Madras High Court
2 Menaka Naresh vs 5 A.K. Nirmalanandan on 22 June, 2021
O.S.A.No.163 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 22.06.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
O.S.A.No.163 of 2021
1 NARESH PURUSHOTHAM
2 MENAKA NARESH ... Appellants
Vs
1 TVS FINANCE AND SERVICES LTD
(FORMERLY KNOWN AS M/S. HARITA FINANCE LTD.)
REP BY ITS AUTHORISED SIGNATORY
G.SAIKUMAR JAYALAKSHMI ESTATE
29 HADDOWS ROAD CHENNAI 6.
2 COUNTER POINT ADVERTISING PVT LTD.
(IN LIQUIDATION) REP BY THE
OFFICIAL LIQUIDATOR HIGH COURT MADRAS
OFFICE AT UTI BUILDING II FLOOR
29 RAJAJI SALAI CHENNAI 1.
3 JUSTICE K.P. SIVASUBRAMANIAN (RETD)
PRESIDING ARBITRATOR
NEW NO. 1 (OLD NO.1168)
15 TH STREET H BLOCK
ANNA NAGAR WEST, CHENNAI 40.
4 JUSTICE. T. SOMASUNDARAM (RETD)
ARBITRATOR NO.46 PULLA AVENUE
SHENOY NAGAR CHENNAI 30.
5 A.K. NIRMALANANDAN ... Respondents
__________
Page 1 of 7
https://www.mhc.tn.gov.in/judis/
O.S.A.No.163 of 2021
Appeal filed against the Fair and Decretal Order of this Court
dated 08.07.2019 in O.P.No.605 of 2009.
For Appellants : Mr.AK.Mylsamy
JUDGMENT
(made by the Hon'ble Chief Justice)
The appeal is directed against a judgment and order of July 08,
2019 passed on a petition under Section 34 of the Arbitration and
Conciliation Act, 1996 brought by the appellants herein.
2. It is not in dispute that the appellants, or the company which
was owned and controlled by the petitioners before the Court of the
first instance, had taken lease of certain equipment from the first
respondent finance company. The equipment were hypothecated in
favour of the finance company and, in addition, certain other securities
were furnished in the form of immovable properties.
__________
https://www.mhc.tn.gov.in/judis/
O.S.A.No.163 of 2021
3. The principal ground that was canvassed in the challenge to
the arbitral award dated August 17, 2009 was that the agreements
obliged the finance company to sell the equipment immediately upon
taking possession thereof and, in the finance company having
admittedly not taken steps to sell the equipment within reasonable
time, the finance company was not entitled to maintain the claim. The
further ground urged by the appellants before the Arbitration Court
was that the equipment were in good condition and should reasonably
have covered the outstanding dues of the relevant company.
4. At the time that the finance company took possession of the
equipment covered by the agreements, the borrower company had
gone into liquidation. It is the admitted position that the finance
company did not take steps to sell the assets within reasonable time of
taking possession thereof or, it is quite possible that the attempt to sell
the assets did not fructify. Whatever may have been the position, it is
evident from the award that the equipment remain unsold. The issue
that arose before the Arbitral Tribunal was what would be the effect of
the failure on the part of the finance company to sell the assets within
reasonable time and, later, make a claim of the entire amount of debt
__________
https://www.mhc.tn.gov.in/judis/
O.S.A.No.163 of 2021
against the borrower or the guarantors.
5. The evidence is clear and there is no dispute in such regard.
The Arbitral Tribunal thought it fit to adjust the value of the securities
furnished in connection with the lease agreements and upon adjusting
the same, passed an award in the sum of about Rs.18 lakh against a
claim in excess of Rs.89 lakh. The Arbitral Tribunal also perceived it to
be just and equitable to reduce the rate of interest claimed from the
permissible 18% per annum to 12% per annum, since the finance
company had failed to sell the assets altogether.
6. In course of the challenge to the arbitral award before the
Court of the first instance, the main thrust of the argument on behalf
of the appellants herein before the Arbitral Tribunal was repeated.
However, the Arbitration Court found that once the Arbitral Tribunal
had taken a decision on the basis of the evidence before it and had
given credit to the values of the securities furnished and the award
was for a reduced amount of about Rs.18 lakh against the claim of
Rs.89 lakh, there was no question of interference in such regard.
Further, the Arbitration Court also reduced the rate of interest from
__________
https://www.mhc.tn.gov.in/judis/
O.S.A.No.163 of 2021
12% per annum to 8%.
7. In dealing with the challenges brought by the appellants, the
Arbitration Court held that in proceedings under Section 34 of the Act
of 1996, the Court would not re-appreciate evidence or go into the
matter in great detail. Indeed, the considerations that weighed with
the Arbitration Court were appropriate. The jurisdiction under Section
34 of the Act is supervisory and the Court is expected to interfere
when errors of jurisdiction are committed, rather than errors within the
jurisdiction of the Arbitral Tribunal’s authority. Since the Arbitration
Court perceived that there was no grave miscarriage of justice and the
Arbitral Tribunal took a reasonable view of the matter, there was no
question of interference.
8. The parameters of assessment applied by the Arbitration
Court are unquestionable and there is no ground made out to interfere
with the judgment and order under appeal. In any event, some relief
has been granted by the Court in reducing the rate of interest. The
matter pertains to a period of nearly 15 years back and it is time that
it is given a quietus. Since the arbitral award appears to be reasonable
__________
https://www.mhc.tn.gov.in/judis/
O.S.A.No.163 of 2021
on the basis of the material before the Tribunal and the Court cannot
interfere with the discretion exercised by the Arbitral Tribunal unless it
appears to be perverse, the judgment and order impugned cannot be
faulted.
9. O.S.A.No.163 of 2021 is dismissed. There will be no order as
to costs.
(S.B., CJ.) (S.K.R., J.)
22.06.2021
Index : yes/no
tar
__________
https://www.mhc.tn.gov.in/judis/
O.S.A.No.163 of 2021
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY, J.
(tar)
O.S.A.No.163 of 2021
22.06.2021
__________
https://www.mhc.tn.gov.in/judis/
