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K. Muthukumarasamy v/s Shriram City Union Finance Ltd., Chennai & Another

    O.P. No. 92 of 2015

    Decided On, 19 July 2018

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE

    For the Petitioner: B.R. Shankaralingam, Advocate. For the Respondents: R1, K.V. Ananthakrishnan, Advocate.



Judgment Text

(Prayer: Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the award dated 08.05.2014 made in A.C.P.No.(SCUF/CAR) 623/2011 passed by the 2nd respondent)

1. The instant petition has been filed under section 34 of the Arbitration and Conciliation Act, 1996 challenging the Award dated 08.05.2014 passed against the petitioner.

2. The brief facts leading to the filing of the instant petition are as follows:

The petitione

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r entered into a loan agreement dated 13.11.2008 with the first respondent and availed a loan of Rs.50,000/- which has to be repaid along with interest to the first respondent in installments. According to the first respondent, the petitioner committed default in the repayment of the loan. There arose disputes between the parties and the said dispute was referred to arbitration by the first respondent in accordance with the Arbitration Clause contained in the agreement by appointing the second respondent as the sole arbitrator. The Second respondent/Sole Arbitrator acted upon the reference and after giving notice to both the parties, passed the Arbitral Award dated 08.05.2014, directing the petitioner to pay the first respondent a sum of Rs.1,06,053/-/- together with interest and costs.

3. Aggrieved by the Award dated 08.05.2014, the instant petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996.

4. Heard Mr.B.R.Shankaralingam, learned counsel for the petitioner and Mr.K.V.Ananthakrishnan, learned counsel for the first respondent.

5. The learned counsel for the petitioner drew the attention of this Court to the Arbitral Award which is under challenge. The learned counsel then drew the attention of this Court to the procedural history contained in the Arbitral Award. According to the learned counsel, the findings of the Arbitrator is that, on 05.04.2011, the petitioner was duly served with the notice and thereafter, he did not choose to attend the hearings in the Arbitral proceedings and he was set ex parte is factually incorrect. According to him, the petitioner attended the arbitral hearing on 05.04.2011 and also on the subsequent hearings. According to the learned counsel, almost 12 hearings were conducted in the arbitral proceedings.

6. The learned counsel for the petitioner also drew the attention of this Court to the notice dated 21.12.2011 sent by the Arbitrator to the petitioner informing the petitioner about the next date of hearing as 12.01.2012. According to him, this would clearly establish that the finding of the Arbitrator that the petitioner did not attend the arbitral proceedings on 05.04.2011 is factually incorrect.

7. The learned counsel for the first respondent is also unable to give a proper explanation for the notice dated 21.12.2011 sent by the Arbitrator to the petitioner, fixing the date of next hearing as 12.01.2012.

8. The learned counsel for the petitioner has taken a specific stand in the instant petition that the petitioner entered appearance through his advocate on the hearing date 25.04.2011 and thereafter, the proceedings were adjourned to the following dates namely 10.05.2011, 18.05.2011, 04.06.2011, 07.06.2011, 22.06.2011, 12.07.2011, 26.07.2011 and 08.09.2011. Further, the learned counsel for the petitioner also submitted the matter was reserved for pronouncement of orders by the Arbitrator on 05.04.2011 whereas the Arbitral Award was passed only on 08.05.2014, after the lapse of almost three years from the date of reserving the case for pronouncement of orders i.e. on 05.04.2011. According to him, this is also another valid ground available to the petitioner for challenge under section 34 of the Arbitration and Conciliation Act, 1996.

9. This Court having considered all the materials available on record and after considering the Arbitral Award dated 08.05.2014 and the submissions of the learned counsels appearing on both sides observes the following:

(a) As seen from the notice sent by the Arbitrator on 21.12.2011 to the petitioner, the petitioner could not has been set ex parte on 05.04.2011 as per the finding of the Arbitrator. Therefore, there is a force in the submissions made by the learned counsel for the petitioner that several hearings took place even after 05.04.2011 wherein the petitioner was duly represented in the arbitral proceedings.

(b) The Arbitrator has also reserved the case for pronouncement of orders on 05.04.2011, but he pronounced the orders only on 08.05.2014 after more than three years from the date of reserving the matter for pronouncement of orders.

10. For the foregoing observations, this Court is of the considered view that the findings of the Arbitrator are perverse and the Award is patently illegal shocking the judicial conscience of this Court.

11. In the result, the Award dated 08.05.2014 passed against the petitioner by the second respondent/Arbitrator is set aside and the petition is allowed. However, there shall be no order as to costs.
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