
2.1. The borrower had taken an objection that the vehicles were not road-worthy and that he was able to ply the vehicles only for two days. The learned Arbitrator relied upon Article 10 of the loan agreements, under which, the borrower was responsible for getting delivery of the asset from the manufacturer / dealer, after verifying fitness, quality condition, etc., Under clause 10 (2) of the agreements, the lender shall not be liable for any delay in delivering from the manufacturer or the dealer with regard to the quality / condition / fitness of the asset; on that ground, the borrower shall not withhold the payment of stipulated instalments, either on the ground that the asset has not been delivered or for any other reason, whatsoever.
3. The petitioner, though filed counter statements before the learned Arbitrator and after the filing of the rejoinder by the Financier, did not appear before the learned Arbitrator and adduce evidence.
3.1. Despite sufficient opportunity given, the petitioner herein did not choose to adduce evidence to substantiate the contentions raised in the counter statements. Yet, the learned Arbitrator has considered all the objections raised in the counter affidavits and has passed the Awards, in terms of the agreements entered into between the parties.
3.2. The incapacity of party, invalidity of the arbitration agreement, improper notice of proceedings, proceedings not in accordance with agreement are the few grounds on which the Award can be challenged and it will be appropriate to quote Section 34 of the Act, to have the grasp of the complete grounds on which, Award can be challenged:-
“Section 34 - Application for setting aside arbitral award.
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matter beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of th
