Cholamandalam Investment And Finance ... vs Uttam Das And Anr
2024 Latest Caselaw 2906 Cal/2

Calcutta High Court

Cholamandalam Investment And Finance ... vs Uttam Das And Anr on 11 September, 2024

Author: Sabyasachi Bhattacharyya

Bench: Sabyasachi Bhattacharyya

OCD-18
                    IN THE HIGH COURT AT CALCUTTA
                     Ordinary Original Civil Jurisdiction
                              ORIGINAL SIDE
                           (Commercial Division)


                          IA NO. GA-COM/1/2024
                                    In
                               EC/250/2021
   CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED
                           VS
                    UTTAM DAS AND ANR.

  BEFORE:
  The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA

Date : 11th September, 2024.

Appearance:

Ms. Shrayashee Das, Adv.

Mr. Himangsu Bhawsingka, Adv.

Mr. Rohan Kumar Thakur, Adv.

...for the award-holder.

Mr. Partha Deb Barman, Sr. Adv.

Mr. Subhadeep Chatterjee, Adv.

Ms. Arpita Kundu, Adv.

...for the award-debtors.

The Court: Learned counsel appearing for the award-debtor raises an

interesting issue. It is contended that the award which has been sought to

be enforced by the present application under Section 36 of the Arbitration &

Conciliation Act, 1996 is vitiated by fraud and is a nullity, in view of the

appointment of the arbitral tribunal being unilateral.

Learned counsel argues that the commencement date of the

arbitration has been mentioned in the award to be January 20, 2020

whereas in the first paragraph of the self-same award, it has been narrated

that the invocation was by a purported letter dated August 17, 2020. Even

apart from such discrepancy, it is contended that the vehicle which is the

subject-matter of the hypothecation, had been previously sold to some third

party entity on June 17, 2019 and was registered in the State of Tripura. As

such, the hypothecation itself was vitiated by fraud, as was the arbitral

reference and the arbitral award which is now sought to be enforced.

Learned counsel seeks to rely on an unreported judgment in the

matter of Cholamandalam Investment and Finance Company Limited -versus-

Amrapali Enterprises and Another dated March 14, 2023 where a co-ordinate

Bench of this Court had, inter alia, observed that a unilateral appointment

of arbitrator vitiates the award. As a result of unilateral appointment, the

arbitral tribunal lacks inherent jurisdiction which goes to the root of the

matter, thereby rendering the award a nullity.

The learned Single Judge further went on to observe that in view of

the award being non est in the eye of law, the jurisprudence pertaining to

Section 47 of the Code of Civil Procedure has to be imported in principle and

even in a proceeding under Section 36 of the 1996 Act, the said defence can

be set up.

Learned counsel appearing for the award holder refutes the contention

of the award-debtors. It is submitted that there is a subsequent judgment of

a learned Single Judge of this Court which considered the report cited by

the award-debtors. Upon a consideration of all facets of the matter, the

latter judgment had held that the lack of jurisdiction arising out of

unilateral appointment is not inherent in the sense that it does not hit at

the root of the arbitral award, since it can be waived under the proviso to

Section 12(5) of the 1996 Act.

Apart from that, learned counsel for the award-holder submits that

the self-same ground of fraud and patent illegality could very well be taken

by the award-debtors in an appropriately constituted challenge under

Section 34 of the 1996 Act. Since no such challenge has been preferred

within the statutory limitation period of three months plus 30 days, no such

challenge can at this juncture be entertained by the Court.

Be that as it may, since arguable issues have been raised even in

connection with the execution case, the affidavit-in-opposition filed to the

Section 36 application today be kept on record. A copy thereof is served

here and now on the learned advocate for the award-holder. Reply, thereto,

if any, shall be filed by September 18, 2024.

The matter shall next be placed in the list under the appropriate

heading on September 23, 2024.

The warrant of arrest issued earlier shall remain suspended till

September 30, 2024 or until further order, whichever is earlier. However,

nothing in this order shall be interpreted to mean that the liability of the

award-debtors to file their affidavits of assets has been mitigated.

Accordingly, the award-debtors shall file their affidavits of assets by

September 18, 2024.

(SABYASACHI BHATTACHARYYA, J.)

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