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2021 Supreme(Mad) 3196
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. Sundar, J.
Mr. R.S. Sekar and ors. - Petitioners
Versus
M/s. Capital First Limited and ors. – Respondents
O.P.Nos.238 and 239 of 2015
Decided On : 30-03-2021
Advocate Appeared:
For the Petitioner: Mr. S. Rajesh
For the Respondent: Mr. S. Sheik Ismail
Headnote:
Arbitration and Conciliation Act, 1996 - Sections 28(1)(a), 31(3), 34 and 34(2)(a)(iii) - Default in payment of EMIs - Loan Against Immovable Property Agreement – Arbitral Award set aside of - Alleging default in payment of EMIs i.e., repayment, CFL triggered arbitration clause in loan agreements and an 'Arbitral Tribunal' constituted by a sole Arbitrator was appointed by CFL. The sole Arbitrator, who constituted AT, has been arrayed as Respondent No.2 in senior and junior Ops - Held, The case of first respondent CFL itself is, petitioner had to pay certain specified number of EMIs, but had defaulted after paying some EMIs. Therefore, particularities as to number of EMIs paid / not paid would be basis for acceding to the claim of CFL and therefore, not giving those particulars vitiates impugned awards in terms of adequacy facet of reasoned award qua Section 31(3) of A and C Act, i.e., adequacy facet qua Dyna Technologies principle - It was violation of section 28(1)(a) of A and C Act. In this case, it is violation of section 31(3) of A and C Act. Owing to sheet anchor of the claim being default in EMIs or in other words, not paying the agreed number of EMIs, i.e., tenor, not mentioning details regarding EMIs paid / not paid, certainly goes to root of matter - OPs are allowed.
ORDER :
This common order will govern captioned two 'Original Petitions' ('OPs' in plural and 'OP' in singular for the sake of brevity). Captioned OPs have been filed assailing two separate arbitral awards.
2. For the sake of convenience and clarity, 'O.P.No.238 of 2015' shall be referred to as 'senior OP' and 'O.P.No.239 of 2015' shall be referred to as 'junior OP'. Senior OP is directed against an 'arbitral award dated 29.01.2015 made in Arbitration Case No.662 of 2014' (hereinafter 'first impugned award' for the sake of convenience) and junior OP is directed against an 'arbitral award dated 29.01.2015 made in Arbitration Case No.663 of 2014' (hereinafter 'second impugned award' for the sake of convenience). First impugned award and second impugned award shall be collectively referred to as 'impugned awards' for the sake of brevity.
3. Senior OP is pivoted on an agreement captioned 'LOAN AGAINST IMMOVABLE PROPERTY AGREEMENT dated 29.02.2012 bearing reference Agreement No.HE468999' (hereinafter 'loan agreement in senior OP' for the sake of convenience) and junior OP is pivoted on an agreement captioned 'LOAN AGAINST IMMOVABLE PROPERTY AGREEMENT dated 14.12.2010 bearing No.HE316624' (hereinafter 'Loan Agreement in junior OP' for the sake of convenience). To be noted, loan agreement in junior OP is prior in point of time. 'Loan agreement in senior OP' and 'loan agreement in junior OP' shall be collectively referred to as 'loan agreements'.
4. In and by loan agreement in junior OP, which is prior in point of time, petitioners in junior OP were advanced Rs.64,00,000/- housing loan against security (immovable property) wherein and whereby petitioners had mortgaged a immovable property in favour of the finance company i.e., 'Capital First Limited' ('CFL' for the sake of brevity). This Rs.64,00,000/- loan under loan agreement in junior OP was to be repaid in 180 Equated Monthly Installments' ('EMIs' in plural and 'EMI' in singular for the sake of convenience) of Rs.84,160/- each. In and by loan agreement in senior OP which is later in point of time, a further sum of Rs.20,00,000/- was advanced by CFL to the petitioners in senior OP (to be noted, petitioners 1 and 2 in senior and junior OPs are the same, but in senior OP there is a third petitioner). This Rs.20,00,000/- loan vide loan agreement in senior OP had to be repaid in 167 EMIs of Rs.27,593/- each. This was also secured by mortgage of immovable property.
5. There is no disputation or disagreement before this Court that the security i.e., immovable property which has been mortgaged, is subsisting.
6. Be that as it may, alleging default in payment of EMIs i.e., repayment, CFL triggered the arbitration clause in the loan agreements and an 'Arbitral Tribunal' ('AT' for the sake of brevity) constituted by a sole Arbitrator was appointed by CFL. The sole Arbitrator, who constituted the AT, has been arrayed as Respondent No.2 in senior and junior OPs. This Court following the procedure adopted by Hon'ble Supreme Court in Vinay Heavy Equipments case [Zonal General Manager, Ircon International Limited Vs. Vinay Heavy Equipments reported in (2015) 13 SCC 680] deletes the second respondent from the array of parties in both senior and junior OPs (to be noted, deletion procedure is captured in order reported in 2007 SCC OnLine SC 4) and this is owing to the nature of the grounds urged in petitioners' campaign against impugned awards.
7. AT was admittedly appointed vide a letter dated 21.08.2014 from CFL. AT entered upon reference, issued notices, first petitioner in senior and junior OPs went before AT and ultimately impugned awards came to be made. It is not necessary to dilate further on these aspects of the matter owing to the short and narrow compass on which the matter turns now.
8. Notwithstanding very many averments and very many grounds raised in senior OP and junior OP, Mr.S.Rajesh, learned counsel for petitioners in both OPs restricted his submissions to two points and those two points
