Madras High Court
Mr.R.O.Palanisamy vs Five Star Business Credits Ltd on 5 January, 2021
O.P.Nos.241 and 252 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 05.01.2021
Coram
THE HONOURABLE MR. JUSTICE M.SUNDAR
O.P.Nos.241 and 252 of 2017
&
A.Nos.1760 of 2017 & A.No.1821 of 2017
1. Mr.R.O.Palanisamy
2.Mrs. P.Kannammal .. Petitioners in both OPs
vs.
1.Five Star Business Credits Ltd.
Rep. By its Managing Director
No.39, Outer Circular Road
Kilpauk Garden Colony
Kilpauk, Chennai – 600 010
2.Mr.P.Tharanidharan ... Respondents in both OPs
Prayer in O.P.No.241 of 2017: Petitioner filed under Section 34 of
Arbitration and Conciliation Act, 1996 to set aside the award passed by
the learned Sole Arbitrator made in C.P.No.13 of 2014 dated 21.10.2016
as illegal, arbitrary, blessed without jurisdiction and is unenforceable in
law and pass such further or other orders as this Hon'ble Court may deem
fit and proper in the circumstances of the case and thus render justice.
Prayer in O.P.No.252 of 2017: Petitioner filed under Section 34 of
Arbitration and Conciliation Act, 1996 to set aside the award passed by
the learned Sole Arbitrator made in C.P.No.12 of 2014 dated 21.10.2016
as illegal, arbitrary, blessed without jurisdiction and is unenforceable in
law and pass such further or other orders as this Hon'ble Court may deem
fit and proper in the circumstances of the case and thus render justice.
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1/25
O.P.Nos.241 and 252 of 2017
For Petitioners : Mr.J.Ramakrishnan
in both OPs
For Respondents : Mr.P.Chandrasekaran for R1
in both OPs
ORDER
This common order will govern both the captioned 'Original
Petitions' ('OPs' in plural and 'OP' in singular for the sake of brevity).
Captioned OPs are applications 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 brevity. To be noted,
O.P.No.241 of 2017 and O.P.No.252 of 2017 shall be referred to as
senior OP and junior OP respectively for the sake of convenience.
2. Before I plunge into the crux and gravamen of the matter, it is
deemed appropriate to extract/reproduce two proceedings made in two
earlier listings, one on 05.11.2020 and another on 15.12.2020, which
read as follows:
'Proceedings dated 05.11.2020:
From now on 'O.P.No.241 of 2017' shall be referred to as
'senior OP' and 'O.P.No.252 of 2017' shall be referred to as
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'junior OP', both for the sake of convenience and clarity. Parties
in Senior and Junior OPs are the same. There are two
petitioners and two respondents in both the OPs.
2.Senior OP is directed against an arbitral award dated
21.10.2016 bearing reference C.P.No.13 of 2014. Junior OP is
directed against another arbitral award, which is also dated
21.10.2016, but it is a separate arbitral award bearing reference
C.P.No.12 of 2014.
3.This Court is informed that the parties are the same and
the facts are similar besides overlap of some issues. Therefore,
the two OPs have been tagged together and have been thus listed.
4.Today, Mr.J.Ramakrishnan, learned counsel on record
for the two petitioners in both the captioned OPs i.e., senior and
junior OPs, is before me in this web-hearing on a
videoconferencing platform. Mr.P.Chandrasekar, learned
counsel, who has joined the web-hearing, submits that he has
instructions to file vakalatnama on behalf of first respondent in
both the captioned OPs. Learned counsel undertakes to file
vakalatnama on or before 10.11.2020.
5. To be noted, this Court is informed that the second
respondent, who was the third respondent before AT (Arbitral
Tribunal) and a guarantor in the transaction, has been duly
served and name of the third respondent is shown in the cause
list, but none appears.
6. A.No.1821 of 2017 in senior OP and A.No.1760 of 2017
in junior OP are stay applications. List these two applications
also along with captioned OPs in the next listing.
List on 11.11.2020.
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O.P.Nos.241 and 252 of 2017
Proceedings dated 15.12.2020:
'Read this in conjunction with and in continuation of
earlier proceedings dated 05.11.2020.
2.Short forms used in the earlier proceedings shall be used
in this proceedings also.
3. Today, Mr.J.Ramakrishnan, learned counsel on record
for the two petitioners in both the captioned OPs i.e., Senior and
Junior OPs and Mr.P.Chandrasekar, learned counsel on behalf
of contesting first respondent in both Senior and Junior OPs, are
before me in this Web hearing on a video conferencing platform.
4. It is submitted by both learned counsel that possibility of
settlement will be explored by the parties.
5. Though obvious, it is made clear that if there is no
settlement, then the matters will be heard out on merits.
6.List under the caption 'FOR REPORTING
SETTLEMENT' after Christmas Holidays.'
3, The aforementioned proceedings made in two earlier listings
give a birds eye view or in other words, a thumbnail sketch of the case
file before me.
4. In the web-hearing on a video-conferencing platform today, i.e.,
in the virtual Court today, adverting to proceedings made on 15.12.2020
listing, more particularly Paragraph 5 thereat, Mr.J.Ramakrishnan,
learned counsel on record for two petitioners in the two captioned OPs
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and Mr.P.Chandrasekaran, assisted by Ms.P.Madhana, for contesting first
respondent, submitted that settlement could not be concluded and
captioned OPs can be taken up for final disposal and heard out. It is on
this basis, I took up captioned OPs for final disposal and the same were
heard out.
5. There is one peripheral issue which requires to be mentioned.
Second respondent in both captioned OPs is a guarantor (to be noted, co-
guarantor along with second petitioner, first petitioner being principal
borrower), he has not chosen to assail the impugned award though it has
gone against him. Both learned counsel very fairly submitted that the
presence of second respondent is not necessary for final disposal of
captioned OPs as it is a mere challenge to the impugned awards. Learned
counsel for petitioners submits that second respondent in both captioned
OPs was added as a party only because he was a co-guarantor and he was
also a third respondent before AT, which made the impugned awards. It
is on this basis that this Court proceeds with hearing of challenge to
impugned awards.
6. Instant OPs turn on two loan agreements, one dated 15.07.2011
and another dated 14.06.2012, while the former is subject matter of
junior OP, the later is subject matter of senior OP. To be noted, both
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these loan agreements have been marked as Ex.A3 in the respective
impugned awards.
7. Former loan agreement dated 15.07.2011, which is subject
matter of junior OP, shall be referred to as 'First Loan Agreement' and
latter loan agreement dated 14.06.2012, which is subject matter of senior
OP, shall be referred to as 'Second Loan Agreement'. It is submitted that
the date of the second loan agreement has been wrongly given as
14.06.2012 and that should read as 15.06.2012. To be noted, the Letter
of Guarantee (Ex.A4) executed by co-guarantor is dated 15.06.2012 and
therefore, this appears to be the correct position. I do not propose to
enter into any of those factual errors owing to the limited statutory
perimeter of Section 34 of A and C Act within which a Section 34 legal
drill of testing impugned awards should perambulate.
8. Under first loan agreement, there are two loan accounts, namely
Loan Account Nos.LN-95087 and LN-95088 for Rs.1,00,000/- and
Rs.7,00,000/- respectively, adding upto Rs.8,00,000/-.
9. Captioned OPs being applications under Section 34 of A and C
Act, short facts shorn of elaboration will suffice owing to the
aforementioned short statutory perimeter and limited legal landscape of
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Section 34. Short facts are that first petitioner in both captioned OPs
with the second petitioner and respondent as guarantors borrowed 8 lakhs
in all under first loan agreement and Rs. 5 lakhs under second loan
agreement from the contesting first respondent by creating a mortgage of
immovable property. To be noted, first petitioner in captioned OPs is the
borrower. As mentioned supra, Petitioner No.2 and Respondent No.2 are
guarantor and co-guarantor respectively.
10. There is no disputation or disagreement before me that there is
an arbitration clause in both the loan agreements these arbitration clauses
in both the loan agreements are identical and they serve as arbitration
agreement between the parties i.e., arbitration agreement within the
meaning of Section 2(1)(b) read with Section 7 of A and C Act.
11. Contesting first respondent, alleging default in repayment of
monies advanced under the two loan agreements, triggered the arbitration
clause, appointed the sole arbitrator who constituted the AT. AT entered
upon reference and made the impugned awards after full contest.
12. Before the AT, suffice to say that the lis turned on one
principal issue and that is the defence taken by the petitioners in
captioned OPs that signatures were obtained in blank/not fully filled in or
written up papers, the same were later manipulated and filled up to show
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marked up/inflated amounts. Therefore, the transaction and the mortgage
is not disputed, but the manner in which the transaction was carried out
was brought under cloud. This essentially is the crux and gravamen of
the lis before the AT.
13. AT made the impugned awards accepting the claim statements
of the contesting first respondent (claimant before AT) in both matters
and passed an award acceding to the entire claims in the claim statement
together with future interest besides mulcting the respondents before AT
with costs. The Arbitrator's fee was directed to be shared in equal
moieties by both sides.
14. Assailing the impugned award, learned counsel for petitioners
made a three pronged attack, a summation of which is as follows:
a) Impugned awards are liable to be set aside for infarct
of Section 31(3) of A and C Act as they do not set out the basis
on which the awards have been made;
b) Impugned awards make it clear that the AT concluded
the proceedings and reserved orders on 08.08.2015, but the
impugned awards were ultimately made only on 21.10.2016,
more than one year and two months later, which vitiates the
awards;
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c) The impugned awards grant interest on the entire
amount claimed by the contesting first respondent (claimant
before AT), which is clearly impermissible. It was emphasised
that future interest at the rate of 24% per annum has been
awarded.
15. In response to the aforesaid submissions, learned counsel for
contesting first respondent made submissions, summation of which is as
follows:
a) It cannot be gainsaid that the basis of the impugned
awards have not been given, as the petitioners who raised
serious disputes about the manner in which the transaction was
made, did not even choose to depose before the AT;
b) The commencement of arbitration proceedings was
prior to 23.10.2015 and therefore, the delay cannot be put
against the impugned awards for dislodging the same;
c) There is provision for interest in both the loan
agreements and these provisions are in the form of covenant
Nos.5, 7 and therefore, the impugned awards cannot be held to
be flawed for awarding interest.
16. This Court now proceeds to carefully consider the rival
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submissions, discuss the same and give its dispositive reasoning for
arriving at a conclusion in the captioned OPs.
17. The first submission with regard to infarct of Section 31(3) of
A and C Act does not find favour with me owing to the facts and
circumstances of this case. In this regard, it is necessary to mention that
learned counsel for petitioners pressed into service an order dated
15.10.2020 made in O.P.No.157 of 2016 wherein an arbitral award was
dislodged on the ground of infarct of Section 31(3) of A and C Act.
The case on hand is clearly distinguishable on facts as in the earlier order
the impugned award is bereft of discussion. The issues that were framed
for consideration and the manner in which the issues were answered by
accepting the ipsi dixit of the claimant have been extracted and
reproduced in paragraph 10 and 11 of that order. That was a case where
a 'Non-Banking Finance Company' ('NBFC' for brevity) had advanced
money under a loan agreement being a loan agreement for auto-mobile
finance and had alleged default. There was no issue of disputation
regarding documentation. In the case on hand, the documentation itself
is being disputed. Therefore, the petitioners, who are protagonist of
captioned OPs, who are now assailing the impugned awards, ought not to
have allowed 8 exhibits and 7 exhibits to be marked without objection.
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To be noted, 8 exhibits in junior OP and 7 exhibits in senior OP, being
Exs.A1 to A8 in junior OP and Exs.A1 to A7 in senior OP, were marked
on the side of contesting first respondent/claimant before AT. Objection
to marking of these documents would have created a situation wherein
the claimant before the AT should have led oral evidence. Even if there
was no oral evidence, the documents itself could have been subjected to
disputation/confrontation. The protagonist of captioned OPs did not do
that. More importantly, protagonist of captioned OPs did not depose.
The least the protagonist could have done is to depose before AT.
Therefore, in the impugned awards, AT has held that the respondents
before AT have not filed any evidence. To be noted, there was neither
oral nor documentary evidence before AT on the side of respondents
(who are protagonist of captioned OPs) before AT. The respondents
before AT did not even assail the statement of accounts, which has been
marked qua both the impugned awards (Ex.A8 in junior OP and Ex.A7 in
senior OP). Therefore, this is not a case where it can be gainsaid that
there is an infarct of Section 31(3) of A and C Act. Though the
articulation of details could have been better particularised and stated
with clarity and specificity, Section 31(3) argument does not aid the
petitioner in the case on hand as AT has clearly articulated in the
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impugned awards that there is no evidence on behalf of respondents
before it.
18. This takes us to the next argument predicated on delay in
making the impugned awards. A delay of one year and two months from
the date on which orders were reserved is certainly not desirable, but
arbitration proceedings we are concerned with are governed by pre
23.10.2015 regime and therefore Section 29-A of A and C Act was not
available. Absent Section 29-A of A and C Act, it cannot be legally
argued that the mandate of the AT snaps on one year or further extended
period of 6 months by mutual consent of parties elapsing. In other
words, this is not a case where the AT has made the award after its
mandate had elapsed. To be noted, by legal fiction ingrained in Section
29-A of A and C Act, one year from the date of completion of pleadings
elapsing, the mandate of AT snaps subject to a further extension of 6
months by mutual consent of parties after which extension can only by
Courts. Though this saves the day with regard to the challenge to the
impugned award, delay of one year and two months is certainly not in
tune and tandem with arbitration as an Alternate Dispute Mechanism.
On the facts and circumstances of this case, this Court finds that it is a
simple loan transaction and therefore, this delay by itself does not
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become a ground to dislodge the impugned awards, but this will certainly
not serve as a precedent as the length of delay and its impact on the
impugned awards will depend on so many other determinants which
includes the nature of the lis. In other words, delay in making the awards
as ground to dislodge arbitral awards has to be decided on a case to case
basis particularly when it falls within pre 23.10.2015 regime. To be noted
in the post 23.10.2015 regime of A and C Act, the statute itself provides
for the consequences inter alia vide Section 29-A. Be that as it may delay
in making the impugned awards manifests itself in another form and the
same will be set out infra.
19. This takes us to the last argument which turns on interest. This
being an application under Section 34 of A and C Act, this Court does
not intend to sit on appeal. This Court reminds itself that this is a one
issue summary procedure as held by Hon'ble Supreme Court in Fiza
Developers case [Fiza Developers and Inter-Trade Private Limited Vs.
AMCI (India) Private Limited reported in (2009) 17 SCC 796]. This
Fiza Developers principle was subsequently reiterated in Emkay Global
case [Emkay Global Financial Services Ltd., v. Girdhar Sondhi
reported in (2018) 9 SCC 49] and more recently in Canara Nidhi
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O.P.Nos.241 and 252 of 2017
Limited case [M/S. Canara Nidhi Limited vs M. Shashikala reported in
2019 SCC Online SC 1244]. I remind myself that Hon’ble Supreme
Court has made it clear that by saying one issue summary procedure, it
does not mean that the lis should turn on one issue. This means that
arbitral award being put to challenge itself becomes an issue in Section
34 proceedings. Therefore, all that this Court would do is, examine
whether it is contrary to the terms of a contract, whether it is hit by public
policy and as to whether there is patent illegality. The covenants in the
loan agreement, as rightly pointed out by learned counsel for contesting
first respondent, are Clauses 5 and 7, which read as follows:
'5. The rate of interest for the loan will be at 17.5% p.a flat
(Annualised Rate 29.45% p.a)'
'7. For any delayed payment of installments additional
interest will be charged at 3% per month for number of days delayed
for each instalment plus applicable service tax.'
20. A careful perusal of the two covenants reveal that there is
provision for interest on the loan and there is also a provision for interest
at the rate of 3% per month on delayed payment of installments.
Obviously 3% per month translates to 36% per annum. A careful perusal
of claim statement in both the OPs reveal that the claim itself includes
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both interest under clause 5 as well as 36% interest on delayed payment
of installments. The most relevant part of the claim statement in both the
matters are Paragraph 8 in junior OP and Paragraph 5 and 8 in senior OP,
which read as follows:
'Junior OP
8. The claimant further states that in respect of the loan
account No. 95087 as well as LN-95088, the claim amount works
out to Rs.9,86,893/- as follows as on 10.06.2014.
Loan Account No.
95087 95088
-------------------------------
Outstanding amount Rs.36,720/- Rs.2,73,780/-
Add: 1) AF charges Rs. 9,500/- Rs. 65,160/-
2) Service Tax Rs. 1,174/- Rs. 7,559/-
3) Legal & Other charges Rs. 2,000/- Rs. 3,000/-
---------------- ------------------
Due amount Rs. 49,394/- Rs.3,49,499/-
Future installment Rs. 73,440/- Rs.5,14,560/-
---------------- ------------------
Total Due Rs.1,22,834/- Rs.8,64,059/-
---------------- ------------------
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'Senior OP
5. The claimant further states that upon the agreed terms and
conditions, the additional loan of Rs.5,00,000/- was disbursed to
the respondents on 19.06.2012 by the registered office of the
claimant on execution of proper documentation in June 2012 such
as Loan Agreement, Promissory Note and deposit of title deeds.
The said sum of Rs.5,00,000/- was financed under a loan accounts
bearing LN 95316. For cursory reference, the details of loan
account, loan amount, rate of interest, period of instalments and
amount of monthly instalments is set out hereunder:-
SI.No. Loan Account No. LN95316
1) Loan amount Rs.5,00,000/-
2) Interest @17.5% for 60 months Rs.4,37,500/-
-----------------
Rs.9,37,500/-
3) Monthly Instalments 15,625 x 60
5) Date of First Instalment: 15.06.2012
Date of Last Instalment 15.05.2017'
'8. The claimant further states that in respect of the loan
account No.95316 the claim amount works out to Rs.7,86,790/- as
follows as on 10.06.2014.
Loan Account No.
95316
---------
Outstanding amount Rs.1,87,500/-
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Add: 1) AF Charges Rs. 43,980/-
2) Service Tax Rs. 5,435/-
2) Legal and other charges Rs. 3,000/-
-----------------
Due Rs.2,39,915/-
Future Installments Rs.5,46,875/-
-----------------
Total Due Rs.7,86,790/-
-----------------'
21. This Court is informed that AF charges is for the delayed
payment contemplated under Covenant No.7. This Court is informed
that AF is an abbreviation for additional finance charges on outstanding
amount mentioned. Two loans in second loan account obviously include
interest contemplated under Covenant No.5 of the loan agreement which
provides for 16.75 flat interest annualized at 29.45 % per annum besides
AF. This takes us to the operative portion of the impugned award. The
operative portion of the impugned awards are Paragraph 9 in both the
impugned awards and the same read as follows:
'Paragraph 9 of the impugned award in senior O.P
9. IN THE RESULT IT IS AWARDED THAT:-
a) The claimant is entitled against the respondents jointly
and severally for a total sum of Rs.7,86,790/- together with interest
at 24% p.a from the date of filing of claim petition i.e., 18.06.2014
till is realisation.
b) The respondents are directed to pay a sum of Rs.2,000/-
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as costs of the proceedings to the claimant.
c) The Arbitrator's fee determined at Rs.10,000/- is payable
by both the parties equally and the claimant shall pay at the first
instance and recover 50% of the same from the respondents.
The award is passed accordingly and a copy of the award
be communicated to the parties concerned.
'Paragraph 9 of the impugned award in junior O.P
9. IN THE RESULT IT IS AWARDED THAT : -
a) The claimant is entitled against the respondents jointly
and severally for a total sum of Rs.9,86,893/- together with interest
at 24% p.a from the date of filing of claim petition i.e., 18.06.2014
till it's realisation.
b) The respondents are directed to pay a sum of Rs.2,000/-
as costs of the proceedings to the claimant.
c) The Arbtirator's fee determined at Rs.10,000/- is payable
by both the parties equally and the claimant shall pay at the first
instance and recover 50% of the same from the respondents.
The award is passed accordingly and a copy of the award
be communicated to the parties concerned. '
22. A careful perusal of the operative portion reveals that the AT has
awarded future interest at the rate of 24% p.a not on the principal, but on the
claim made by the claimant which includes both interest and 36% further
interest for delayed payment as articulated supra. Therefore, the impugned
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awards have been made by granting future interest at the rate of 24% p.a not
on the principal but on an amount which includes both interest and penal
interest at 36%p.a. I choose to use the term penal interest as Covenant No.7
is in the nature of a penalty for delay in payment of instalments. This is
clearly in conflict with public policy of India and it is in contravention with
the fundamental policy of Indian law. This is also a patent illegality.
Therefore, on this ground, this Court finds for the petitioners and holds that
these cases fall in the category of impugned awards shocking the conscience
of the Court. In this regard, I remind myself of the judgment of the Hon'ble
Supreme Court in the oft-quoted Associate Builders case [Associate
Builders Vs. Delhi Development Authority] reported in (2015) 3 SCC 49]
wherein Hon'ble Supreme Court held that if an arbitral award shocks the
conscience of the Court, it can be a ground to dislodge the same. To be
noted, Associate Builders case was subsequently referred to by Hon'ble
Supreme Court in Ssangyong Engineering and Construction Company
Limited Vs. National Highways Authority of India reported in (2019) 15
SCC 131. In Ssangyong Engineering case, Hon'ble Supreme Court
extensively dealt with the impact of 23.10.2015 amendment on the
principles laid down in Associate Builders case and the principle with
regard to awards which shocks the conscience laid down by Hon'ble
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Supreme Court remain undisturbed. The relevant paragraph is as follows:
'36. The third ground of public policy is, if an award is
against justice or morality. These are two different concepts in law.
An award can be said to be against justice only when it shocks the
conscience of the court. An illustration of this can be given. A
claimant is content with restricting his claim, let us say to Rs 30
lakhs in a statement of claim before the arbitrator and at no point
does he seek to claim anything more. The arbitral award ultimately
awards him Rs 45 lakhs without any acceptable reason or
justification. Obviously, this would shock the conscience of the court
and the arbitral award would be liable to be set aside on the ground
that it is contrary to “justice”.
23. This Court also finds that this is a patent illegality. In this
regard, it is noticed that both captioned OPs have been presented in this
Court on 11.01.2017. Therefore, applying the Ssangyong principle both
captioned OPs are governed by post 23.10.2015 regime of A and C Act.
In the post 23.10.2015 regime of A and C Act or in other words, A and C
Act as obtaining today, post amendment by Act 3 of 2016 which kicked
in with retrospective effect on and from 23.10.2015, patent illegality is
available as a statutory provision vide sub-section (2A) of Section 34.
There are only two exceptions to this patent illegality ground. One
exception is mere erroneous application of law and another is, it should
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not turn on re-appreciation of evidence. This case of awarding 24% per
annum future interest on a claim which includes interest and penal
interest is clearly not a case of mere erroneous application of law and it
requires no re-appreciation of evidence. Therefore, without entering into
the forbidden arena of re-appreciation of evidence and by holding that
this is not mere erroneous application of law, this Court is of the
considered view that this case falls in the category of awards which
deserve to be dislodged on shocking the conscience of Court principle.
24. This Court is conscious of the fact that a school of thought
which says that interest on the claim amount (which includes interest)
may be construed as interest on damages or compensation for delayed
payment on the basis of which interest on the amount claimed in
arbitration has been sustained inter alia in M.C.Clelland Engineers case
[Oil and Natural Gas Commission Vs. M.C.Clelland Engineers S.A
reported in (1999) 4 SCC 327]. This is made clear to make this order
comprehensive and enhance clarity though this M.C.Clelland Engineers
case was not cited by both sides before me. Be that as it may, there are
two reasons as to why the impugned award is in conflict with public
policy besides being vitiated by patent illegality. In the case on hand, the
claim does not include interest alone, but it includes penal interest also
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which is styled as additional charges for delayed payment. This means
that vide the impugned award interest has been awarded not merely on
interest but on penal interest also, that too at the rate of 24% p.a which is
one reason. The other reason turns on the delay in making the award. To
be noted, this Court has already mentioned supra elsewhere in this order
that delay of one year and two months though by itself does not vitiate
the impugned award owing to captioned OP being governed by pre
23.10.2015 regime (absent Section 29-A) the delay manifests itself in
another form. That manifestation is, this 24% p.a future interest on penal
interest also is payable for this period of one year and two months which
the AT took for making the impugned award after reserving orders. It is
made clear that this view is taken on the basis of facts and circumstances
of this case and issues of this nature have to be tested on a case to case
basis depending on the factual matrix in each case, but in this case it is a
simple loan transaction on a mortgage where the defence by the loanee is
signatures were obtained in blank papers and papers with figures blank
and they were filled in later but the loanee did not let in evidence either
orally nor documentary in this regard. Absence of evidence has been put
against the loanee. In this view of the matter mulcting the petitioners in
captioned OP with interest on penal interest at 24% p.a for this one year
https://www.mhc.tn.gov.in/judis/
O.P.Nos.241 and 252 of 2017
and two months period also puts this award in the category of one that
shocks the conscience of this Court.
25. Before parting with this matter, owing to the trajectory of the
matter, this Court deems it appropriate to extract Paragraph 52 of
McDermott case [McDermott International Inc. v. Burn Standard Co.
Ltd., (2006) 11 SCC 181], which reads as follows:
'52. The 1996 Act makes provision for the supervisory role
of courts, for the review of the arbitral award only to ensure
fairness. Intervention of the court is envisaged in few
circumstances only, like, in case of fraud or bias by the arbitrators,
violation of natural justice, etc. 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.'
Owing to the discussion and dispositive reasoning thus far both
captioned OPs are allowed. To be noted, though the prayer talks about
setting aside the awards on several grounds, it will suffice to say that this
Court by saying that the OPs are allowed means that impugned awards
are set aside. This shall be borne in mind while drafting process is done
https://www.mhc.tn.gov.in/judis/
O.P.Nos.241 and 252 of 2017
by Registry qua this order. Consequently A.Nos.1760 of 2017 and
A.No.1821 of 2017 stand closed. Owing to the trajectory of the hearing
today, there shall be no order as to costs.
05.01.2021
Speaking order: Yes/No
Index: Yes/No
gpa
https://www.mhc.tn.gov.in/judis/
O.P.Nos.241 and 252 of 2017
M.SUNDAR.J.,
gpa
O.P.Nos.241 and 252 of 2017 &
A.Nos.1760 of 2017 & A.No.1821 of 2017
05.01.2021
https://www.mhc.tn.gov.in/judis/
