O R D E R

The revision petitioners herein are the plaintiffs in the suit in O.S.No.1906 of 2016, on the file of VIII Asst. Judge, incharge of VII Asst. City Civil Court, Chennai. They have filed the suit against the defendants 1 to 4 for the relief of declaration to declare the notices dated 17.03.2016 issued by the 1st defendant in respect of two trucks bearing Regn. Nos. TN-23 AK 2255 and TN 23 AK-2266 are null and void and consequently restraining the 1st defendant from proceeding against the plaintiffs including the sale of trucks and other consequential reliefs.

2. In the said suit, notices and summons were issued. On receipt of summons, the 1st defendant Hinduja Leyland Finance Ltd. filed an application in I.A.No.12942 of 2016 under Sec.8 and 5 of the Arbitration and Conciliation Act praying the court to refer the petitioner and the respondent to the arbitration proceedings under Sec.8 of Arbitration and Conciliation Act. In that application, the contention of 1st defendant is that the plaintiffs 1 and 2 approached the 1st defendant for obtaining a vehicle loan and they have entered into an agreement under Ex.P1 and as per clause 22 of the Agreement, which contains arbitration clause. As per clause 3.1 of loan agreement, the asset is hypothecated to the petitioner herein as a security for the repayment of loan amount and as per clause 22 of the said agreement, all disputes, differences and/or claim arising out of or in connection with the loan agreements shall be settled by arbitration.

Accordingly, as per Ex.P1, which is a loan agreement entered into between the plaintiff and 1st defendant, they can invoke Sec.8 of Arbitration Act. Hence, the suit, as such is not maintainable and prayed to refer the matter for arbitration.

3. Per contra, the learned counsel for revision petitioners/plaintiffs contended that there was an agreement of hypothecation between them and the 1st defendant for availing finance and subsequently, in order to discharge the loan, there was another agreement with the 2nd defendant Sampathkumar, who assured to clear the dues to the 1st defendant. As per the negotiation, the 2nd defendant agreed to pay the balance dues to the 1st defendant. Accordingly, the dispute was resolved. So, the plaintiffs are not entitled to pay any dues to the defendants 3 and 4 viz., M/s.Sundaram Finance Ltd. But, they have falsely issued notice as if the plaintiffs are liable to discharge the dues. Therefore, they have filed a suit stating that after the execution of hypothecation agreement, there was a change in circumstances. Accordingly, the 2nd defendant Sampathkumar, entered into agreement with the 3rd and 4th defendants. Hence, the Arbitration and Conciliation Act cannot be invoked. Accordingly, they prayed to dismiss this Civil Revision Petition.

4. On considering submissions of both sides, the trial judge held that as per the hypothecation agreement, the plaintiffs obtained loan to purchase two trucks from the 1st defendant and entered into agreement Ex.P1. On perusal of clause 22, if there is any dispute, it should be referred to arbitration. Accordingly, the said application was allowed. Challenging the said findings, the plaintiffs filed the present Civil Revision Petition.

5. The learned counsel for Revision Petitioners argued that the trial court failed to take note of the fact that after entering into hypothecation agreement, Ex.P1, the 2nd defendant agreed to settle the dues and as per the submission of 1st defendant, the 2nd defendant entered into such agreement with the defendants 3 and 4. Accordingly, he paid certain dues. Subsequently, due to the said change of circumstances, the arbitration clause cannot be invoked as per Ex.P1 hypothecation agreement. But, the trial court failed to take note of the said fact. In support of their contentions, they relied on the authority reported in 2003 (2) CTC 431 in the case of Sukanya Holdings Pvt. Ltd. vs. Jayesh H. Pandya and another, wherein Hon'ble Apex Court held a