Hari Krishan Mishra vs Escorts Finance Ltd.
2005 Latest Caselaw 1156 Del

JUDGMENT

Anil Kumar, J.

1. Aggrieved by award dated 01.03.2000 given by Shri K.S. Jaggi, Arbitral Tribunal, the petitioner has filed the present objections under Section 34 of the Arbitration and Conciliation Act, 1996.

2. Brief Facts to appreciate the controversy are that the petitioner had entered into a hire-purchase agreement dated 14.08.1997 for an Armada Mahindra Jeep with the respondent. The respondent is a public limited company incorporated under the Companies Act and is engaged in the business of leasing and hire-purchase of vehicles, equipment and machinery.

3. Pursuant to hire-purchase agreement No. 97 HWN 21118 dated 14.08.1997, a vehicle bearing registration No. UP-325-TT-1153 with Chassis No. DV 25920 and Engine No. DV 25920 was taken by the petitioner. An amount of Rs. 3.00 lakh was disbursed by the respondent in terms of the agreement. For the amount disbursed and other amounts payable under the agreement, M/s Vivek Studio and Electrostat, opposite Vivek Cinema, Kapurthala, Ali Ganj, Lucknow (U.P.) stood as guarantor and made himself jointly and severelliable to pay the outstanding amounts in terms of the agreement.

4. As per agreement entered between the petitioner and the respondent, the amounts were payable with interest at the rate of 14% per annum in 36 monthly installments of Rs. 11,833/- commencing from 13.08.1997 and ending on 13.07.2000.

5. The petitioner defaulted in payment of installments due to the respondent. Because of repeated defaults of the petitioner, the respondent terminated the agreement on 13.08.2000 and after repossessing the vehicle sold it for Rs.1.90 lakhs on 05.10.1998.

6. The respondent thereafter demanded an amount of Rs.1,14,738/- along with overdue interest at the rate of 2.5% from 04.05.1999 till payment and sent a notice dated 20.08.1999 by registered A.D. post and under postal certificate. While demanding the amounts due to the respondent from the petitioner, clause 21 of the agreement containing arbitration agreement was also invoked. The petitioner replied to the notice and contended that the vehicle which was taken on hire-purchase, was illegally snatchedrom him and consequently the petitioner raised counter claim of Rs. 10,000/- for illegally depriving the petitioner from the use of vehicle in his business of lime stone and also demanded a sum of Rs. 5.00 lakh on account of mental agony caused to the petitioner on account of non-availability of the vehicle to carry his mentally retarded daughter to the hospital. The petitioner also claimed Rs. 50,000/- towards unjustified and uncalled arbitration proceedings and Rs. 25,000/- towards filing of a case in Maihabad, Lucknow and Rs.10.00 lakhs towards loss of reputation.

7. On invoking the arbitration clause, Shri Rahul Srivastava, Advocate was appointed as the sole arbitrator to settle and decide all disputes arising out of hire-purchase agreement dated 14.08.1997 entered between the parties. After his appointment as sole arbitrator, Shri Rahul Srivastava sent a letter dated 03.07.1999 to the petitioner to appear before him. The petitioner replied to the notice of the arbitrator and stated that he had filed a civil suit No. 67 of 1999 titled as Hari Krishan Mishra v. Escorts Finance Limited in the court of Civil Judge, Malihabad, Lucknow and the court was pleased to pass an order whereby the respondent was restrained from selling/transferring the vehicle. The petitioner, without prejudice to his right, also climed that the arbitrator, Shri Rahul Srivastava did not comply with the requirement of Section 112 of the Arbitration and Conciliation Act, 1996 and, therefore, requested not to continue the arbitration proceedings. However arbitration, thereafter contnued for some time. The petitioner, therefore, again protested the continuation of Shri Rahul Srivastava as an arbitrator vide letter dated 07.08.1999 and consequent thereto Shri Rahul Srivastava, Advocate, sole arbitrator withdrew from the arbitration proceedings and intimated the petitioner, which intimation was received by the petitioner on 20.08.1999.

8. After the resignation of Shri Rahul Srivastava, Advocate to act as an arbitrator a notice under Section 15(2) of the Arbitration and Conciliation Act, 1996 dated 20.08.1999 was given and Shri K.S. Jaggi was appointed as a sole arbitrator in place of Shri Rahul Srivastava. Shri K.S. Jaggi on his appointment intimated the petitioner about his appointment vide letter dated 23.08.1999 and asked the petitioner to file the reply to the claims filed by the respondent.

9. The petitioner, therefore, appeared and participated in the arbitration proceedings and also filed reply to the claims filed by the respondent and also filed counter claims. In the reply filed by him before the arbitrator it was also averred that the reply of the petitioner was without prejudice to his rights to challenge the invocation of arbitration proceedings and appointment of arbitrator and his jurisdiction.

10. The petitioner also filed a detailed affidavit by way of evidence and also produced the copy of interim order dated 09.04.1999 passed by the third Additional Civil Judge (SD) Lucknow in Original Suit No. 67 of 1999 titled Hari Krishan Mishra v. Escorts Finance Limited.

11. The learned arbitrator considered the claim, counter claim, evidence produced by the parties and the documents and gave the award dated 01.03.2000 rejecting the counter claim of the petitioner and allowing the claim of Rs. 1,14,738/- up to 04.05.1999 towards outstanding monthly installments of hire-purchase and pendente lite and future interest at the rate of 12% per annum in stead of 30% per annum claimed by the respondent from 01.07.1999 besides the cost of Rs. 3,500/- for the arbitration proceeding and Rs. 10,000/- as the counsel's fee.

12. Petitioner preferred objection against the award dated 01.03.2000 under Section 34 of the Arbitration and Conciliation Act, 1996. The learned counsel for the petitioner, Shri R.K. Yadav, contended that on consideration of the counter claim, reply and the evidence produced by the petitioner and his documents, the counter claim could not be rejected and the claims of the respondent could not be allowed. The petitioner also produced the judgment of third-Additional Civil Judge (SD) Lucknow District Regular Suit No. 67 of 1999 dated 31.01.2003 wherein the respondent was directed to handover the vehicle No. UP-325-1153 Model Mahindra Armada to the plaintiff within one month. The counsel for the respondent contended that an appeal has been filed against the said judgment and decree dated 31.01.2003 which is pending adjudication in the High Court Judicature at Allahabad and in any case, the said decree was not in respect of the claims for the recovery of amounts due from the petitioner to the respondent. The judgment of the Civil Court was not produced before the Arbitrator and was pronounced during the pendency of objections of the petitioner. In any case, the arbitration agreement could not be denied by the petitioner and therefore jurisdiction arbitrator could not be ousted.

13. The counsel for the petitioner and the respondent have, however, confined their arguments to the counter claim of the petitioner and the claims of the respondent in the award and not to the question of return of the vehicle to the petitioner. Therefore, I shall deal with the counter claim and the claims of the respondent individually.

14. In the counter claim, the petitioner claims amounts for illegally depriving him of the use of vehicle besides the amounts for uncalled arbitration proceedings and for filing the case and towards loss of reputation.

15. The learned arbitrator has considered the counter claim and the documents filed by the parties. In terms of the clauses 8 and 9 of the hire-purchase agreement, it has been held that the respondent was at liberty to terminate the agreement on default being committed by the petitioner and consequently respondent was entitled to terminate the agreement. After termination of the agreement outstanding amounts on hire charges became due to the respondent and he also became entitled to re-possess the vehicle. The petitioner has not denied the agreement and its terms and conditions. The petitioner had admitted that there were four defaults in the payment of monthly installments and hire charges and consequently relying on the terms of the agreement, it whaled that the determination of the agreement by the respondent and demanding outstanding hire charges and re-possession of the vehicle was within the right of the respondent. No cogent reason has been given by the petitioner against termination of the agreement.

16. The arbitrator has considered the respective contentions of the parties and the documents produced before him. Since the parties selected their own forum, therefore the power of appraisement of evidence has been conceded to the arbitrator. The petitioner not only filed the reply but also participated in the arbitration proceedings and filed the evidence and the documents. This court under Section 34 of the Arbitration and Conciliation Act will not consider the reasonableness of the reasons given by the arbitrator as the arbitrator is the sole judge of the quality as well as quantity of evidence and it will not be for this court to take upon itself the task of being a judge on the evidence before the arbitrator.

17. Reliance can be placed on , Food Corporation of India v. Joginderpal Mohinderpal and Anr. ; , Puri Construction Pvt. Ltd v. Union of India; Gujrat Water Supply and Sewerage Board v. Unique Erectors (Gujrat) P. Ltd and Anr. and Hind Builders v Union of India holding that when the parties have chosen a forum to refer their disputes to be adjudicated not under a common law forum or under a statute by filing a suit, the court while exercising appellate power will not substitute its opinion with than that of the arbitrator. If the clause in the contract is open to two plausible interpretations, it is legitimate for the arbitrator to accept one or the other available interpretation and even the Court may think that the other view is preferable, the Court will not or should not interfere with interpretation of the Arbitrator until and unless the decision of the arbitrator is manifestly perverse or has been arrived at on the basis of wrong application of law.

18. Similarly in Sudarsan Trading Co. v. Govt. of Kerala, , the Supreme Court had carved out the distinction between error within jurisdiction and error in excess of jurisdiction and also held that reasonableness of the reasons given by the arbitrator, cannot be challenged and that appraisement of evidence by the arbitrator is never a matter which the court questions and considers.

19. Resultantly, it can not be said that the arbitrator has acted in excess of his jurisdiction or that the rejection of counter claim is manifestly perverse or has been arrived at on wrong application of law. The petitioner has not denied the agreement and has not challenged it on any ground nor has challenged the terms and conditions of the agreement. It is also not disputed and admitted by the petitioner that he committed four defaults. In the circumstances, the petitioner has not and can not challenge the termination of agreement. On termination of agreement, the respondent was entitled to repossess the vehicle. Consequently the petitioner is not entitled to claim any damages on account of repossession of vehicle by the respondent and the finding of the arbitrator rejecting the claim of the petitioner can not be faulted in the facts and circumstances.

20. While considering the claims of the respondent, the arbitrator has relied on the agreement between the parties and its terms and conditions. As already observed earlier, the agreement and its terms and conditions have not been denied by the petitioner. The defaults committed by the petitioner have not been denied. The amount demanded by the respondent has been held to be in accordance with the terms and conditions of the agreement. Nothing has been shown that allowing the claim for outstanding of monthly hire charges is based on wrong application of law or suffer from any other perversity or that the Learned Arbitrator has acted in excess of jurisdiction.

21. The arbitrator has considered the award of pendent lite and future interest and has awarded 12% per annum on the amount found due from the petitioner to the respondent instead of 30% per annum demanded by the respondent. In view of the decision of the Supreme Court in Secretary to Govt. of Orissa and Ors vs. G C Roy the arbitrator was competent to award pendente lite and future interest. The rate of interest of 12% per annum can also be not termed perverse in the facts and circumstances. The claim No. 3 of the respondent for the cost has also been allowed by the arbitrator and finding of the arbitrator can not be termed perverse and/or based on wrong application of law.

22. Consequently the award dated 01.03.2000 cannot be said to be perverse and there are no grounds as contemplated under Section 34 of the Arbitration and Conciliation Act, 1996 for setting it aside. It cannot be stated that the arbitrator has not taken the material before him into consideration before coming to a probable conclusion in allowing claims and rejecting counter claim. There is no merit in the objections filed by the petitioner under section 34 of the Arbitration and Conciliation Act,1996 and they are dismissed in the facts and circumstances. However, the parties are left to bear their own costs.