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2022 Supreme(Mad) 2768
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
Periyasamy & Another - Appellant
Versus
Hinduja Leyland Finance Limited, Rep. by its authorized Representative, Chennai - Respondent
Arb. O.P. (Com.Div.)No. 334 of 2022 & A. No. 3018 of 2022
Decided On : 08-08-2022
For the Petitioners:V. Jeyaprakasham, R.S. Jain Le Sadmar, Advocates.
The court emphasized the importance of providing a fair opportunity to parties in arbitration proceedings and applied the summary procedure for challenges to arbitral awards as provided in the MHC Arbitration Rules and Practice Directions.
Headnote:
Arbitration - Arbitration and Conciliation Act, 1996 - Section 34(2)(9)(ii) - MHC Arbitration Rules - Rule 8 - Clause 8.5
Fact of the Case:
The petitioners sought to set aside an arbitral award made without notice to them. The loan agreement contained an arbitration clause, and the impugned award was made in favor of the respondent for a sum of Rs.6,80,182/- with interest and costs. The petitioners challenged the award, alleging lack of notice and an ex parte award.
Finding of the Court:
The court found that the petitioners had been given multiple opportunities to participate in the arbitration proceedings, and the records showed that their counsel on record had appeared before the Arbitral Tribunal. The court dismissed the Arbitration Original Petition and the application, refraining from imposing costs but with a caveat for future cases.
Issues: The main issue was whether the arbitral award was made without notice to the petitioners, and whether the petitioners had been given a fair opportunity to participate in the arbitration proceedings.
Ratio Decidendi: The court applied Rule 8 of the MHC Arbitration Rules and Clause 8.5 of the Practice Directions, which provide for a summary procedure for challenges to arbitral awards. The court also considered the principles established in the Fiza Developers and Emkay Global cases, emphasizing that the challenge to an arbitral award is the main issue before the court.
Final Decision: The Arbitration Original Petition and the application were dismissed, with no order as to costs but with a caveat for future cases.
JUDGMENT
(Prayer: Arbitration Original Petition filed under Section 34(2)(9)(ii) of the Arbitration and Conciliation Act, 1996 praying to
(a) Set aside the Arbitral Award dated 22.04.2022 bearing NO.ACP No.HLF/SP/02 of 2021 passed by Mr.P.Suresh, Advocate / Arbitrator;
(b) Direct the respondent to pay the costs;)
1. This order will now dispose of the captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] and captioned application thereat.
2. This order has to be read in conjunction with and in continuation of earlier proceedings made in the first listing of the captioned Arb OP on 29.07.2022 which reads as follows:
'Mr.R.S.Jain Le Sadmar, learned counsel for petitioners submits that the impugned arbitral award being an award dated 22.04.2022 bearing Reference No.ACP.No.HLF/SP/02 of 2021 has been made without notice to the petitioners.
2. Registry to requisition the records of Arbitral Tribunal i.e., records pertaining to impugned award. To be noted, Arbitral Tribunal has been constituted by sole Arbitrator Shri P.Suresh, Advocate at Chennai with address at New No.6-B, Old No.11B, Ist Floor, Chandra Bagh Avenue, Ist Street, Mylapore, Chennai – 600 004. Sole Arbitrator to place the entire records of Arbitral Tribunal qua impugned award in a sealed envelop in the Registry and Registry shall place the same before this Court in the next listing. Registry to send a communication to the sole Arbitrator requisitioning the records in this manner forthwith.
List in the Admission Board 'Monday Week' i.e., on 08.08.2022.'
3. Today, Mr.V.Jeyaprakasham, learned counsel representing the counsel on record for two petitioners is before this Court.
4. Adverting to aforementioned earlier proceedings dated 29.07.2022, Mr.V.Jeyaprakasham, learned counsel submits that in the previous listing Mr.R.S.Jain Le Sadmar, counsel on record for petitioners was not before this Court and he only represented the matter. This submission is recorded and aforementioned 29.07.2022 proceedings shall be read accordingly.
5. Be that as it may, pursuant to the aforementioned earlier proceedings, records of 'Arbitral Tribunal' ['AT'] were requisitioned by the Registry and the same are before this Court.
6. Captioned Arb OP has been presented in this Court on 24.05.2022 assailing an 'arbitral award dated 22.04.2022 bearing ACP No.HLF/SP/02 of 2021' [hereinafter 'impugned award' for the sake of convenience and clarity] made by a sole Arbitrator who constituted AT.
7. Short facts are that the 'respondent' in captioned Arb OP [hereinafter 'HLFL' denoting 'Hinduja Leyland Finance Limited' for the sake of convenience and clarity] had given finance facilities for purchase of 3516 H vehicle [hereinafter 'said vehicle' for the sake of convenience and clarity] and for this purpose, 'loan agreement No.TNSLNM01943 dated 07.03.2018' [hereinafter 'primary contract' for the sake of convenience and clarity] was entered into between petitioners and respondent; that there is no disputation that this loan agreement contains an arbitration clause; that there was default in repayment, HLFL triggered the arbitration clause; that AT entered upon reference qua primary contract and AT sent notices to petitioners before this Court i.e., borrower and guarantor [hereinafter collectively 'borrowers' for the sake of convenience and clarity]; that AT after giving sufficient opportunities to borrowers to complete pleadings made the impugned award inter alia in favour of HLFL for a sum of Rs.6,80,182/- together with interest at the rate of 18% per annum and costs besides arbitrator's fee of Rs.3,000/- to be shared equally by both sides; that assailing the impugned award, captioned Arb OP has been presented in this Court by borrowers.
8. Though the point that borrowers were not put on notice by AT has not been raised in the Arb OP petition, this Court requisitioned records of AT vide the aforementioned proceedings dated 29.07.2022 by relying on the submis
