Madras High Court
Mani.V vs M/S.Shriram City Union Finance ... on 20 January, 2021
O.P.No.571 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 20.01.2021
CORAM
THE HON'BLE Mr.JUSTICE M.SUNDAR
O.P.No.571 of 2020
and
A.No.3003 of 2020
1.Mani.V
S/o.Veerasamy
2. Lakshmi.M.
C/o.Mani
... Petitioners
-Vs.-
M/s.Shriram City Union Finance Ltd.,
Represented by its Authorized Representative
Having their office at No.123 Angappan Naickan St.,
Chennai-600 001.
and
it's inter alia branch, Sorento Building,
1st Floor, No.6, L.B.Road, Adyar,
Chennai-600 020.
.. Respondent
This Original Petition filed under Section 34 (2) (a) (ii) & 34 (2) (b)
(iii) of the Arbitration and Conciliation Act, 1996, praying to set aside the
the award dated 16.12.2019 made in ACP(EF) No.CAR 305/2019 and
thereby dismiss/reject the claim of the Respondent.
1/22
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O.P.No.571 of 2020
For Petitioners : Mr.Vigneshwar Elango
For Respondent : Mr.K.V.Ananthakrushnan
***
ORDER
In a web hearing on a video conferencing platform today,
Mr.Vigneshwar Elango, learned counsel on record for the two petitioners in
the captioned 'Original Petition' ['OP' for the sake of brevity] and
Mr.K.V.Ananthakrushnan, learned counsel on record for the lone respondent
are before me, with the consent of both learned counsel, captioned OP was
taken up for final disposal and it was heard out.
2. Proceedings/order made by this Court in the captioned OP in the
listing on 10.12.2020 is of relevance and the same reads as follows:
'Mr.Vigneshwar Elango, learned counsel for two petitioners is
before me in this web hearing on a video conferencing platform.
2. Captioned 'original petition' ['OP' for the sake of
convenience and clarity] has been filed under 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
convenience and clarity assailing an 'arbitral award dated
16.12.2019 bearing reference No.ACP(EF)No.CAR 305/2019'
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[hereinafter 'impugned award' for the sake of convenience and
clarity].
3. Learned counsel submits that captioned OP is specifically
predicated on Section 34(2)(a)(iii) of A and C Act as according to
him prior notice of arbitral proceedings has not been issued to
petitioners. To further his contention in this direction, learned
counsel draws the attention of this Court to pleadings, particularly
paragraph Nos.3.3, 3.4, grounds (d) and (e) in captioned OP, which
read as follows:
'3.3. Out of the Blue the petitioners were issued
with a notice from the Learned Arbitrator
Mr.C.A.Ravichandiran dated 18.09.2019 calling forward
the petitioners to attend the Arbitration proceedings to be
held on 15.10.2019. Due to some personal
inconvenience, petitioners were unable to attend the
Arbitration proceedings held on 15.10.2019.
3.4. It is pertinent to point out here that the
proceedings which was supposedly to be held on
15.10.2019 was held on 16.10.2019 by the Arbitrator for
the reasons best known to him. The petitioners were
completely unaware of the fact that the Arbitration
proceedings had taken place on 16.10.2019.
d. The Learned Arbitrator in his summons issued
to the petitioners called upon them to attend the
Arbitration proceedings on 15.10.2019 but conducted the
arbitration proceedings on 16.10.2019 in order to
proceed with the arbitration in the absence of the
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petitioners and set them ex-parte.
e. The Learned Arbitrator ought to have
considered the fact that the petitioners issued a notice
through their counsels dated 19.10.2019 requesting for
the next date of hearing in order to take part in the
Arbitration Proceedings.'
4. What is of significance is, in this regard, learned counsel,
adverting to a notice through counsel (sent by petitioners) being
notice dated 19.10.2019 emphatically asserts that the same was
served in person on the arbitrator on 21.10.2019. This notice has
been placed before me as part of case file. Scanned reproduction of
the same reads as follows:
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5. Adverting to short signature/initials on 21.10.2019 notice,
learned counsel asserts that it is the signature (acknowledgement of
receipt) qua sole arbitrator, who constituted the AT. Learned
counsel submits that while the notice has fixed 15.10.2019, as
hearing date, hearing/sitting was actually held on 16.10.2019 in
unholy haste and more importantly, there is no response to
19.10.2019 notice is petitioners' counsel's further say.
6. In the light of aforesaid submission, issue limited notice on
above point to sole respondent returnable by 17.12.2020. Private
notice permitted. Private notice through electronic modes (besides
conventional modes) also permitted.
7. Registry to requisition the records of AT from
Mr.C.A.Ravichandran, Sole Arbitrator, pertaining to impugned
award i.e., award dated 16.02.2019 bearing reference
No.ACP(EF)No.CAR 305/2019. Registry to requisition through
electronic modes of communications, if coordinates are available
(besides conventional modes). At request, learned counsel for
petitioners is permitted to communicate a copy of this
proceedings/order to learned Arbitrator for the limited purpose of
expeditious submission of records of AT in the office of Registrar
General of this Court in a sealed envelope so that the same can be
placed before me in the next listing.
8. List on 17.12.2020.'
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3. Thereafter, there were two listings of captioned OP, one on
17.12.2020 and another on 05.01.2021 and the proceedings made in these
two listings read as follows:
'Proceedings dated 17.12.2020
Read this in conjunction with and in continuation of earlier
proceedings dated 10.12.2020.
2. To be noted, short forms/abbreviations used in the earlier
proceedings made in the previous listing on 10.12.2020 are being
continued to be used in the instant proceedings also.
3. In this web hearing on a video conferencing platform today
i.e., virtual hearing Mr.Vigneshwar Elango learned counsel on record
for two petitioners is before me.
4. Pursuant to earlier proceedings dated 10.12.2020, Registry
has put up a note saying that the records of AT have since been
received and the records have also been placed before me as part of
the case file. Be that as it may, vide Paragraph No.6 of previous
proceedings dated 10.12.2020 limited notice was issued to sole
respondent, notice has since been effected and Ms.Janani
Ananthakrushnan, learned counsel who has joined hearing today
submits that her Senior Mr.K.V.Ananthakrushnan, herself and co-
counsel (if any) with address for service at No.14/31, Gopal Sreet,
T.Nagar, Chennai-600 017, have instructions to enter appearance
and file Vakalatnama. In other words, she accepts notice on behalf of
sole respondent and undertakes to file Vakalatnama along with her
Senior and co-counsel (if any) by Monday i.e., 21.12.2020.
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5. List after Christmas Holidays.'
'Proceedings dated 05.01.2021
Read this in conjunction with and in continuation of earlier
proceedings made in previous listing on 17.12.2020.
2. Today, in this virtual Court, Mr.Vigneshwar Elango,
learned counsel on record for two petitioners and Ms.A.Janani,
counsel on record for sole respondent are before me.
3. Learned counsel for petitioners seeks an adjournment citing
difficulty.
List on 20.01.2021.'
4. Pursuant to aforementioned proceedings made on 10.12.2020,
requisitioning records of AT qua impugned award, the same have been
submitted in this Court by learned sole Arbitrator, who constituted the
'Arbitral Tribunal' ['AT' for brevity] and the records have been placed before
me.
5. In the light of 10.12.2020 proceedings, the only point that arises for
consideration is whether there is breach of second limb of Section
34(2)(a)(iii) of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of
1996)' ['A and C Act' for the sake of brevity]. In other words, the lone point
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on which learned counsel for petitioner predicated is challenged to impugned
award is, the petitioners were not given proper notice of the arbitral
proceedings.
6. In this regard, the proceedings made by this Court in 10.12.2020
listing, which has been extracted and reproduced supra, captures the
challenge as articulated by the protagonists of captioned OP and therefore,
this Court shall not dilate on the same again.
7. This Court carefully perused the records of AT qua impugned
award, which have been placed before it and the following points are
noticed. In this regard, this Court deems it pertinent to set out that
expression 'furnish proof that' in Section 34(2) (a) of A and C Act has been
replaced by 'establishes on the basis of the record of the arbitral tribunal
that' by Amending Act being Act 33 of 2019. To be noted, vide Section 1(2)
of this Amending Act, the same will kick in on the date on which, Central
Government makes a notification in the Official Gazette and different dates
can be appointed for different provisions of the Amending Act. In this case,
the expression, which we are concerned with relates to provision of Section 7
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of the Amending Act and the same kicked in i.e., came into force on and
from 30.08.2019 vide notification of Central Government being
S.O.3154(E). To be noted, captioned OP has been presented on 16.03.2020
[post 30.08.2019] and therefore, this is being mentioned. The
adjudication/record of proceedings qua adjudication as culled out from the
records of AT is as follows:
8. Therefore, it is clear that AT sent a notice dated 18.09.2019 fixing
15.10.2019 10.30.a.m to 12.30.p.m as the date and time of the first sitting of
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AT. To be noted, the venue has also been mentioned in this notice. This
18.09.2019 notice has been duly received by both the petitioners on
19.09.2019 and the postal acknowledgement cards are available in the
records. There is no difficulty in this regard and petitioners' counsel also
does not dispute this, but, what the petitioners' counsel's say is, a letter dated
19.10.2019 was given to the sole Arbitrator, who constituted AT inter alia
saying that petitioners could not participate in the 15.10.2019 sitting and
specifically sought for (a) 15.10.2019 proceedings and (b) details of the next
date of hearing/sitting so as to enable the petitioners to participate in the
arbitration proceedings. It is the specific case of learned counsel for
petitioners that this was served in person on the sole Arbitrator, who
constituted AT on 21.10.2019 and the signatures contained in that letter is
that of the sole Arbitrator. A careful perusal of not one but, three signatures
of sole Arbitrator available in the records [extracted and reproduced supra]
and a comparison of the same with the signature in the 19.10.2019 notice
[also scanned and reproduced supra as part of 10.12.2020 proceedings]
leaves this Court with the considered view that to the naked eye the signature
on the 19.10.2019 communication appears to be that of the Arbitrator.
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9. Be that as it may, what is of greater significance is, the Procedural
History as captured in the impugned award reads as follows:
'Procedural History:
19.09.2019. The date on which, the claim petition and relevant
documents filed. Specifically notifying Arbitral Tribunal's intention
to pass an award on merits in case of Respondents' failure to appear
and file their objections if any. Notice to Respondents ordered by
16.10.2019. 16.10.2019 Claimant's Representative present.
Respondents summons served. Respondents called absent. No
representation. Set exparte. Adjourned to 30.10.2019 for evidence.
30.10.2019 On petition P.A filed documents marked orders
reserved.'
10. The aforementioned procedural history runs contrary to the
adjudication proceedings found in the records of AT while the records of AT
show that the first sitting was on 15.10.2019 as indicated in the
aforementioned 18.09.2019 notice, on that day, the respondents [petitioners
before me] have been set exparte and the next date of sitting has been fixed
as 13.10.2019 for evidence. Thereafter, the impugned award has been made
on 16.12.2019.
11. Learned counsel for respondent, submitted that the Procedural
History captured in the impugned award is a typographical error and the
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petitioners cannot make a mountain out of a molehill. On a demurer even if
this is a typographical error, there is nothing to demonstrate that 15.10.2019
proceedings were sent to the petitioners (who are respondents before AT).
On a further extreme demurer even absent 19.10.2019 communication,
nothing prevented AT from sending 15.10.2019 proceedings to the
respondents before AT, who are petitioners before me.
12. Learned counsel for respondent, pressed into service an order
dated 11.01.2018 made by a Hon'ble Division Bench of this Court in
O.S.A.No.66 of 2014. Placing reliance on this order, learned counsel for
respondent submitted that the petitioners cannot insist on adjournment as a
matter of right.
13. Learned counsel for respondent also insisted that notices sent by
the respondent to the petitioners prior to the commencement of arbitral
proceedings had also been duly received and therefore, aforementioned plea
put forth by the petitioners' is specious and it cannot be entertained. In the
considered view of this Court, this is not specious, but sound and correct as
we are concerned with proper notice of arbitral proceedings and not pre-
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arbitral communications between parties to list. In this regard, the
aforementioned 30.08.2019 Amendment to Section 34(2)(a) of A and C Act
becomes significant and this is not a case of protagonists of captioned OP
furnishing proof, but it is a case of plea being established on the basis of
records of Arbitral Tribunal. The paragraphs dealing with proceedings
before Arbitral Tribunal in the aforementioned order of Hon'ble Division
Bench are paragraphs 5 and 6 and the same read as follows:
'5.It is the case appellants that they had not received any
intimation of the approval of the loan. Admittedly, the first
appellant had received phone calls from Ms.Ramya and Mr.Shriram
(Regional Manager) from Mylapore Branch of M/s.Shriram City
Union Finance Limited for non-payment of the loan instalments. He
apparently did nothing inspite of phone calls. Be that as it may, the
first appellant could not have claimed an adjournment of the
arbitration proceedings as a matter of right. It was for the
appellants to appear before the Arbitrator and make their
submissions.
6. The learned Single Bench very rightly found that the
appellants had received notice and the request of the first appellant
to postpone the hearing had not been acceded to. Before the actual
date of hearing, the first appellant wrote another letter reminding
the Arbitrator to postpone the hearing. Adjournment cannot be
claimed as of right. If adjournment were not granted, it was for the
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appellants to appear before the Arbitrator and file their pleadings,
which they had not done.'
14. Learned counsel for petitioners, submitted that the said order of
Hon'ble Division Bench is clearly distinguishable on facts as this is not a
case where the petitioners sought adjournment and the petitioners are not
saying that adjournment is a matter of right. On the contrary, it is pointed
out that this is a case where the petitioners wanted to know the next date of
sitting so as to enable them to participate in the arbitration proceedings. This
has been articulated in aforementioned 19.10.2019 letter and the same has
also been alluded to supra. It was also submitted that the aforesaid order is
not an authority for the proposition that petitioners need not have been put a
notice that they being set exparte and the petitioners need not be provided
with copies of the proceedings dated 15.10.2019. Learned counsel also
submitted that above order was rendered prior to 30.08.2019. This Court
finds force in the submissions of learned counsel petitioners and this Court
accepts the submission that the aforementioned order is both distinguishable
on facts and is also not an authority for the proposition that is being
canvassed in the case on hand by the respondent. In this regard, this Court
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reminds itself of observation of Lord Denning in Harper Vs. National Coal
Board [(1974) 2 AII ER 441(CA)] that precedents are not to be read
ipsissima verba. To be noted, this Harper's case principle has been
recognised by Hon'ble Supreme Court in BGS SGS Soma JV Vs. NHPC
reported in (2020) 4 SCC 234 and relevant paragraph is paragraph 43.
Relevant portion of this paragraph 43 reads as follows:
'43. In any case, a judgment must be read as a whole, so that
conflicting parts may be harmonised to reveal the true ratio of the
judgment. However, if this is not possible, and it is found that the
internal conflicts within the judgment cannot be resolved, then the
first endeavour that must be made is to see whether a ratio
decidendi can be culled out without the conflicting portion. If not,
then, as held by Lord Denning in Harper v. National Coal
Board [Harper v. National Coal Board, 1974 QB 614 : (1974) 2
WLR 775 : (1974) 2 All ER 441 (CA)] , the binding nature of the
precedent on the point on which there is a conflict in a judgment,
comes under a cloud. [ In Harper, 1974 QB 614 : (1974) 2 WLR 775
: (1974) 2 All ER 441 (CA), the decision in Central Asbestos Co.
Ltd. v. Dodd, 1973 AC 518 : (1972) 3 WLR 333 : (1972) 2 All ER
1135 (HL), a House of Lords judgment, had to be applied. It was
found that two learned Law Lords decided the question of law in
favour of Dodd, 1973 AC 518 : (1972) 3 WLR 333 : (1972) 2 All ER
1135 (HL), whereas two learned Law Lords decided the question of
law against Dodd, 1973 AC 518 : (1972) 3 WLR 333 : (1972) 2 All
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ER 1135 (HL), stating that his claim was barred. As Lord Denning
stated, the fifth Law Lord, Lord Pearson, was the odd man out, in
that he agreed with the two learned Law Lords that the law did not
support Dodd case, 1973 AC 518 : (1972) 3 WLR 333 : (1972) 2 All
ER 1135 (HL), but agreed with the minority judges that Dodd, 1973
AC 518 : (1972) 3 WLR 333 : (1972) 2 All ER 1135 (HL) claim was
not barred. This being the case, Lord Denning spoke of the
precedential value of Dodd case, 1973 AC 518 : (1972) 3 WLR 333 :
(1972) 2 All ER 1135 (HL) as follows:“How then do we stand on the
law? We have listened to a most helpful discussion by Mr
McCullough on the doctrine of precedent. One thing is clear.We can
only accept a line of reasoning which supports the actual decision of
the House of Lords. By no possibility can we accept any reasoning
which would show the decision itself to be wrong. The second
proposition is that if we can discover the reasoning on which the
majority based their decision, then we should accept that as binding
upon us. The third proposition is that, if we can discover the
reasoning on which the minority base their decision, we should
reject it. It must be wrong because it led them to the wrong result.
The fourth proposition is that, if we cannot discover the reasoning
on which the majority based their decision, we are not bound by it.
We are free to adopt any reasoning which appears to us to be
correct, so long as it supports the actual decision of the House.In
support of those propositions, I would refer to the speech of Lord
Dunedin in Great Western Railway Co. v. Owners of S.S. Mostyn,
1928 AC 57, pp. 73-74 (HL), and of Lord MacDermott
in Walsh v. Curry, 1955 NI 112 (CA), pp. 124-125 and of Viscount
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Simonds in Midland Silicones Ltd. v. Scruttons Ltd., 1962 AC 446,
pp. 468-469 : (1962) 2 WLR 186 (HL)Applying the propositions
to Central Asbestos Co. Ltd. v. Dodd, 1973 AC 518 : (1972) 3 WLR
333 : (1972) 2 All ER 1135 (HL), the position stands thus : (1) the
actual decision of the House in favour of Dodd must be accepted as
correct, We cannot accept any line of reasoning which would show it
to be wrong. We cannot therefore accept the reasoning of a minority
of two — Lord Simon of Glaisdale and Lord Salmon — on the law. It
must be wrong because it led them to the wrong result. (2) We ought
to accept the reasoning of the three in the majority if we can
discover it. But it is not discoverable. The three were divided. Lord
Reid and Lord Morris of Borth-y-Gest took one view of the law. Lord
Pearson took another. We cannot say that Lord Reid and Lard
Morris of Borth-y-Gest were correct : because we know that their
reasoning on the law was in conflict with the reasoning of the other
three. We cannot say that Lord Pearson was correct : because we
know that the reasoning which he accepted on the law led the other
two (Lord Simon of Glaisdale and Lord Salmon) to a wrong
conclusion. So we cannot say that any of the three in the majority
was correct. (3) The result is that there is no discernible ratio among
the majority of the House of Lords. In these circumstances I think we
are at liberty to adopt the reasoning which appears to us to be
correct.” (Harper case, 1974 QB 614, pp. 621-22)(emphasis in
original)]'.
15. This Court also reminds itself of the observation of Hon'ble
Supreme Court in Sreenivasa General Traders Vs. State of Andhra Pradesh
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reported in (1983) 4 SCC 353 where it was held that observations case laws
have to be read in the context of facts settings in which they appear. The fact
setting of the case relied on by learned counsel for respondent is clearly
distinguishable qua case on hand as that was a case where adjournment was
insisted as a matter of right and it turned on several other issues also.
16. Be that as it may, the petitioners have taken the stand that the
arbitral proceedings were hastily held on 16.10.2019 owing to the procedural
history captured in the impugned award, but it was not and if 15.10.2019 had
been sent/given to petitioners the trajectory, dimensions and dynamics of this
matter may well have been different.
17. Owing to the narrative thus far, the inevitable sequitur is, there has
been an infarct second limb of Section 34 (2)(a)(iii) leading to a Section
34(2)(a)(i) situation i.e., the infarct qua lack of proper notice of arbitral
proceedings has resulted in putting the parties i.e., petitioners under an
incapacity qua the arbitral proceedings. This Court also notices that there is
a breach, which has the trappings of Section 18 of A and C Act as, the
15.10.2019 proceedings have not mailed to the petitioners, whereas the
respondent has had the benefit of the said proceedings.
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18. Before parting with this case, in the light of the view that has been
taken by this Court, this Court deems it appropriate to extract and reproduce
a portion of paragraph 52 of McDermott International v. Burn Standard
Co. Ltd., reported in (2006) 11 SCC 181) which reads as follows:
'52. .......................... The court cannot correct errors of the
arbitrators. It can only quash the award leaving the parties free to
begin the arbitration again if it is desired. So, the scheme of the
provision aims at keeping the supervisory role of the court at
minimum level and this can be justified as parties to the agreement
make a conscious decision to exclude the court's jurisdiction by
opting for arbitration as they prefer the expediency and finality
offered by it.'
19. If the parties resort to re-arbitration, though obvious, any
observation made in this order will not come in the way of such proceedings.
20. There is one other aspect of the matter/proceedings which needs to
be set out in this matter. Prayer in the captioned OP reads as follows:
'It is therefore in the interest of justice necessary and
prayed that the Hon'ble court may be pleased to set aside the
the Award dated 16.12.2019 made in ACP(EF) No.CAR
305/2019 and thereby dismiss/reject the claim of the
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Respondent and pass further or other orders as this Hon'ble
Court may deem fit and proper in the facts and circumstances
of the this case and thus render justice.'
21. A perusal of prayer shows that the petitioners seek to set aside the
impugned award and consequently want dismissal/rejection of the claim of
the respondent. There is no question of dismissing/rejecting the claim of the
respondent in this OP. It is a matter for re-arbitration, if that be so. All that
can be said/done in the captioned OP is allowed to the extent of setting aside
the impugned award. Therefore, the second limb of prayer in the captioned
OP i.e., dismissal/rejection of the claim of respondent is not acceded to. It is
made clear that the impugned award is set aside and the captioned OP is
allowed to that extent. This shall be borne in mind by Registry while
drawing up the decretal order. Considering the nature of the matter, there
shall be no order as to costs. Consequently, connected Application No.3003
of 2020 is closed.
22. Registry is directed to retain the records of AT along with the
envelope and covering letter from the sole Arbitrator dated 12.12.2020 in a
sealed envelope and this is obviously for the purpose of reference in an intra
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court appeal, if that be so. There shall be a post script to this order also in
this regard.
20.01.2021
Speaking order: Yes/No
Index: Yes / No
kmi
P.S.
Registry is directed to retain the records of AT along with envelope and
covering letter from the Sole Arbitrator dated 12.12.2020 in a sealed
envelope.
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M.SUNDAR, J.
kmi
O.P.No.571 of 2020
and
A.No.3003 of 2020
20.01.2021
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