(Prayer: Original Petition filed under Section 34 (2A) of the Arbitration and Conciliation Act, 1996, to set aside the impugned award dated 19.06.2019 passed in A.C.P.No.AR/RN/379/2017 passed by the sole Arbitrator.)
1. Ms.V.Valarmathi, learned counsel on record for petitioners is before this Court.
2. PREFATORY NOTE:
2(i) Instant 'Original Petition' ('OP' for the sake of brevity) has been filed under Section 34(2A) of 'The Arbitration and Conciliation Act, 1996' (Act No.26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity. To be noted, caption in case file reads Section 34(2A), but it figures as 34(2-A) in the statute. Be that as it may, instant OP has been filed assailing an arbitral award dated 19.06.2019 made by an Arbitral Tribunal constituted by a sole Arbitrator qua a 'loan agreement dated 31.12.2014 under Contract No.J012900737' (hereinafter 'said contract' for the sake of brevity, clarity and convenience). One covenant in said contract i.e., Article 22 is an arbitration clause and therefore, the same serves as an 'arbitration agreement' between the parties being 'arbitration agreement' within the meaning of Section 2(1)(b) read with Section 7 of A and C Act between the parties.
2(ii) Challenge to an arbitral award under Section 34 of A and C Act, going by the language in which Section 34 of A and C Act is couched, is by way of an application, but this Court is giving the nomenclature 'Original Petition' for such applications under Section 34 of A and C Act. Therefore, this Court will continue to refer to instant matter as 'OP'. A OP under Section 34 of A and C Act is neither an appeal nor a revision. It is not even a full-fledged judicial review, but it is a limited judicial review within the contours and confines of Section 34 of A and C Act. By contours and confines of Section 34 of A and C Act, this Court refers to the 8 designated slots adumbrated in Section 34 of A and C Act. To be noted, 5 slots are adumbrated under Section 34(2)(a), two slots are adumbrated under Section 34(2)(b) and one slot figures under Section 34(2-A). This Court chooses to deploy the term 'slots' in preference to 'grounds' as instant OP is neither an appeal nor a revision and it is not even a full-fledged judicial review as mentioned above.. To put it differently, it is a mere challenge to an award. When it comes to 'challenge to an award', the principle is, if a petitioner/applicant is able to fit his case into any one or more of the eight slots snugly, the award will be dislodged or in other words set aside. If that not be so, the award will not be interfered with. This is owing to 'minimum judicial interference' in 'Alternate Dispute Resolution' ('ADR') mechanism, which is an important sublime philosophy and salutary principle qua scheme of A and C Act. In this context, this Court chooses to describe the eight slots adumbrated in Section 34 as eight pigeon holes. To be noted, some of these pigeon holes are even in the nature of keyholes and pinholes, as some of these slots have been further circumscribed by limitations. An illustrative list is a) not entailing review on merits, b) making re- appreciation of evidence impermissible and c) eliminating even erroneous application of law from patent illegality slot etc.,.
3. Having set out the scope and ambit of instant OP under Section 34 of A and C Act and having noticed that minimum judicial interference is one of the important pillars of ADR mechanism, expeditious disposal of OPs under Section 34 is also a very important facet of the matter. This facet of the matter finds statutory expression in sub-section (6) of Section 34 of A and C Act, which mandates that such OPs shall be disposed of expeditiously and in any event within a period of one year from the date on which notice under sub-section (5) is served on the party concerned. This sub-section (6) and importance of disposing of OPs of instant nature as expeditiously as possible and within the one year time line was emphasised by Hon'ble Supreme Court in State of Bihar Vs. Bihar Rajya Bhumi Vikas Bank Samiti reported in (2018) 9 SCC 472. To be noted, though Bhumi Vikas case law is an authority for the broad proposition that sub-section (5) of Section 34 is only directory and not mandatory, but there is a categoric observation in the Bhumi Vikas case law that every endevour should be made by courts dealing with Section 34 OPs to adhere to one year time line in sub-section (6) of Section 34. Broad summation of prefatory note is:
a) Contours/confines of Section 34 OP are limited;
b) The adumbration under Section 34 are in the nature of pigeon holes (some being keyholes and pinholes) and not grounds;
c) A OP under Section 34 is neither an appeal nor a revision. It is not even a full-fledged judicial review, but a limited judicial review within the contours and confines of 8 pigeon holes;
d) Minimum judicial interference which is one of the pillars of ADR mechanism is the sublime philosophy and salutary principle underlying the scheme of A and C Act;
e) expeditious disposal of OPs of this nature is imperative for ADR mechanism to be successful.
4. FACTUAL MATRIX:
4(i) Having set out a prefatory note to this order, this Court is of the view that owing to scope and ambit of instant OP, short facts shorn of elaboration/details will suffice. In other words, it is not necessary to dilate in detail on facts in the case on hand. Suffice to say that respondents 3 and 4 before the Arbitral Tribunal are the petitioners herein and the sole claimant is the respondent in OP on hand. To be noted, Respondents 1 and 2 before Arbitral Tribunal are no more. The fulcrum of instant lis is said contract i.e., loan agreement dated 31.12.2014 bearing Contract No.J012900737. In said contract, an auto- mobile loan was availed, the total agreement value is Rs.8,82,000/-, which is payable in 47 monthly installments commencing on 31.12.2014 and ending on 10.11.2018. Rs.18,810/- is first monthly installment and Rs.18,765/- each is quantum of remaining 46 installments. Alleging default, respondent invoked arbitration clause in said contract (to be noted, as mentioned supra, Article 22 of said contract is arbitration clause). After invoking the arbitration clause and constitution of Arbitral Tribunal, respondent made claims, the details of which as can be culled out from the impugned award are as follows:
'Details of Claim Amount outstanding : Rs.6,16,619.00 Add Additional Interest : Rs.1,61,181.00 Travelling Expenses : Rs.4,400.00 Amount outstanding : Rs.6,16,619.00 Bank Charges : Rs.2,500.00 Repossession expenses : Rs.2,200.00 Incidental Debit : Rs.95,900.00 Sub-Total (A) : Rs.8,37,600.00 Less Rebate : Rs.4,640.52 Additional Interest : Rs.5,469.00 Received Sub-Total (B) : Rs.10,109.52 Total amount due (A-B) : Rs.8,27,490.48 ' 4(ii) A perusal of the award reveals that the petitioners before this Court were originally set ex parte, but were subsequently given opportunity of participation in arbitral proceedings including cross-examination. To be noted, claimant's witness deposed as PW1 in arbitral proceedings. The petitioners before this Court, who are Respondents 3 and 4, have also filed a counter to which a rejoinder has been filed by the claimant. A perusal of the counter affidavit reveals that the transaction is not in dispute. All that the petitioners have said is that during floods in December 2015 in Chennai City, the vehicle/auto-mobile (subject matter of said contract) was damaged, it was brought back to shape, but repossessed by the claimant. It is the further case of the petitioners that they offered to pay Rs.2,00,000/- and sought re-delivery of the vehicle and this plea should have been accepted.
5. SUBMISSIONS AND DISPOSITIVE REASONING:
5(i) Having set out the factual matrix in a nutshell, this Court now turns to the grounds urged in the case file that has been placed before this Court. A perusal of the case file reveals that (as mentioned supra) instant OP has been filed under Section 34 (2-A) of A and C Act. This Court deems it appropriate to extract Section 34 (2-A) of A and C Act together with the proviso, which reads as follows:-
['(2-A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court. If the Court finds that the award is vitiated by patent illegality appearing on the face of the award.
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence].' 5(ii) From the case file it is clear that instant OP is predicated on one of the 8 pigeon holes and that pigeon hole i.e., patent illegality plea is in the nature of keyhole, as it is further circumscribed by a proviso that an erroneous application of law cannot be a ground to infer patent illegality and re-appreciation of evidence is impermissible while testing patent illegality.
5(iii) Ms.V.Valarmathi, learned counsel on record for petitioners vehemently contended that petitioners before this Court have made a plea and offered to pay Rs.2,00,000/- (Rupees Two Lakhs only) and sought re-delivery of vehicle. It was pointed out that petitioners had sent legal notice calling upon the respondent to hand over possession of the vehicle (offering to pay Rs.2,00,000/-), but the respondent sent a reply on 27.11.2017 by making false statements. To be noted, this has been considered in the award.
5(iv) Turning to the grounds, the same as can be culled out from the case file read as follows:
a) The award passed by the arbitrator is not in accordance law and facts of the case.
b) The award passed by the Sole Arbitrator is without application of mind.
c) The Sole Arbitrator failed to see that the vehicle was extensively damaged during the floods in 2015 and that after completion of repairs and payment of the repair charges through insurance payment of Rs.5,15,000/- and balance by the claimant and the petitioners.
d) The Sole Arbitrator failed to see that after payments of repair charges, the claimant took possession of the vehicle and unjustly failed to heed the request of the petitioners herein and their deceased father Mr.N.Poongavanam by the letter dated 06- 11-2017 (Ex.A9) to the respondent/claimant to hand over the vehicle to them by promising to pay Rs.2,00,000/- and to pay the balance dues by installments.
e) The Sole Arbitrator failed to see that the claimant failed to take any steps to bring the hypothecated vehicle for auction sale inpite of the consent letter dated 06-06-2017 (Ex.A7) given by Late Mr.N.Poongavanam, which has resulted in abnormal increase of the debt burden upon the petitioners.
f) The Sole Arbitrator failed to see that after carrying out the repairs, the Vehicle presented a new look and it would have secured good price, if sold in auction immediately.
g) The Sole Arbitrator failed to see that the hypothecated vehicle along with original Registration Certificate continued to be in possession of the Claimant as on the date of passing of the Award and that they have not addressed the petitioners herein to take steps to effect transfer of the Vehicle from the name of the deceased 2nd respondent to the name of the either of the petitioners herein.
h) The Sole Arbitrator failed to see that the reason adduced by the claimant for failure to bring the hypothecated vehicle for auction sale is frivolous and unacceptable.
i) The Sole Arbitrator failed to see that the value of the vehicle would slowly loss its value, if kept idle without using on road and the claimant alone is responsible for its loss of value.
j) The award of future interest at the rate of 12% is unreasonable.' 5(v) A perusal of the grounds raised in the instant OP, leaves this Court with the impression that they are more in the nature of grounds in a regular first appeal under Section 96 of 'The Code of Civil Procedure, 1908' ('CPC' for brevity). On a careful analysis of the 10 grounds read in the light of submissions made by learned counsel for petitioners, this Court finds that no case has been made out regarding patent illegality qua impugned award. Be that as it may, this Court has also read through the impugned award. This Court is unable to find any patent illegality in the impugned award. On the contrary, this Court notices that Arbitral Tribunal has awarded future interest of only 12% in terms
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of Section 31(7)(b) of A and C Act though the claimant has claimed 24% per annum. This is articulated in Paragraph 13 of impugned award, which reads as follows: '13. The claimant seeks future interest at 24% per anum but I am of the view that the claimant will be entitled to future interest at 12% per annum only in terms of Section 31(7)(b) of the Arbitration Act from the date 24-03-2017 till date of realization of the amount.' 5(vi) As many as 14 exhibits have been marked by the claimant (respondent before this Court) and oral evidence has been let in. In the light of the narrative thus far, this Court has no hesitation in coming to the conclusion that there is no patent illegality qua impugned award and as patent illegality is the lone pigeon hole qua Section 34 of A and C Act on which instant OP is predicated, instant OP cannot but fail. 5(vii) In the light of dispositive reasoning set out supra, which has in turn been made in the light of grounds raised in the OP, submissions made by learned counsel for petitioners and facts and circumstances of this case in the hearing, this Court comes to the conclusion that no case has been made out to dislodge/set aside the impugned award. 6. DECISION: Instant OP is dismissed. Considering the facts and circumstances of the case and nature of submissions made at the hearing, there shall be no order as to costs.