Dismissed

M/S.Svr Super Speciality v. M/S.Reliance Capital Ltd.

Madras HC26 Aug 2020OP/243/2015

Case brief

AI extract

What is this about?

This court dismissed an application u/s 34 of the Arbitration and Conciliation Act, 1996 challenging an award on public policy grounds. The court held the award was not arbitrary as the arbitrator considered evidence and applied the contract's terms, reaffirming the summary nature of s. 34 proceedings.

What did the court decide?

Original Petition dismissed. No order as to costs.

M/S.Svr Super Speciality Vs M/S.Reliance Capital Ltd. — Arbitration | Madras HC (2020)

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Dated:26.08.2020

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CORAM

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THE HON'BLE MR.JUSTICE M.SUNDAR

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O.P No.243 of 2015
1.M/s.SVR Super Speciality Hospital
Rep. By its Partner E.Ravinder Reddy
No.7-1-79, A&B,
Dharam Karan Road,
Ameerpet, Hyderabad – 500 016.
2.E.Ravinder Reddy
3.E.Sandhya Rani ... Petitioners
Vs.
1.M/s.Reliance Capital Ltd.
Rep. By its Authorised Representative
Regd Office at H Block, I Floor,
Dhirubhai Ambani Knowledge City
Koparkhairane, Navi Mumbai – 400 710
Having its State/Branch Office at
No.10-A, Haddows Road,
Nungambakkam, Chennai – 600 006.
2.Shri D.Saravanan
Sole Arbitrator,
Orient Chambers
No.90, (Old No.73), 4 th Floor,
Armenian Street,
Chennai – 600 001. ... Respondents

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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Original Petition filed under Section 34 of Arbitration and Conciliation Act, 1996 praying to set aside the impugned award dated 03.01.2015 made in A.C.P.(RCL) No.80 of 2014, passed by the 2^nd respondent herein.

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For Petitioners : Ms.Vasudha Thiagarajan

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For 1^st Respondent : Mr.Kiran M for Mr.K.Moorthy ORDER

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Ms.Vasudha Thiagarajan, learned counsel on record for three petitioners and Mr.Kiran M, learned counsel representing the counsel on record for the contesting first respondent are before me in this webhearing on a video-conferencing platform. Both learned counsel agreed for main OP being taken up for final hearing, being heard out in this virtual hearing, on this basis the main OP is being taken up and heard out.

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Captioned 'Original Petition' ('OP' for the sake of brevity) is an

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application under Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act 26 of 996)' and this Act shall hereinafter be referred to as 'A

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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and C Act' for the sake of brevity and convenience. Captioned OP has been filed assailing 'an arbitral award dated 03.01.2015 bearing reference No.A.C.P. (Reliance) No.80 of 2014' (hereinafter 'impugned award' for the sake of brevity) made by an 'Arbitral Tribunal' ('AT' for sake of brevity) constituted by a sole Arbitrator. To be noted, this sole Arbitrator, who constituted the AT/made the impugned award, has been arrayed as Respondent No.2 in captioned OP and there is no disputation or disagreement before me as between the two learned counsel that the presence of respondent No.2 is not necessary for disposal of captioned OP owing to the nature of grounds that have been canvassed in captioned

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OP.

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Owing to captioned OP being an application under Section 34 of

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A and C Act, factual matrix in a nutshell would suffice. Facts are that

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first petitioner firm is represented by the second petitioner; that petitioners 2 and 3 as co-borrowers with petitioner No.1 as borrower entered into a 'Loan Agreement dated 05.09.2008 bearing Reference No. RLMEHYD000116109' (hereinafter 'said contract' for the sake of brevity

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and convenience); that the petitioners were given a loan of

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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Rs.21,77,997/- by contesting first respondent under said contract for purchase of medical equipment; that the petitioners were liable to repay this loan together with interest/finance charges and insurance charges in 49 monthly instalments; that the said contract contains an arbitration clause (Clause No.38); that contesting first respondent alleging delay/default in payment of monthly instalments triggered the arbitration clause owing to which AT was constituted; that AT entered upon reference; that AT made the impugned award dated 03.01.2015 after full contest; that vide the impugned award, AT inter alia directed payment of Rs.10,73,629/- together with interest; that the petitioners, who were respondents before AT have presented captioned OP on 23.03.2015 in this Court assailing the impugned award.

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It is necessary to mention that vide earlier proceedings in

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captioned OP, records of the AT were requisitioned and the same are now before this Court. Said contract, which was marked as an exhibit before AT, forms part of the records of AT and there is no disputation or disagreement as between the two learned counsel before me that certified

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copies of said contract have since been furnished to both sides by the Registry.

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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As already mentioned supra, instant OP i.e., captioned OP has been presented on 23.03.2015 and is therefore governed by the pre 23.10.2015 regime qua A and C Act. In other words, A and C Act as it stood prior to amendment vide Act, 3 of 2016 which kicked in with retrospective effect from 23.10.2015 will govern the case on hand.

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Notwithstanding very many averments/contentions raised in the petition, learned counsel for petitioners focussed her submissions on the argument that impugned award is in conflict with public policy of India. In other words, this is the lone ground on which impugned award is being assailed before this Court.

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Learned counsel for petitioners, drawing the attention of this

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Court to a communication dated 16.07.2014 being a communication from the contesting first respondent to the first petitioner submitted that even

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according to the contesting first respondent, the principal outstanding was 'NIL' (0.00) as of 16.07.2014 and therefore the claim is clearly not tenable atleast in terms of numbers. It was also submitted that there is no

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provision for what has been described as LPP charges. This Court is informed that LPP charges denote 'Late Payment Penalty'.

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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Learned counsel also drew the attention of this Court to

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pleadings before AT i.e., petitioners' pleadings captioned 'counter reply' and more particularly to paragraph 22. Referring to paragraph 22 of the

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petitioners' (respondents before AT) pleadings before AT, it was submitted that cheques issued by the petitioners were dishonoured on 63 occasions and if cheque bounce charges are levied at the rate of INR Rs.450/- per dishonour, it comes to Rs.28,350/- whereas the contesting first respondent has shown only a claim of Rs.14,322/- under this head. Adverting to this, it was submitted that it is a bad accounting system that

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has been followed by the contesting first respondent.

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In response to the above, learned counsel for contesting first

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respondent submitted that with regard to LPP (Late Payment Penalty),

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though there is no specific clause in said agreement, communications have been sent to the petitioners, they have agreed, it therefore forms part

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of the transaction between the parties, owing to this LPP has become part

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of said contract, the communications and acceptance by petitioners were

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placed before AT, which on appreciation of this evidence, has ultimately

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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made the impugned award. With regard to the cheque bouncing charges and plea of bad accounting system, learned counsel for contesting first respondent submitted that argument of the petitioners is in the nature of an appeal, it turns on the merits of the matter, but AT has made the impugned award after considering the accounts statements before it.

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This takes this Court to the impugned award. A perusal of the impugned award reveals that as many as 10 exhibits viz., Exhibits A1 to A10 have been marked on the side of contesting first respondent (Claimant before AT) and one exhibit viz., Ex.B1 has been marked on the side of the petitioners (respondents before AT) and therefore there was documentary evidence before AT. The records of AT placed before this Court also reveal that such documentary evidence was before the AT. A careful perusal of the impugned award reveals that impugned award does deal with both the LPP and cheque bouncing charges plea. This is contained in paragraph 5(b)(iv) of the impugned award which reads as follows:

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'(iv) Now coming to the other objection, the respondents dispute the claim of additional finance charges at 36% per annum; claim

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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of cheque bouncing charges at Rs.450/- as the same is usurious and unconscionable. In this respect, under the loan application in reference the respondents categorically agreed to pay the delayed payment interest at that 3% per month on its unpaid EMI/outstanding amount and Rs.450/- towards cheque bouncing charges for each of the cheque dishonored. The first schedule to the loan agreement also contemplates the payment under such heads. Admittedly, the respondents had committed default and even the respondents themselves states that on 63 occasions the cheques issued by them got bounced. So long as the respondents pay the installments on due dates payment of additional finance charges would not occur. So also, payment of cheque bouncing charges would not occur in the event of honoring the cheque on due date. On the other hand, in the case on hand, the respondents themselves warranted to such a situation by leaving the cheques dishonored repeatedly. Having agreed to the terms and conditions of the agreement and executed the same way back in the year 2008 with open eyes it is not now open to the respondents to go back and question the same. This tribunal is a creature of the contract. That be so, this tribunal is bound to travel within the four corners of the agreement. Therefore, the claim of LPP charges; cheque bouncing charges are in accordance with the terms and conditions of the loan agreement. Therefore, this tribunal comes to an irresistible conclusion that the claim in this regard of the claimant is justified and valid in law.'

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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To be noted, paragraph 5 of the impugned award is captioned 'Issues, Discussions and Findings', Sub paragraph (b) therein is captioned 'Whether the respondents are liable to pay the sum of Rs.10,73,629/- to the claimant arising out of the default in payment of installments as per the Loan Agreement in reference?'

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A perusal of paragraph 5(b)(iv) of the impugned award (extracted and reproduced supra) reveals that AT has considered both the points urged before this Court, there was documentary evidence before AT and AT has taken a view. This Court is unable to persuade itself to believe that the view taken by AT is such that no reasonable person would take such a view. In other words, this Court is unable to persuade itself to believe that the view taken by AT qua the two pronged submissions are implausible. Therefore, this Court is of the considered view that there is no scope for judicial intervention under Section 34 of A and C Act qua impugned award as proceedings under Section 34 are summary proceedings as laid down by Hon'ble Supreme Court in Fiza Developers case [ Fiza Developers and Inter-Trade Private Limited Vs.

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O.P.No.243 of 2015 dated 26.08.2020 [M/s.SVR Super Specially Hospital V. M/s.Reliance Capital Ltd.]

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AMCI (India) Private Limited reported in (2009) 17 SCC 796 ], which was reiterated as a step in the right direction by Hon'ble Supreme Court in Emkay Global case being Emkay Global Financial Services Ltd. v.

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Girdhar Sondhi reported in (2018) 9 SCC 49. To be noted, this Fiza Developers principle was further reiterated recently by Hon'ble Supreme Court in Canara Nidhi Limited case [M/S. Canara Nidhi Limited vs M. Shashikala reported in 2019 SCC Online SC 1244].

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In the light of narrative thus far, instant OP fails and the same is
dismissed. There shall be no order as to costs.
26.08.2020

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Note to Office: Registry is directed to return the records of the Arbitral Tribunal to the second respondent under due acknowledgement.

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Speaking Order : Yes/ No Index : Yes / No

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sgl/gpa

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