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J. Jayakar v/s M/s.G.E.Money Financial Services Pvt., Ltd., Rep. by its Managing Director, Chennai & Another

    O.P. No. 480 of 2012

    Decided On, 20 July 2018

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE

    For the Petitioner: P.C. Hari Kumar, Advocate. For the Respondents: R1, No Appearance.



Judgment Text

(Prayer: Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the ex parte award passed by the 2nd respondent in Arbitration Case No.LA_GE_ARB-OCTOBER 10-2503/20 and direct the respondents to pay the cost of the petition.)

1. The instant petition has been filed under section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Award dated 05.03.2012 passed against the petitioner.

2. The brief

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facts leading to the filing of the instant petition are as follows:

The petitioner availed a personal loan for a sum of Rs.3,00,000/- from the first respondent, under a loan agreement dated 04.07.2006. According to the first respondent, the petitioner committed default in the repayment of the loan. There arose disputes between the parties and said dispute was referred to arbitration by the first respondent by appointing the second respondent as the sole arbitrator. The Second respondent/Sole Arbitrator acted upon the reference and passed the Arbitral Award dated 05.03.2012, directing the petitioner to pay the first respondent a sum of Rs.1,75,263/- together with interest and costs.

3. Aggrieved by the Arbitral Award dated 05.03.2012, the instant petition has been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996.

4. Heard Mr.P.C.Hari Kumar, learned counsel for the petitioner. Despite service of notice on the first respondent and the name of the first respondent having been printed in the cause list today, there is no representation on the side of the first respondent.

5. The learned counsel for the petitioner submitted that the main ground raised by the petitioner for challenge in the instant petition is that no notice was received by the petitioner in the arbitral proceedings. The learned counsel for the petitioner drew the attention of this Court to the findings of the Arbitrator and submitted that the Arbitrator has fixed the first date of hearing on 27.11.2010. According to the learned counsel, as seen from the findings of the Arbitrator neither the returned cover nor the acknowledgement card for having served the notice on the petitioner was referred to in the findings of the Arbitrator in order to come to the conclusion that the notice was served on the petitioner or not. Thereafter, the Arbitrator has adjourned the hearing to 26.02.2011. On 26.02.2011, the petitioner has been set ex-parte by the Arbitrator. According to the learned counsel, there is no reference to any acknowledgement card or returned cover for having served the notice for the hearing on 26.02.2011 by the Arbitrator. Despite no proof being referred to in the arbitral proceedings, the Arbitrator has set the petitioner ex parte. According to the petitioner, no notice was received by the petitioner from the Arbitrator.

6. The next submission made by the learned counsel for the petitioner is that no part of cause of action arose at New Delhi and therefore, New Delhi cannot be a venue for arbitration. According to the learned counsel for the petitioner, the petitioner received the loan amount from the first respondent branch office at Chennai and the money was also disbursed only at Chennai and the petitioner made the part payments to the first respondent only at Chennai. Therefore, according to him, since no part of cause of action took place at New Delhi, the venue for Arbitration cannot be at New Delhi.

7. The next submission made by the learned counsel for the petitioner is that the loan was not recalled by the first respondent and no notice of demand was received by the petitioner from the first respondent calling upon him to pay the outstanding amount.

8. This Court, after considering the materials available on record and after hearing the submissions of the learned counsel appearing for the petitioner is of the considered view that no notice was received by the petitioner in the arbitral proceedings. The Arbitrator has also not mentioned in his finding whether any acknowledgement card or returned cover was received from the petitioner for having delivered the notice to the petitioner in the arbitral proceedings.

9. This Court also finds from the materials available on record that the entire part of cause of action arose only at Chennai, since the petitioner is residing at Chennai and the loan was also disbursed at Chennai from the first respondent branch office at Chennai. The part payments were also made only at Chennai by the petitioner to the first respondent.

10. Therefore, this Court is of the considered view that the findings of the arbitrator are perverse and the Award which is under challenge is patently illegal.

11. In the result, the instant Original petition is allowed and the Award dated 05.03.2012 passed against the petitioner is set aside. However, there shall be no order as to costs.
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