Disposed

Munindra Kumar Dev Sarma v. the Reserve Bank of India and 3 Ors.

Gauhati HC13 Sept 2022WP(C)/3253/2021

Case brief

AI extract

What is this about?

The Gauhati High Court disposed of a writ petition challenging loan recovery notices issued by an NBFC. The court held that the dispute was arbitrable and, since the validity of arbitral awards and execution proceedings were already pending, the petition was closed to allow parties to pursue remedies in connected pending proceedings.

What did the court decide?

Leave granted to parties to pursue remedies in connected pending proceedings before the Addl. District Judge, Kamrup.

Munindra Kumar Dev Sarma Vs the Reserve… — Contract and Commercial Disputes | Gauhati HC (2022)

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GAHC010098712021

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : WP(C)/3253/2021

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MUNINDRA KUMAR DEV SARMA S/O DEBEN SARMA

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RESIDENT OF HOUSE NO. 14, MAIDAMGAON, PUBALI PATH, TRINYAN NAGAR, PO BELTOLA, ASSAM 781028

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VERSUS

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THE RESERVE BANK OF INDIA AND 3 ORS. REPRESENTED BY ITS CHIEF GENERAL MANAGER, 11TH FLOOR, CENTRAL OFFICE BUILDING, SHAHID BHAGAT SINGH ROAD, MUMBAI 400001

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2:THE CHIEF GENERAL MANAGER

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RESERVE BANK OF INDIA 11TH FLOOR CENTRAL OFFICE BUILDING SHAHID BHAGAT SINGH ROAD MUMBAI 400001

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3:THE CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED REPRESENTED BY ITS DIRECTOR DARE HOUSE 2 N.S.C BOSE ROAD PARRYS CHENNAI 600001 INDIA

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4:THE CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED

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REPRESENTED BY ITS MANAGER ARHAN ARCADE SECOND FLOOR DR. B. BORUAH ROAD OPP. KANAKLATA INDOOR STADIUM ULUBARI GUWAHATI 0

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Advocate for the Petitioner : MR. P K GOSWAMI

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Advocate for the Respondent : MR. P NEOG

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BEFORE HONOURABLE MR. JUSTICE SUMAN SHYAM

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ORDER

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Date : 13-09-2022

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Heard Mr. B.P. Borah, learned counsel for the writ petitioner. Also heard Mr. R. De,

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learned counsel appearing for the respondent Nos. 3 and 4. None has appeared for the respondent Nos. 1 and 2.

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The final notices issued by the respondent No. 3 to the writ petitioner demanding re-payment of loan, failing which, custody of the vehicles would be taken over and sold in auction, have been put under challenge in this writ petition, inter alia, on the ground that the respondent Nos. 3 being an NBFC, has not followed the RBI guidelines dated 28-092008 and 24-04-2009 and therefore, the impugned notices were dehors the provisions of law. It appears that the writ petitioner herein had purchased 06 (six) vehicles by obtaining loan from the respondent No. 3 to the tune of Rs. 84,60,212/-. Those buses were being operated as school buses. Subsequently, there were “top-ups” also in respect of the loan accounts thereby creating another 04 (four) separate accounts. According to

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the petitioner, he was earning his livelihood and repaying the installments by operating the six school buses under the Kendriya Vidyalay, Khanapara. However, during the Covid19 pandemic, the school had to remain closed, as a result of which, the buses were also lying idle. On such count, the petitioner had failed to re-pay the installment amounts. Situated thus, the respondent No. 3 has issued 03 (three) notices, all dated 08-02-2021, demanding re-payment of the loan amount. Assailing the said notices, the writ petitioner had approached this Court instituting the present writ petition apprehending that the respondents may take steps for taking over possession of the vehicles.

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Taking note of the apprehension expressed by the petitioner, this Court had passed an interim order dated 12-07-2021, directing that no coercive action shall be taken against the petitioner till the returnable date. However, it appears that no further order was issued by the court extending the interim order beyond the returnable date.

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When this matter was taken up for admission hearing before this Court today, Mr. Borah, learned counsel for the petitioner has submitted that after re-opening of the schools, school buses are now regularly plying and the petitioner has also started generating some income there-from. As such, although the earlier proposal for One Time Settlement (OTS) settlement was not acted upon by the respondent No. 3, yet, his client is now in a position to make a fresh offer for upfront payment of a reasonable amount with a proposal to go for fresh ‘OTS’ of the entire loan account, if the respondent Nos. 3 and 4 are agreeable to such a recourse. But, in the meantime, the respondents be restrained from taking back possession of the school buses run by his client.

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Responding to the above, Mr. De, learned counsel for the respondent Nos. 3 and 4

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submits that as many as 06 (six) arbitration awards pertaining to the 06 loan agreements have already been passed against the petitioner and Money Execution Cases Nos. 127 - 132 of 2022 are also pending before the court of learned Addl. District Judge No. 4, Kamrup at Guwahati for execution of the aforesaid awards. Under the circumstances, the question of going for OTS at this stage does not arise. Mr. De, however, submits that no steps for taking over possession of six vehicles (school buses) will be initiated by the respondent No. 3 without obtaining a proper order from the Court to that effect.

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Mr. Borah, on the other hand, submits that the arbitration awards were passed exparte without proper service of notice upon his client, as a result of which, separate applications under Section 34 of the Arbitration and Conciliation Act, 1996 numbered and registered as Misc. (Arb.) Case No. 37 - 43 of 2022 have been instituted by his client in the court of learned Addl. District Judge No. 4, Kamrup at Guwahati. Applications filed in each of the aforesaid cases praying for stay of execution of the arbitration award are also pending adjudication before the learned court below. Under the circumstances, the respondents cannot claim any right under the arbitral award.

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I have heard the submission made at the bar and have also gone through the materials available on record. The dispute between the parties in this case is evidently arising out of the loan transaction governed by a contract agreement, which contains an arbitration clause. If that be so, the resolution of the dispute by and between the parties would lie within the scope and ambit of the loan agreement and therefore, the same has to be resolved in an arbitration proceeding. To that extent this Court does not find any error in the recourse taken by the respondents by referring the disputes to arbitration.

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However, the question as to whether the arbitration proceeding has been conducted in accordance with law and a valid award has been passed therein after compliance with the principles of natural justice would certainly be issues lying within the domain of the Court exercising jurisdiction under Section 34 of the Act of 1996. Since the arbitration awards have already been passed against the writ petitioner and money execution cases along with applications for setting aside such awards are also pending before the learned Addl. District Judge No. 4, Kamrup at Guwahati, I am of the view that this writ petition deserves to be closed by granting leave to the parties to pursue their remedies before the learned court below.

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Therefore, by taking note of the submission of Mr. De that no steps for repossession of the vehicle would be initiated without the leave of the court, this writ petition stands disposed of by granting leave to the respective parties to pursue their remedies in the connected proceedings pending before the learned Addl. District Judge No. 4, Kamrup at Guwahati.

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Writ petition stands disposed of.

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JUDGE

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Comparing Assistant

Munindra Kumar Dev Sarma v. the Reserve Bank of India and 3 Ors.

Case brief

What is this about?

What did the court decide?

Munindra Kumar Dev Sarma v. the Reserve Bank of India and 3 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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