Madras High Court
Prema Paranthaman vs M/S.Kotak Mahindra Bank on 28 September, 2021
C.M.A.Nos.1119 of 2021 etc.,
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 28.09.2021
CORAM:
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
C.M.A.Nos.1119, 1143 & 1201 of 2021
and C.M.P.Nos.6094, 5840, 5841, 5752 & 5754 of 2021
1. Prema Paranthaman
2. Vinod Paranthaman .. Appellants in C.M.A.No.1119/2021
1. Pramod Paranthaman
2. Vinod Paranthaman .. Appellants in C.M.A.No.1143/2021
1. Vinod Paranthaman
2. Pramod Paranthaman .. Appellants in C.M.A.No.1201/2021
Vs.
M/s.Kotak Mahindra Bank,
Zone 2, 8th Floor,
TVH Agnito Park,
141, Old Mahabalipuram Road,
Kandanchavadi,
Chennai - 600 096. .. Respondent in all the CMAs
Prayer in all the CMAs: Civil Miscellaneous Appeal filed under Section 37
(2) of the Arbitration and Conciliation Act, 1996 seeking to set aside the
order dated 15.09.2020 in I.A.No.1 of 2018 in
A.C.P.No.KMBL/CV/3723872/424 of 2020, I.A.No.1 of 2018 in
A.C.P.No.KMBL/CV/3833493/423 of 2020 and I.A.No.1 of 2018 in
A.C.P.No.KMBL/CV/3723872/424 of 2020 respectively on the file of the
Sole Arbitrator.
https://www.mhc.tn.gov.in/judis/
1/9
C.M.A.Nos.1119 of 2021 etc.,
For Appellant : Mr.S.Kukunth
in all the CMAs for M/s.Sarvabhauman Associates
For Respondent : Mr.K.Moorthy
in all the CMAs
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COMMON JUDGMENT
(The case has been heard through video conference)
These appeals have been filed by family members, who had availed
loan from the respondent under various loan agreements for the purchase of
vehicles. According to the respondent, the appellants are defaulters under
their respective loan agreements. In accordance with the Arbitration Clause
contained in the respective loan agreements, the respondent has initiated
Arbitration proceedings before the Sole Arbitrator. By separate orders dated
15.09.2020, passed under Section 17 of the Arbitration and Conciliation Act,
the Sole Arbitrator directed the respondent to take repossession of the
respective hypothecated vehicles from the respective appellants, who are the
borrowers. Aggrieved by the orders dated 15.09.2020, passed in all the
applications under Section 17 of the Arbitration and Conciliation Act, these
appeals have been filed under Section 37 of the Arbitration and Conciliation
Act. Since the issues raised in all these appeals are one and the same, these
appeals are disposed of by means of this common judgment.
https://www.mhc.tn.gov.in/judis/
C.M.A.Nos.1119 of 2021 etc.,
2. Heard Mr.S.Mukunth, learned counsel appearing for the appellants
and Mr.K.Moorthy, learned counsel appearing for the respondent.
3. The learned counsel appearing for the appellants at the outset would
submit that the impugned orders have to be set aside as the principles of
Natural Justice has been violated by the Sole Arbitrator. He also drew the
attention of this Court to the notices dated 07.03.2020, issued by the
respondent to the respective appellants, calling upon them to pay the
outstanding amount and also intimating the respective appellants about the
appointment of Mr.R.Tamilselvan as Sole Arbitrator for deciding the dispute
between the parties under their respective loan agreements. He then drew
the attention of this Court to the letter dated 08.12.2020, issued by the Sole
Arbitrator Mr.R.Tamilselvan to the respective appellants, calling upon them
to appear for Arbitration on 30.12.2020 at 2.30 p.m. He then drew the
attention of this Court to the impugned orders, all dated 15.09.2020, passed
under Section 17 of the Arbitration and Conciliation Act, wherein, the
vehicles which are the subject matter of hypothecation were directed to be
repossessed by the respondent from the respective appellants by the Sole
Arbitrator.
https://www.mhc.tn.gov.in/judis/
C.M.A.Nos.1119 of 2021 etc.,
4. The learned counsel appearing for the appellants would further
submit that the impugned orders passed under Section 17 of the Arbitration
and Conciliation Act, which is the subject matter of challenge in these
appeals have been issued without issuing notice to the appellants and in the
intimation dated 08.12.2020, given by the Sole Arbitrator to the respective
appellants, the Sole Arbitrator has suppressed the passing of the impugned
orders on 15.09.2020.
5. Further, the learned counsel appearing for the appellants would
submit that the impugned orders have been passed prior to 3 1/2 months
from the date of commencement of the arbitration proceedings i.e., before
the date of the first hearing without any notice whatsoever to the respective
appellants.
6. However, the learned counsel appearing for the respondent would
submit that the Sole Arbitration is having power under Section 17 of the
Arbitration and Conciliation Act to pass ex-parte orders against the
appellants. He would submit that the respective appellants are defaulters in
their respective loan agreements and they have been declared as NPA. He
https://www.mhc.tn.gov.in/judis/
C.M.A.Nos.1119 of 2021 etc.,
would further submit that only in terms of the condition of the loan contract,
the vehicles were directed to be repossessed from the respective appellants
by the Sole Arbitrator under the impugned orders.
7. As seen from the documents filed along with the typed set of
papers, it is clear that the respondent has desired to initiate arbitration
proceedings in respect of the loan contract entered into with the appellants
for the alleged non repayment of their respective loan amount by their
respective letters dated 07.03.2020, to the respective appellants and in the
said letters, they have nominated Mr.R.Tamilselvan as the Sole Arbitrator,
who has passed the impugned orders under Section 17 of the Arbitration and
Conciliation Act. Only on 08.12.2020, the Sole Arbitrator, nominated by the
respondent, has sent notices to the respective appellants stating that the
hearing of the arbitration will take place on 30.12.2020 at 02.30 p.m. In the
same notice, dated 08.12.2020, the Sole Arbitrator has mentioned that due to
COVID-19 pandemic the first hearing did not happen and it has been
postponed. However, in the said notice dated 08.12.2020, the date of the
first hearing of the arbitration has not been mentioned by the Sole Arbitrator.
The notice also does not reveal as to when the Sole Arbitrator has acted upon
the reference and has accepted the nomination as Sole Arbitrator by the
https://www.mhc.tn.gov.in/judis/
C.M.A.Nos.1119 of 2021 etc.,
respondent. Further without any notice to the appellants, the impugned
orders dated 15.09.2020, have been passed by the very same Sole Arbitrator
directing the respondent to repossess the hypothecated vehicles from the
respective appellants. The operative paragraph of the respective impugned
orders are as follows:
".....Therefore, this application is allowed as
prayed for and Mr.Durgaprasad K.J. working, with
the claimant is hereby appointed to take custody of
the vehicle morefully described in the Schedule to
this order and to keep it in their safe custody till
further order from this Tribunal. The said
Mr.Durgaprasad K.J. is hereby advised to take all
the legal protection for his safety at the time of
seizure/repossession of the vehicle including police
protection. Further in case if it requires break open
for repossession, the above named receiver is
permitted to break open in the presence of the police
with in whose jurisdiction the vehicle is lying and
the receiver is directed to take photos at the time of
repossession."
8. Even in the impugned orders passed under Section 17 of the
Arbitration and Conciliation Act, the Sole Arbitrator has not revealed as to
https://www.mhc.tn.gov.in/judis/
C.M.A.Nos.1119 of 2021 etc.,
when he has accepted the nomination as Sole Arbitrator by the respondent
and when the Arbitration has commenced and when the respective appellants
have been intimated about the date of hearing of the Arbitration as
30.12.2020 at 02.30 p.m. Even without notice to the respective appellants,
the impugned orders have been passed for repossession of the vehicles from
them.
9. The Sole Arbitrator under the impugned orders has violated the
principles of Natural Justice, that too when the respondent has appointed the
Sole Arbitrator by their letters dated 07.03.2020 itself. When the respondent
has appointed the Sole Arbitrator on 07.03.2020 itself, the Sole Arbitrator
ought to have given notice to the respective appellants before passing any
interim order under Section 17 of the Arbitration and Conciliation Act.
10. For the foregoing reasons, these appeals will have to be
necessarily allowed as the impugned orders passed under Section 17 of the
Arbitration and Conciliation Act is not in accordance with law.
Accordingly, all the impugned orders dated 15.09.2020, are hereby set aside
and the appeals are allowed. After dictation of this judgment, the learned
counsel appearing for the appellants submitted that in respect of
https://www.mhc.tn.gov.in/judis/
C.M.A.Nos.1119 of 2021 etc.,
C.M.A.No.1119 of 2021, the subject vehicle has already been repossessed by
the respondent and the appellants in the said appeal seeks liberty to workout
their remedies for return of the vehicle by filing necessary application before
the Sole Arbitrator under Section 17 of the Arbitration and Conciliation Act.
The said liberty is granted. However, the Sole Arbitrator has to decide the
said application, if at all filed, on merits and in accordance with law.
Consequently, the connected miscellaneous petitions are closed. No costs.
28.09.2021
Index : Yes / No
kk
To
1. Mr.R.Tamilselvan, B.A., B.L.,
Sole Arbitrator,
Room No.4, 1st Floor, "Mubarak Plaza",
No.260/128, Angappan Naicken Street,
Parrys, Chennai - 600 001.
2. The Section Officer,
VR Section, High Court, Madras.
https://www.mhc.tn.gov.in/judis/
C.M.A.Nos.1119 of 2021 etc.,
ABDUL QUDDHOSE, J.
kk
C.M.A.Nos.1119, 1143 & 1201 of
2021 and C.M.P.Nos.6094, 5840,
5841, 5752 & 5754 of 2021
28.09.2021
https://www.mhc.tn.gov.in/judis/
