L & T Finance Ltd vs Braham Pal & Anr
2012 Latest Caselaw 2416 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI


+                 EFA Nos.11/2012, 14/2012 and 15/2012


%                                                              13th April, 2012

1.     EX.F.A. 11/2012

       L & T FINANCE LTD                                       ..... Appellant
                        Through:            Mr. Rajesh Jangra, Adv.
                 versus

       BRAHAM PAL & ANR                                        ..... Respondents

Through:

WITH

2. EX.F.A. 14/2012

L & T FINANCE LTD ..... Appellant Through: Mr. Rajesh Jangra, Adv.

                      versus

       RAJ KUMAR & ANR                                           ..... Respondents
                       Through:
                            AND
3.     EX.F.A. 15/2012

       L & T FINANCE LTD                                        ..... Appellant
                      Through:              Mr. Rajesh Jangra, Adv.

                      versus

       SAHANSAR PAL & ORS                                         ..... Respondents
                    Through:


 CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

CM No.6431/2012(for exemption) in EFA No.11/2012, CM No.6471/2012(for exemption) in EFA No.14/2012 & CM No.6522/2012(for exemption) in EFA No.15/2012

Allowed, subject to all just exceptions.

Applications stand disposed of.

EFA No.11/2012, EFA No.14/2012 & EFA No.15/2012

1. These three appeals are being disposed of by this common

order as the challenge is to the identical orders of the Executing Court. By

the impugned orders dated 9.2.2012, the Executing Court has dismissed the

execution petitions filed for execution of the Awards passed in favour of the

appellant/Finance Company. The Execution petitions were dismissed

without even issuing notices to the respondents.

2. Executing Court has dismissed the execution petitions by

holding that since no disputes had arisen, the Arbitrator could not have

entered into the reference and passed the Awards. It has been held that

since the Awards were passed without disputes existing, the Awards were

null and void/without jurisdiction, and hence the Executing Court could not

implement such Awards. The Executing Court has held that merely because

one person asserts a right and which is repudiated by another is not a

difference, i.e. merely because the appellant/Finance Company sought

payment, and which could not be paid by the borrowers, there is no dispute

or difference by mere non-payment and therefore the Awards could not be

passed. The Executing Court has relied upon two judgments in the cases of

Dilip Construction Company vs. Hindustan Steel Ltd. WIR 1973 Madhya

Pradesh 261 and M/s Pearl Hosiery Mills Ludhiana Vs. Union of India

and Anr.

3. So far as the judgment in the case of M/s Pearl Hosiery (supra)

is concerned, the said judgment was passed under the Arbitration Act, 1940

wherein an application was filed under Section 34 of the Act to stay the suit

on account of the fact that the parties were governed by an Arbitration

Agreement and therefore the disputes ought to be referred to the Arbitration.

It was held by a learned Single Judge of this Court in the case of M/s. Pearl

Hosiery (supra) that since what were the disputes which were sought to be

referred to Arbitrator had not been stated in application under Section 34 of

the Arbitration Act, 1940, therefore, the application did not lie. This

judgment has therefore no application in the facts of the case where Award

has been passed after issuing notices to the respondents in the cases who

were the principle borrowers and the guarantors.

4. So far as the judgment in the case of Dilip Construction

Company (supra) is concerned, the said judgment holds that there is a want

of inherent jurisdiction in Umpire unless there is reference by both sides and

Award can be challenged at any stage even in collateral proceedings. It was

also held in the judgment of the Dilip Construction Company (supra) that

the parties who appear before the Arbitrator after objecting to his jurisdiction

cannot said to have waived their rights to challenge the Award on the ground

of Award being passed by the Arbitrator/Umpire without authority. This

judgment also therefore has no application in the facts of the cases where

Awards have been passed after notices were issued to the principal

borrowers and guarantors who failed to appear after due service, resulting in

passing of the Awards.

5. I am in fact perturbed by not only the procedure adopted by the

Executing Court but also by the impugned order on merits. Firstly, the

Executing Court cannot go behind the judgment and decree, and which are

Awards in these cases. The Executing Court by arriving at a total perverse

finding, to say the least, has held that Executing Court can go behind the

Award because the Award is without jurisdiction inasmuch as no disputes

existed. This line of reasoning is unheard of, if I may say so. Secondly, the

execution petitions were dismissed even without issuing notices to the

respondents in the cases. Finally, if there are non-payment of dues by the

principal borrowers and the guarantors because of which arbitration

proceedings are initiated, and which thereafter results in passing of the

Awards after issuing due notices to the respondents in the proceedings, it

cannot be said that such Awards are without jurisdiction for the Executing

Court to hold the same to be without jurisdiction allegedly because no

disputes exist inasmuch as non-payment of dues is very much a dispute.

6. Appeals are accepted and the impugned orders are set aside.

7. Since the impugned orders are totally perverse and have

absolutely no basis in law, let copies of the impugned orders and a copy of

today's order be sent by the Registry to the Committee of Inspecting Judges

of the concerned ADJ.

VALMIKI J. MEHTA, J APRIL 13, 2012 ak