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2023 Supreme(Online)(MAD) 20781

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.10.2023 CORAM :

THE HONOURABLE MR.JUSTICE C.SARAVANAN Arb.O.P.(Com.Div.)No.71 of 2023 M/s.Shriram City Union Finance Limited, (Presently Shriram Finance Limited), Represented by its Authorized Representative Pugazenthi.V, Senior Manager, Having Regional Office at No.114, Suriyavel Tower, Near Balaji Theatre, Kamaraj Salai, Puducherry - 605 011. ... Petitioner Vs.

1.S.Kavitha, W/o.K.Selvam

2.Subash Chandra Bose (Minor)

S/o (late) K.Selvam Represented by his Mother & Guardian S.Kavitha ... Respondents Prayer: Original Petition is filed under Section 11(5) of the Arbitration and Conciliation Act, 1996, praying to appoint a sole Arbitrator under Section 11(5) of the Arbitration and Conciliation Act to adjudicate the dispute between the petitioner and the respondents as per Clause No.17 of the Loan/Hypothecation Agreement dated 26.10.2023 entered between the petitioner and the respondents.

For Petitioner : Mr.T.Karthi for M/s.Aiyar and Dolia For Respondents : Mr.T.P.Manoharan Senior Counsel

ORDER

The petitioner has filed this Original Petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator.

2. The petitioner herein had earlier issued a Pre-Arbitration Notice dated

10.04.2015 to the first respondent's husband and to the first respondent, who had borrowed a sum of Rs.10,00,000/- from the petitioner's company.

3. It appears a loan for Rs.10,00,000/- was advanced by the petitioner to Late K.Selvam, husband of the first respondent/father of the second respondent. The first respondent stood as a guarantor for the loan advanced to Late K.Selvam. The said loan was to be repaid within a period of 36 equated monthly instalments.

4. The loan is secured by an Equitable Mortgage Deeds/by Deposit of Title Deeds dated 18.10.2023, which has also been registered before the Sub- Registrar, Thirukanur vide Document No.2499 of 2013. It appears that the first respondent husband Late K.Selvam serviced the loan up to a particular point of time.

5. In view of the above, a Pre-Arbitration Notice is said to have been issued on 10.04.2015 purportedly under Section 21 of the Arbitration and Conciliation Act, 1996. The said notice was also sent to the first respondent.

6. The arbitrator appointed by the petitioner proceeded to pass an Award on 08.10.2015. The award was challenged by Late K.Selvam and by the first respondent, who stood as a guarantor before the Principal District Judge at Puducherry in O.P.No.13 of 2016.

7. During the pendency of Arbitration O.P.No.13 of 2016 before the learned Principal District Judge at Puducherry, the first respondent husband/father of the second respondent died on 05.12.2016. The learned Principal District Judge at Puducherry, allowed the Arbitration O.P.No.13 of

2016 by holding that there were large scale irregularities committed in the initiation of the arbitral proceedings as the Pre-Arbitration Notice dated 10.04.2015 was not received by Late K.Selvam, the deceased husband of the first respondent/father of the second respondent and that there were no service of notice as is contemplated under Section 21 of the Arbitration and Conciliation Act, 1996 on the first respondent.

8. The petitioner had challenged the above order dated 25.02.2020 passed by the learned Principal District Judge at Puducherry in Arbitration O.P.No.13 of 2016 before this Court in C.M.A.No.1395 of 2020.

9. The Principal District Judge at Puducherry after considering the arguments advanced by the learned counsel for the petitioner (appellant therein) and the learned Senior Counsel for the respondents herein (respondents therein)

dismissed the C.M.A.No.1395 of 2020 vide order dated 13.05.2021.

10. The Court found certain discrepancies in the date of the loan agreement. The Court also concluded that it was highly improbable that the Pre-Arbitration Notice dated 10.04.2015 would have been received by the deceased borrower on 01.05.2015.

11. Relevant portion of the order dated 13.05.2021 of the learned Single Judge of this Court in C.M.A.No.1395 of 2020 upholding the order of the learned Principal District Judge in Arbitration O.P.No.13 of 2016 reads as under:-

"21. Heard the counsels and perused the records.

22. The primary objection that has been put forward by the claimant/appellant to the order under appeal is that the learned Principal District Judge, Puducherry has erroneously recorded the evidence when there is no scope for the same. In order to answer the above, it is necessary to briefly recapitulate the basis of the claim. The claimant has invoked the arbitral clause in the agreement between the claimant and the respondents. Dispute had arisen in respect of payment of the dues. The claim statement in very clear terms would mention the date of agreement as 26.10.2013. The claimant would also state that on the same day the demand promissory note and post dated cheques had been issued. Further the list of documents filed along with the claim would also indicate the date of the agreement as 26

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