High Court set aside an arbitral award for loan recovery under the Act, 1996, holding that the claim was barred by the three-year limitation period under Article 37 of the Limitation Act despite the bank's arguments regarding default and repossession.
Arbitral Award dated 19.12.2011 set aside; Original Petition allowed; No costs awarded.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 03.12.2018
CORAM:
THE HONOURABLE MR. JUSTICE S.VAIDYANATHAN
Original Petition No.182 of 2012
K.S.Ramasamy ... Petitioner
vs.
1. M/s.HDFC Bank Ltd.,
rep. By its Authorized Representative,
4 th Floor, “Abdullah Complex”,
No.22, Thirumurthy Nagar, I Street,
Nungambakkam, Chennai 600 034.
2. M/s.Senthil Kumaran Borewell Service,
rep. by its Managing Partner Mr.K.S.Ramasamy,
Dyankadu, Karuvappampatti Post,
T.P.Palayam Village,
Tiruchengode, Salem – 637 304.
3. T.P.Venkatachalam
4. K.Moorthy ... Respondents
Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Arbitral Award dated 19.12.2011 passed by the Sole Arbitrator in A.C.P.(HDFC) No.280 of 2011. For Petitioner : Mr.T.L.Thirumalaisamy For 1st Respondent : Ms.E.Malini, for M/s.PASS Associates For Respondents 2 to 4 : No appearance
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O R D E R
This Petition is filed seeking to set aside the Arbitral Award dated 19.12.2011 passed in A.C.P.(HDFC) No.280 of 2011.
the Arbitrator. According to the 1st Respondent/HDFC Bank, the 2nd Respondent herein/M/s.Senthil Kumaran Borewell Service, who is the Borrower and the Petitioner herein viz. K.S.Ramasamy, who is the Co-Borrower, entered into a Commercial Vehicle Loan Agreement No.1041323 with the 1st Respondent/HDFC Bank on 07.12.2004 for the purchase of AL ALCO 1616 vehicle and a sum of Rs.11,50,000/- was financed to the Borrower and CoBorrower, who took delivery of the vehicle directly from the Dealer. The 3rd Respondent herein stood as Guarantor for the said Loan. In terms of the Loan Agreement, the Borrower, Co-Borrower and the Guarantor are due and liable to repay the amount financed i.e. Rs.11,50,000/- together with finance charges of
Rs.1,32,250/- and insurance charges, all totalling to a sum of Rs.12,82,250/- in 23 instalments along with additional finance charges at 36% per annum in the event of default. The instalments commence from 05.01.2005 and the last instalment falls due on 05.11.2006.
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there was no response from the Borrowers.
record, the learned Arbitrator, passed the Arbitral Award dated 19.12.2011,
which reads as under:
“7. For all the foregoing reasons, this Arbitral Tribunal finds that the Claimant has established its case and IN THE RESULT, IT IS AWARDED THAT the claim is allowed and consequently, the Respondents are jointly and severally directed to pay the sum of Rs.8,09,215/-. The said sum of Rs.8,09,215/- shall carry interest at 18% per annum from the date of this Award, as held above, till its realization which the Respondents are directed to pay together with a sum of Rs.2,500/towards cost of arbitration within a period of 30 days from the date of passing the Award. In noncompliance thereof, it is open to the claimant, to repossess and sell the vehicle being of AL ALCO 1616 vehicle with Engine No.TLE350177; Chassis No.TLR122617 and Registration No.KA 01 MB 4244 in open market for the highest price and adjust the sale proceeds towards the amount due. If the sale proceeds short fall, the amount due under this
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Award, the claimant may recover the same by executing this Award from all the three respondents jointly and severally. If the sale proceeds exceed the due, the balance shall be returned to the 1st and 2nd Respondents.”
Award is bad in law, as the Arbitrator has failed to take note of the fact that the delay in initiating Arbitration proceedings was not at all explained in the Claim statement. He submitted that the vehicle has been re-possessed by the Bank in terms of the Arbitration Award. Hence, according to the learned counsel, the Arbitrator ought to have dismissed the Claim Petition on the ground that after repossessing the vehicle, the 1st Respondent/Bank has no right or interest whatsoever, to invoke the Arbitration clause.
payments after 18.09.2006 and the Arbitration Proceedings were initiated by the Petitioner only in 2011.
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Transport Finance Company Ltd., Chennai vs. V.Balanisamy, reported in 2018 (5) MLJ 1. A reading of the said judgment makes it very clear that the cause of action available for initiation of recovery proceedings commences
from the date of default and limitation commences only from that date.
of 2011 is set aside and the Original Petition is allowed. No costs.
(aeb)
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S.VAIDYANATHAN,J.
(aeb)
O.P.No.182 of 2012
03.12.2018
3 issues framed by the court
Whether the arbitrator's award determining liability for a commercial vehicle loan should be set aside on the ground of delay irregular in initiating arbitration proceedings.
Whether the claim for recovery is barred by limitation as the default occurred more than three years prior to arbitration.
Whether the bank's initiation of arbitration proceedings is maintainable after the vehicle had already been repossessed.
Colour shows how this judgement treated each authority
M/s.Shriram Transport Finance Company Ltd., Chennai vs. V.BalanisamyReferred¶33
2018 (5) MLJ 1
1 provisions across 1 enactments
K.S.Ramasamy
M/s.HDFC Bank Ltd.
M/s.Senthil Kumaran Borewell Service
T.P.Venkatachalam
K.Moorthy
S. Vaidyanathan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
