IN THE HIGH COURT OF MADRAS
N. Sathish Kumar, J.
Flywheel Logistics Solutions Pvt. Ltd. – Appellant
Versus
Hinduja Leyland Finance Ltd. and Ors. – Respondents
C.M.A. Nos. 25 to 28, 30, 66 to 88 of 2020, C.M.P. Nos. 271, 273, 275, 277, 289, 617 to 621 and 623 to 640 of 2020
Decided On : 17-09-2020
Arbitration and Conciliation Act - Section 17 - Civil Procedure Code, 1908 - Order 40 - Loan agreements - Nonpayment of - Orders passed by arbitrator to seize vehicles - Challenged - Appellant by various loan agreements has availed loan to purchase vehicles from the respondent. As there was default in repayment of installments, respondents invoked arbitration clause provided under agreement - Accordingly, a notice has been sent invoking arbitration indicating various nature of contract entered between parties and default committed by respondent and amount due thereon - Respondent has also nominated Advocate as an Arbitrator and respondent has also requested appellant to settle dues in an amicable manner. Pursuant to above notice, so called arbitrator issued notice fixing hearing dated of arbitration - Held, Whenever receiver is appointed in respect of property, he has to furnish security as court thinks fit, duly to account for what he shall receive in respect of property and submit his accounts at such periods and in such form as Court directs and pay amount due from him as Court directs and be responsible for any loss occasioned to property by his wilful default or gross negligence - A reading of above provision makes it clear that mechanically receiver cannot be appointed to deal with property - Therefore, Order of tribunal is capable of execution as a decree of a civil Court, arbitral tribunal has to follow the procedures as contemplated under law - This Court also place on record of appreciation to Mr. Sharath Chander, Amicus Curiae placing various judgments of the Apex Court referred above - Civil Miscellaneous Appeals are allowed.
JUDGMENT :
N. Sathish Kumar, J.
1. These Civil Miscellaneous Appeals have been filed challenging the interim Orders passed by the learned arbitrator to seize the vehicles.
2. Since, the dispute is said to have been arisen in hire purchase agreements, in respect of around 28 trucks, entered between the parties on 30.09.2017 and the fact that in all the appeals, similar disputes have arisen out of the hire purchase agreements, though styled as a different contract, as the matter involves one and same and similar to each other, this Court is inclined to dispose of all the appeals in a Common Judgment.
3. These Civil Miscellaneous Appeals have been filed challenging the Order of the learned arbitrator under section 17 of the Arbitration and Conciliation Act to seize the vehicle.
4. Brief facts leading to filing of these appeals are as follows:
The appellant by various loan agreements dated 30.01.2017 has availed loan to purchase vehicles from the respondent. As there was default in repayment of the instalments, the respondents invoked arbitration clause provided under the agreement. Accordingly, a notice has been sent invoking arbitration dated 14.09.2019 indicating various nature of contract entered between the parties and default committed by the respondent and the amount due thereon. The respondent has also nominated Mr. Samuel, Advocate as an Arbitrator and the respondent has also requested the appellant to settle the dues in an amicable manner. Pursuant to the above notice, the so called arbitrator issued notice dated 23.11.2019 fixing the hearing dated of arbitration on 09.12.2019. While issuing notice indicating the hearing date on 09.12.2019, the learned arbitrator appears to have received a claim petition on 23.11.2019 and an application under section 17 of the Arbitration and Conciliation Act and passed interim Orders to seize the vehicles on the same day.
5. It is to be noted that the arbitration hearing date has been fixed on 09.12.2019. In all the matters, a cyclostyle order has been passed by the learned arbitrator appointing an employee of the respondent as a receiver to seize the vehicles. Pursuant to the said Order, it appears that more than 26 trucks were said to have been seized and kept idle from 02.12.2019. Challenging the interim Orders passed by the learned arbitrator, the present appeals have been filed.
Heard the learned counsel appearing for the appellant and the respondents and Mr. Sharath Chandar, Amicus Curie.
6. It is appropriate to set out the framework of Sections 9 and 17 of the Act and to examine their scope, object and purpose, for consideration of the following interim measures
A. Interim Injunctions
B. Appointment of Receiver
C. Seizure of Vehicles
D. Power to order sale
E. Furnishing Security pending arbitral proceedings
7. Ideally, the handling of arbitral disputes should resemble a relay race. In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the court; for at that stage there is no other organisation which could take steps to prevent the arbitration agreement from being ineffectual. When the arbitrators take charge they take over the baton and retain it until they have made an award. At this point, having no longer a function to fulfil, the arbitrators hand back the baton so that the court can in case of need lend its coercive powers to the enforcement of the award.
8. SECTION 9 OF THE ARBITRATION AND CONCILIATION ACT, 1996 reads as follows:
Section 9 of the Act empowers the Court to grant interim measures in three stages i.e., (a) before the commencement of arbitral proceedings (b) during the arbitral proceedings and
(c) at any time after the making of the arbitral award but before it is enforced under Section 36 of the Act.
9. The principles governing the exercise of power under Section 9 are no longer res-integra. The locus classicus is the decisio
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