Dismissed

Seven Hills Construction v. L and T Finance Dltd.

Bombay HC13 Aug 2014ARBP/874/2013

Case brief

AI extract

What is this about?

The High Court dismissed the petition challenging an arbitration award. It held that the learned Arbitrator considered the valuation report and arguments regarding the sale of the vehicle and that no interference was required as the award was plausible and the petitioner was fully heard.

What did the court decide?

The arbitration petition was dismissed as the learned Arbitrator had considered the relevant aspects and the award did not require interference.

Seven Hills Construction Vs L and T Finance Dltd. — Arbitration | Bombay HC (2014)

ARBP.874/2013-Order

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION PETITION NO. 874 OF 2013

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Seven Hills Construction Vs. L & T Finance Ltd.

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...Petitioner

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...Respondent

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Mr. Yogendra Singh i/b. Hemant Tejwani i/b. Auris legal, Advocate for the Petitioner Mrs. S.I. Joshi i/b. S.I Joshi & Co., Advocate for the Respondent

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CORAM : MRS. ROSHAN DALVI, J. DATED : 13^TH AUGUST, 2014

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ORDER :

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The petitioner has challenged the entire award in this petition. The petition came up for hearing on 7^th July, 2014. It was seen that the Arbitrator followed the procedure that he laid down. The parties accepted the procedure and an award came to be passed with regard to the loan of the defaulters committed thereunder. The only aspect which was required to be re-seen by the Arbitrator was in respect of the valuation of the vehicle. A valuation report was not specifically referred to in the claim though obtained prior to the claim. The learned Arbitrator considered the valuation report. The petitioner took exception to the consideration of the valuation report by the learned Arbitrator. Consequently the parties agreed and the Court directed hearing the

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ARBP.874/2013-Order

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petitioner only upon the valuation report under Section 34(4) of the Arbitration and conciliation Act, 1996 (the Act).

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The Court directed that the learned Arbitrator shall fix one date and hear both the parties. The petitioner herein shall be entitled to tender another valuation and the learned arbitrator shall hear both the parties upon the valuation report.

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The parties went before the learned Arbitrator. The learned Arbitrator fixed the date of hearing. The petitioner appeared before the learned Arbitrator and could not file another valuation report because the vehicle was repossessed and later sold and the inspection of the vehicle could not be taken by any valuer. That opportunity had been lost to the petitioner long prior to the award itself.

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The petitioner, therefore, must argue only upon the valuation report produced by the respondent herein. The petitioner claimed that the valuation is highly under valued. That case has to be made good by the petitioner.

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The petitioner would argue that the respondent sold the vehicle on an e-sale on the internet without any public notice in the newspaper, without waiting for any further bids and at the price lesser than the price stated in the valuation. Whether or not this would be a bonafide ground to show the malafides of the

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ARBP.874/2013-Order

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respondent herein would have to be seen. This had to be shown to the learned Arbitrator. The award shows that this has been considered. Nevertheless the petitioner has tried to argue this before the Court. It is seen that under clause 13(4) of the loancum-hypothecation agreement between the parties the respondent herein can repossess, sell or otherwise dispose off the asset in such manner as the lender may think fit.

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The respondent repossessed the vehicle on 21^st January, 2010. The respondent waited for a reasonable period for the petitioner to pay off the loan. The petitioner did not pay off any installments. The respondent put up the vehicle for sale on the internet on 25^th August, 2010, after 7 months. Sufficient time was given to the petitioner to pay off the loan installments. None was paid.

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For the sale the respondent obtained the valuation on 27^th March, 2010. The valuation report shows the valuation of the vehicles at Rs.6.4 lakhs each. Both the vehicles are in similar condition. The technical information is given in separate items of the equipments. Consolidated report at the foot of the valuation is also made. The report shows tyres worn out, battery missing, engine in average condition and body in damaged condition. The equipments are hypothecated. They are stated to be used 24x7. That would be in fact over-use. The condition is bound to deteriorate far quicker than the vehicle which is otherwise well

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ARBP.874/2013-Order

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maintained and properly used.

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Further for 7 months the vehicle remained with the respondent herein whilst the petitioner made no effort to pay the installments to take back the vehicle if it was really in good condition.

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The sale price is less than the valuation price. It would have to be seen whether such a sale can be made or not. That was for the petitioner to show the learned Arbitrator. The only argument of the petitioner is that further efforts should have been made and further time should have elapsed. That argument is erroneous. Under clause 13(4) no further effort need be made as the disposal under the agreement is as the lender thinks fit. The petitioner is bound by this clause of the agreement as much as all other clauses. The petitioner knew that if the installments were not paid and in the event of default the vehicle would be repossessed and sold. The petitioner had notice of the repossession and sale as the next step. The petitioner must envisage the further step. The sale would be as the lender would think fit. The petitioner would have no say in the sale.

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The lender thought fit to sell on the internet. What is material to note is that the lender obtained various bids. The sale has been actually effectuated 4 months after the valuation report itself. That is between 27^th March. 2010 to 25^th August, 2010.

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ARBP.874/2013-Order

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Giving public advertisement in the newspaper is not the only best way of selling an equipment when the contract allows one of the parties to sell it as it thinks fit.

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A higher sale would enure to the benefit of the respondent as much as the petitioner. The respondent would have also obtained a much higher price if the vehicle had been sold at a higher price than the sale price. Therefore, there can no malafides imputed upon the sale.

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The petitioner has argued what was already argued before this Court and before the learned Arbitrator. The learned Arbitrator has considered that the parties were sent to him on the limited issue of the valuation report submitted by the claimants. The learned Arbitrator has also considered that the respondent has not been able to procure a valuation report. The learned Arbitrator has considered each of the aspects of the equipments in the valuation report also. In fact the learned Arbitrator has considered the argument of the respondent that the parts which were found in poor condition were replaceable and should not bring down the valuation of the vehicle and that a higher price which would be the fair price should have been obtained. The learned Arbitrator has considered that the vehicle would have been sold to highest bidders following the process which is the usual process in the market. Judicial notice is required to be taken of such facts. The learned

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ARBP.874/2013-Order

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Arbitrator has also considered that the vehicles were tippers and were bound to depreciate considerably by the very nature of their work.

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Having considered all of these aspects which are the same aspects that have been argued before this Court also, no other view can be taken by this Court. The view of the learned Arbitrator is a very plausible view.

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The petitioner has been fully heard. The arbitration award does not require any interference. The petition is dismissed.

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(ROSHAN DALVI, J.)

Seven Hills Construction v. L and T Finance Dltd.

Case brief

What is this about?

What did the court decide?

Seven Hills Construction v. L and T Finance Dltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

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