Original Petition filed to set aside an arbitral award. The court observed notice was served by return and paper publication ordered before proceeding. Petitioner's claim of resignation and evasion defense rejected. Petition dismissed.
Original Petition filed under Section 34 of the Act to set aside the Award dated 29.11.2016 is dismissed.
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: 28.11.2018
CORAM:
THE HONOURABLE MR. JUSTICE S.VAIDYANATHAN
Original Petition No.613 of 2017
Prabhash Chandra Chaturvedi ... Petitioner
vs.
Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Arbitral Award dated 29.11.2016 passed by the Sole Arbitrator in Arbitration Case No.107 of 2016.
For Petitioner : Mr.T.Sezhian
For Respondents : Mr.R.Umashankar
O R D E R
This Petition is filed to set aside the Arbitral Award dated 29.11.2016
passed by the Sole Arbitrator in Arbitration Case No.107 of 2016.
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Limited, is the Claimant before the Arbitrator. Before the Arbitrator, it is stated by the 1st Respondent/Claimant that M/s.P.N.Agencies Pvt. Ltd., the 2nd Respondent herein approached them for sanction of enterprise finance loan of Rs.10,00,000/- for its additional line of business. The Petitioner herein and the 3rd Respondent herein stood as Guarantors for the loan availed by the 2nd Respondent. It is the further case of the Claimant that the 2nd Respondent herein paid only 6 instalments, that too belatedly, all amounting to Rs.3,08,316/- only, thereby, the 2nd Respondent herein committed default in repayment of further instalments of loan amount.
contract and issued Demand Notice dated 10.03.2016 to the Borrower and Guarantors. On the date of filing the Claim Petition, a total sum of
Rs.12,76,244/- was due from the 2nd Respondent and Guarantors. The Claimant invoked the Arbitration Clause in the Agreement, in and by their letter dated 29.04.2016 and sent the letters of reference to the Borrower and the Guarantors, i.e. the Petitioner and the 3rd Respondent herein, which were returned as “Left”. Arbitration notice dated 15.06.2016 was issued to the
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Borrower and Guarantors directing them to appear for the hearing on 18.07.2016. Notices sent to the 2nd and 3rd Respondents herein were returned as “unclaimed” and notice sent to the Petitioner was unserved as “insufficient address”. On 18.07.2016, Claim Petition was filed and there was no representation for the Respondents. Hence, the Arbitrator issued fresh notice dated 18.07.2016 with copies of Claim Petition to the Borrower and Guarantors, directing them to appear for the hearing on 16.08.2016, but, none appeared. Hence, paper publication was ordered to be effected on the Respondents returnable by 14.10.2016. Even thereafter, none represented the Borrower and the Guarantors.
“(i) The Respondents shall pay a sum of Rs.12,76,244/- (Rupees Twelve Lakhs Seventy Six Thousand Two Hundred and Forty Four only) along with future interest @ 18% per annum from the date of Claim Petition till the date of realization.
(ii) The Claimant is entitled for a sum of Rs.10,000/- towards cost of proceedings.”
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has already submitted his resignation as early as on 31.03.2014 from Full time Directorship and that the Arbitral Award in any event will not bind him. Relying on the decision of the Apex Court in the case of Sachin Gupta vs. K.S.Forge Metal Private Limited, (2013) 10 SCC 540, learned counsel for the Petitioner submitted that the Apex Court has set aside the Arbitral Award under challenge therein, on the ground that without issuance of any notice and without hearing the party, the Award has been passed. Learned counsel further relied on a judgment of the Delhi High Court in the case of Union of India vs. Daisy Trading Corporation, (2001) SCC Online Del 1180, wherein also, an exparte Award passed by the Arbitrator was challenged and the same was set aside. Thus, according to the learned counsel for the Petitioner, the Award under challenge in the case on hand is liable to be set aside under Section 34(2)(a)(iii) of the Arbitration and Conciliation Act, 1996.
that the address furnished by the Petitioner in the Loan Agreement and in the present Original Petition, is one and the same and that the Petitioner has purposely evaded Arbitration proceedings.
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sent to the Petitioner therein was not returned by the Postal Authorities. The learned Arbitrator proceeded ex parte against the Petitioner therein by observing that it was a presumed sufficient service. However, in the case on hand, though the Arbitration notice issued to the Borrower and Guarantors were returned as 'Unclaimed' and 'Insufficient Address', the Arbitrator issued
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fresh notice to them. As there was no response to the same, the Arbitrator has ordered Paper publication. Only thereafter, the learned Arbitrator has proceeded to pass the Arbitral Award. Hence, the above cited Delhi High Court judgment is not applicable to the case on hand.
taken to serve notice on the Borrower and the Guarantors.
Original Petition.
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known, as the loan was availed during the period when he was one of the Directors of the 2nd Respondent Company. Hence, the Arbitrator has rightly held that the 2nd Respondent Company and the Guarantors are jointly and severally liable to pay the outstanding dues. The Petitioner cannot take a
hyper-technical ground to defeat the claim of the 1st Respondent/Claimant and the same cannot be accepted.
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S.VAIDYANATHAN,J.
(aeb)
O.P.No.613 of 2017
28.11.2018
3 issues framed by the court
Whether the exparte arbitral award should be set aside due to insufficient notice served on the guarantor.
Whether the petitioner's resignation as a director disentitles him from the guarantee liability in arbitration proceedings.
Whether the arbitral tribunal acted with jurisdiction in the absence of response from the borrower and guarantors.
Colour shows how this judgement treated each authority
Sachin Gupta vs. K.S.Forge Metal Private LimitedDistinguished¶31
Sachin Gupta vs. K.S.Forge Metal Private Limited, (2013) 10 SCC 540 · Who else cites this
Union of India vs. Daisy Trading CorporationDistinguished¶31
Union of India vs. Daisy Trading Corporation, (2001) SCC Online Del 1180 · Who else cites this
Prabhash Chandra Chaturvedi
M/s.Shriram City Union Finance Limited
M/s.P.N.Agencies Pvt. Ltd.
Neeraj Chandra Chaturvedi
S.Vaidyanathan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
