Dismissed

Mvr Gas and Mvr Chemicals and Oils Bv Sadanand Proprietor v. Equitas Small Finance Bank Ltd., (Formerly known as Equitas Finance Ltd. and Equitas Finance Pvt. Ltd.

Madras HC19 Jan 2021OP/980/2019

Case brief

AI extract

What is this about?

The court dismissed petitions to set aside an ex-parte arbitral award. It held that petitioners were given proper notice via registered post, evidenced by postal receipts and acknowledgments, thus failing to establish non-compliance with Section 34(2)(a)(iii) of the Arbitration and Conciliation Act.

What did the court decide?

The Original Petition Nos. 980 and 981 of 2019 are dismissed; connected applications are closed; no costs are imposed.

Mvr Gas and Mvr Chemicals and Oils Bv Sadanand Proprietor Vs… — Arbitration | Madras HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS (ORDINARY ORIGINAL CIVIL JURISDICTION)

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TUESDAY, THE 19TH DAY OF JANUARY 2021

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THE HON'BLE MR. JUSTICE M.SUNDAR

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O.P.No.980 of 2019

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and

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A.Nos. 9184 and 9749 of 2019

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In the matter of Arbitration and Conciliation Act, 1996 and In the dispute relating to loan agreement bearing No. BLMSNRD0000060 and Arbitration Award in Case no. SAP/ESFB/BL – 094/2019 dated 27.09.2019.

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MVR Gas and MVR Chemicals and Oils BV Sadanand Proprietor No.801, 9th Main Road, 3rd Block Koramangala, Bangalore - 560 034 Rep. by its Power Agent Mr.G.Mahesh

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Mr.B.V.Sadanand S/o.M.Venkateshaswamy Reddy No.801, 9th Main Road 3rd Block, Koramangala, Bangalore - 560 034.

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Mrs.S.L.Manjula W/o.B.V.Sadanand No.801, 9th Main Road 3rd Block, Koramangala Bangalore - 560 034.

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... Petitioners /Applicants (in A.No.9184 of 2019)

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https://hcservices.ecourts.gov.in/hcservices/

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vs.

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Equitas Small Finance Bank Ltd., (Formerly known as Equitas Finance Ltd., and Equitas Finance Pvt. Ltd.,) Spencer Plaza, 4th Floor Phase II, No.769, Mount Road, Anna Salai, Chennai-600 002 Tamil Nadu, India. ... Respondent /Respondent (in A.No.9184 of 2019)

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Original Petition praying that this Hon'ble Court be pleased to set aside the ex-parte award of the arbitrator passed in No.SAP/ESFB/BL094/2019 dated 27.09.2019 against the petitioners.

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A.No.9184 of 2019:

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Application praying that this Hon'ble Court be pleased to stay

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further proceedings in pursuance to the exparte award of the arbitrator passed in ACP No. SAP/ESFB/BL-094/2019 dated 27.09.2019 against the petitioner.

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A.No. 9749 of 2019:-

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In the matter of Arbitration and Conciliation Act, 1996 and

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In the dispute relating to loan agreement bearing No. BLMSNRD0000060 and Arbitration Award in Case no. SAP/ESFB/BL – 094/2019 dated 27.09.2019.

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MVR Gas and MVR Chemicals and Oils BV Sadanand Proprietor https://hcservices.ecourts.gov.in/hcservices/ No.801, 9th Main Road, 3rd Block Koramangala, Bangalore - 560 034

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3 Rep. by its Power Agent Mr.G.Mahesh 2. Mr.B.V.Sadanand S/o.M.Venkateshaswamy Reddy No.801, 9th Main Road 3rd Block, Koramangala, Bangalore - 560 034. 3. Mrs.S.L.Manjula W/o.B.V.Sadanand No.801, 9th Main Road 3rd Block, Koramangala Bangalore - 560 034. ... Applicant/Petitioner vs. 1. Equitas Small Finance Bank Ltd., (Formerly known as Equitas Finance Ltd., and Equitas Finance Pvt. Ltd.,) Spencer Plaza, 4th Floor Phase II, No.769, Mount Road, Anna Salai, Chennai-600 002 Tamil Nadu, India. ... Respondent/Respondent 2. Suchit Anant Palande Arbitrator Old No.159, New No.327, II Floor, Lingi Chetty Street, Chennai 600 001. ... Proposed Respondent Application praying that this Hon'ble Court be pleased to implead the Arbitrator Mr.Suchit Anant Palande, proposed respondent as 2^nd respondent in OP No. 980 of 2019.

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This Original Petition alongwith O.P.No. 981 OF 2019 AND

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https://hcservices.ecourts.gov.in/hcservices/ A.Nos. 9184 and 9749 of 2019, coming on this day before this court for

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hearing in the presence of Mr.Devasenathipathi, Advocate for the

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Petitioners in OP.No.980 of 2019 and for the Applicants in A.Nos. 9184 and 9749 of 2019 and Mr.A.Damodaran, Advocate for the respondent in OP.No.980 of 2019 and A.No. 9184 of 2019 and for the 1^st respondent in A.No.9749 of 2019, and upon reading the petition and the award dated 27.09.2019 filed in O.P.No.980 of 2019 and the judges summons and the affidavit of G.Mahesh, filed in A.Nos. 9184 and 9749 of 2019, and this court having observed that the lone ground that petitioners did not receive any communication from AT prior to interim and final awards i.e., impugned awards falls flat on its face, that ground fails without any speck of doubt as not one but three sets of communications have been duly received by each of the three petitioners at the addresses as shown in the captioned OPs prior to the receipt of impugned awards, therefore, this Court has no difficulty in unhesitatingly coming to the conclusion that there is no violation or infarct of the second limb of Section 34(2)(a)(iii), and before parting with this case, this Court deems it appropriate to observe that the protagonists of applications assailing arbitral awards should be careful and responsible while raising grounds such as non-receipt of proper notice of arbitral proceedings as the entire exercise of requisitioning records and perusing the same was clearly avoidable in the case on hand as each of three

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petitioners have received 3 sets of communications prior to the impugned https://hcservices.ecourts.gov.in/hcservices/ awards, notwithstanding this position they have ventured to predicate their

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challenge on the ground of no proper notice of arbitral proceedings by

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saying that they have not received any notice from AT prior to the receipt of the impugned award, owing to the nature of submission made by learned counsel for petitioners, this Court is not imposing costs in this case, but it need not be the same in days to come in cases of this nature, I t is ordered as

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follows:

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That the O.P.No.980 of 2019 be and is hereby dismissed.

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That the connected application Nos. 9184 and 9749 of 2019,

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be and are hereby closed.

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That this court refrains itself from imposing costs.

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WITNESS THE HON'BLE MR. JUSTICE SANJIB BANERJEE, CHIEF JUSTICE, HIGH COURT AT MADRAS AFORESAID, THIS THE 19^th DAY OF JANUARY 2021.

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Sd./ASSISTANT REGISTRAR (O.S.II) //Certified to be true copy//

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Dated at Madras this the day of 2021.

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COURT OFFICER(O.S.) From 25th Day of September 2008 the Registry is issuing certified copies of the Orders/Judgments/Decrees in this format.

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https://hcservices.ecourts.gov.in/hcservices/

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SK 04.02.2021

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O.P.No.980 of 2019 and A.Nos. 9184 and 9749 of 2019

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ORDER :-

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DATED: 19.01.2021

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THE HON'BLE MR.JUSTICE M.SUNDAR

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FOR APPROVAL: 05.03.2021

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APPROVED ON: 08.03.2021

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Note:

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Registry is directed to retain the records of AT along with envelope and covering letter from the Sole Arbitrator dated 27.01.2020 in a sealed envelope.

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https://hcservices.ecourts.gov.in/hcservices/

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Dated : 19.01.2021

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Coram

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THE HONOURABLE MR. JUSTICE M.SUNDAR

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O.P.Nos.980 & 981 of 2019 and

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A.Nos.9184 & 9749 of 2019

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MVR Gas and MVR Chemicals and Oils BV Sadanand Proprietor No.801, 9th Main Road, 3rd Block Koramangala, Bangalore - 560 034 Rep. by its Power Agent Mr.G.Mahesh

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Mr.B.V.Sadanand S/o.M.Venkateshaswamy Reddy No.801, 9th Main Road 3rd Block, Koramangala, Bangalore - 560 034.

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Mrs.S.L.Manjula W/o.B.V.Sadanand No.801, 9th Main Road 3rd Block, Koramangala Bangalore - 560 034. Petitioners in both OPs

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vs.

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https://hcservices.ecourts.gov.in/hcservices/

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Original Petition No.980 of 2019 filed under Section 34 of the

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Arbitration and Conciliation Act, 1996, to set aside the ex-parte award of the arbitrator passed in No.SAP/ESFB/BL-094/2019 dated 27.09.2019 against the petitioners.

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Original Petition No.981 of 2019 filed under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the ex-parte award of the arbitrator passed in No.SAP/ESPB/BL-095/2019 dated 27.09.2019 against the petitioners.

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For petitioners in both OP : Mr.Devasenathipathi For respondent in both OP : Mr.A.Damodaran

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C O M M O N O R D E R

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This common order will govern the captioned two 'Original

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Petitions' [hereinafter 'OPs' in plural and 'OP' in singular for the sake of brevity and convenience] and captioned applications therein.

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In this web hearing on a video conferencing platform i.e.,

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Virtual Court today, Mr.Devasenathipathi, learned counsel on record for three petitioners in both captioned OPs and Mr.A.Damodaran, learned counsel on record for the lone respondent in both captioned OPs are before me.

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Aforementioned two learned counsel consented for captioned

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OPs being taken up for final disposal and being heard out though the https://hcservices.ecourts.gov.in/hcservices/ captioned OPs are listed under the cause list caption 'FOR REPORTING

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SETTLEMENT'. To be noted, this is owing to report from 'Tamil Nadu Mediation and Conciliation Centre' ('TNMCC' for the sake of brevity) being report dated 21.12.2020 wherein TNMCC reported that mediation has been completed, but no agreement has reached. In other words, mediation failed. Therefore, with the consent of learned counsel on both sides, captioned OPs were taken up for final disposal and being heard out.

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Owing to the short statutory perimeter or in other words the limited legal landscape of Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' {which shall hereinafter be referred to as 'A and C Act' for the sake of brevity and convenience}, within which a legal drill of testing an arbitral award should perambulate short facts shorn of elaboration will suffice.

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Short facts are that petitioners in captioned OPs availed financial assistance by way of loan from respondent i.e., 'Equitas Small Finance Bank Ltd.,' [hereinafter 'said Bank' for the sake of convenience and brevity] vide two separate loan agreements, (i) Loan Agreement in BLMSNRD0000060 dated 31.01.2017 (loan amount of Rs.40,00,000/-) and

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(ii) Loan Agreement in BLMSNRD0001915 dated 21.02.2018 (loan https://hcservices.ecourts.gov.in/hcservices/ amount of Rs.20,90,000/-); that loan availed by petitioners from said Bank

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were agreed to be repaid in 36 'Equated Monthly Installments' ['EMI' in

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singular and 'EMIs' in plural for the sake of brevity]; that there is an arbitration clause in both loan agreements which serves as Arbitration Agreement between the parties being arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of A and C Act; that alleging default in repayment, arbitration agreement was triggered by said Bank; that 'Arbitral Tribunal' ('AT' for the sake of brevity) was constituted; that AT is constituted by a sole arbitrator; that AT entered upon reference, adjudicated upon the claim of said Bank and made two separate awards viz., '(i) Award dated 27.09.2019 bearing reference No.SAP/ESFB/BL-094/2019 and (ii) Award dated 27.09.2019 bearing reference No.SAP/ESFB/BL095/2019' [hereinafter 'impugned award' in singular and 'impugned awards' in plural]; that impugned awards have been assailed in the captioned two OPs.

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Both the captioned OPs are now being heard out in the light of

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the aforesaid trajectory. This Court having set out short facts or in other words factual matrix in a nutshell containing essential facts imperative for appreciating this common order (which also captures the trajectory captioned matters have taken) this Court now embarks upon the exercise of https://hcservices.ecourts.gov.in/hcservices/ discussing the lone point that has been urged in captioned OPs. Before that

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is done, it is necessary to mention that records of AT pertaining to both impugned awards have been placed before me, the same having been requisitioned by predecessor Hon'ble Judge.

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Adverting to captioned OPs, learned counsel for petitioners submitted that challenge to impugned awards is predicated on one lone point and that lone point is AT has not put petitioners on notice about the hearing and it is the pointed case of petitioners made with specificity that prior to interim and final awards (impugned awards) petitioners have not received any communication from the AT. To be noted, this is articulated in Paragraph Nos.6 of O.P.No.980 of 2019 and Paragraph No.5 of O.P.No.981 of 2019 and the same read as follows:

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Paragraph No.6 of O.P.No.980 of 2019:

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'The petitioners submit that on perusal of the award it is seen that sufficient opportunities were given to them to appear in the tribunal none of the notice alleged to be sent were received by the petitioners, nothing likewise were received by the petitioners herein, except the interim award and the final award which has been made as a part and parcel of this petition.'

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Paragraph No.5 of O.P.No.981 of 2019:

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'The petitioners submit that on perusal of the award it is seen that sufficient opportunities were given to them to appear in https://hcservices.ecourts.gov.in/hcservices/ the tribunal none of the notice alleged to be sent were received by

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the petitioners, nothing likewise were received by the petitioners herein, except the interim award and the final award which has been made as a part and parcel of this petition.'

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Be that as it may, as the lone point urged before this Court turns

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on AT not sending notice of sittings to petitioners, this matter essentially turns on the second limb of Section 34(2)(a)(iii) of A and C Act, which reads as follows:

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'34. Application for setting aside arbitral award.-

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(1) ......

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(2) An arbitral award may be set aside by the Court

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only if-

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(a) the party making the application [establishes on the basis of the record of the arbitral tribunal that]-

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(i) ......

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(ii) .....

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(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

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(iv) .....

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(underlining made by this Court for ease of reference)

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This Court, by saying second limb of Section 34(2)(a)(iii) of A

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and C Act, obviously refers to the ground that the parties who are

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protagonists of captioned applications are predicating and positing their challenge to the impugned awards on the ground that they were not given proper notice of arbitral proceedings.

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In this regard, it is necessary to notice that there was an amendment to Section 34(2)(a)(iii) of A and C Act vide an Amending Act being Act No.33 of 2019 wherein the expression 'furnishes proof that' was replaced by 'establishes on the basis of the record of the arbitral tribunal that'. To be noted, this Amending Act being Act No.33 of 2019 is dated 09.08.2019, but vide Section 1(2) of said Amending Act, provisions of Amending Act kick in on and from the date on which the provisions of Amending Act are notified by the Central Government in official gazette, different dates can be appointed for different provisions of the Amending Act. Out of 16 sections in this Amending Act, only 11 sections have been notified and such notification was done on 30.08.2019 by notification of Central Government vide S.O.3154(E).

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The aforementioned amendment to Section 34(2)(a)(iii) of A and C Act where the expression 'furnishes proof that' was replaced by 'establishes on the basis of the record of the arbitral tribunal that' is vide Section 7 of the Amending Act and Section 7 of the Amending Act is one of https://hcservices.ecourts.gov.in/hcservices/ the 11 sections that has been notified vide aforementioned notification on

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30.08.2019. Therefore, Section 34(2)(a) of A and C Act as amended by Amending Act No.33/2019 is being applied to the case on hand by following Ssangyong principle being law laid down by Hon'ble Supreme Court in Ssangyong Engineering and Construction Company Limited Vs. National Highways Authority of India reported in (2019) 15 SCC 131. T o

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be noted, this is in view of the fact that both captioned OPs have been

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presented in this Court post 30.08.2019, to be precise on 15.11.2019.

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12. A careful perusal of records of AT reveals that AT has sent a communication dated 09.07.2019 fixing the date, time and venue of hearing/ sitting as 26.07.2019 (4.00 p.m.) in the office of sole arbitrator. This communication has been mailed to all petitioners by registered post with acknowledgement due and each of the three petitioners have duly received the same on 16.07.2019, as is evident from postal acknowledgement cards in the records of AT.

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13. A scanned reproduction of communication dated 09.07.2019 from AT are as follows:

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https://hcservices.ecourts.gov.in/hcservices/

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14. A scanned reproduction of postal receipts (as in records of

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AT) evidencing mailing of aforementioned communication dated 09.07.2019 are as follows:

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15. A scanned reproduction of postal acknowledgement cards

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evidencing receipt of communication dated 09.07.2019 by the three petitioners in captioned OPs are as follows:

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16. A further perusal of records from AT reveals that sole arbitrator has also sent requisite disclosure under cover of aforementioned letter dated 09.07.2019. This Court is informed that petitioners did appear on 26.07.2019, but it may not be necessary to delve into that aspect of the matter as, after 09.07.2019 communication which has been duly served on all three petitioners, claim statement has also been mailed by registered post with acknowledgement due to all three petitioners and the same have also been duly received by all three petitioners.

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https://hcservices.ecourts.gov.in/hcservices/ 17. Claim statement has been mailed on 01.08.2019, which is

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evidenced by postal receipts and postal acknowledgement cards forming

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part of records of AT. A scanned reproduction of the same are as follows:

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18. This Court on further perusal of records of AT finds that even

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thereafter, another communication from AT enclosing proceedings dated 30.08.2019 has been sent. A scanned reproduction of proceedings dated 30.08.2019 are as follows:

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19. Aforesaid communication dated 30.08.2019 has also been

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duly received by all three petitioners and a scanned reproduction of postal receipts and postal acknowledgement cards (as in the records of AT) are as follows:

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20. To be noted, the aforementioned communication from AT which has been duly received by each of the three petitioners have been mailed to the same addresses as in short and long cause titles of captioned OPs filed by petitioners who are protagonists qua challenge to impugned awards. Therefore, the lone ground that petitioners did not receive any communication from AT prior to interim and final awards i.e., impugned awards falls flat on its face. That ground fails without any speck of doubt as not one but three sets of communications have been duly received by each of the three petitioners at the addresses as shown in the captioned OPs prior to the receipt of impugned awards. Therefore, this Court has no difficulty in

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https://hcservices.ecourts.gov.in/hcservices/ unhesitatingly coming to the conclusion that there is no violation or infarct

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of the second limb of Section 34(2)(a)(iii) that has been alluded to supra.

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This is evident from the records of AT as alluded to and thereafter

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delineated supra.

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21 . Registry is directed to retain the records of AT along with the envelope and covering letter from the sole Arbitrator dated 27.01.2020 in a sealed envelope and this is obviously for the purpose of reference in an intra court appeal, if that be so. There shall be a post script to this order also in this regard.

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Before parting with this case, this Court deems it appropriate

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to observe that the protagonists of applications assailing arbitral awards should be careful and responsible while raising grounds such as non-receipt of proper notice of arbitral proceedings as the entire exercise of requisitioning records and perusing the same was clearly avoidable in the case on hand as each of three petitioners have received 3 sets of communications prior to the impugned awards. Notwithstanding this position they have ventured to predicate their challenge on the ground of no proper notice of arbitral proceedings by saying that they have not received

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any notice from AT prior to the receipt of the impugned award. Owing to https://hcservices.ecourts.gov.in/hcservices/ the nature of submission made by learned counsel for petitioners, this Court

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is not imposing costs in this case, but it need not be the same in days to

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come in cases of this nature.

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M.SUNDAR. J

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23. In the light of the discussion thus far, both the captioned OPs failed and the same are dismissed. Consequently, connected applications are closed. This Court refrains itself from imposing costs.

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Sd./-(M.S.J.,)

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19.01.2021

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//Certified to be true copy// Dated at Madras this the day of 2021.

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COURT OFFICER(O.S.) From 25th Day of September 2008 the Registry is issuing certified copies of the Orders/Judgments/Decrees in this format.

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https://hcservices.ecourts.gov.in/hcservices/