Madras High Court
V.Raja vs Kotak Mahindra Bank Limited on 27 June, 2025
CRP.No.81 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Order reserved on : 19.06.2025 Order pronounced on : 27.06.2025
CORAM
THE HON'BLE MR. JUSTICE P.B.BALAJI
CRP.No.81 of 2023
& C.M.P.No.622 of 2023
V.Raja ..Petitioner
Vs.
1.Kotak Mahindra Bank Limited,
Rep. by its Manager,
8th Floor, Zone – 2,
TVH Agnitio Park,
No.141, Old Mahabalipuram Road,
Kandhanchavadi, Chennai – 600 096.
2.Dhatinamoorthi
3.Bakiyammal
4.Santhoshkumar
5.Vijayakshmi ..Respondents
Prayer: Civil Revision Petition filed under Article 227 of Constitution of
India, to set aside the Arbitral award in I.A.No.1 of 2022 in
A.C.P.No.KMBL/CE/764205/689 of 2022 dated 23.03.2022 passed by the
learned Arbitrator, A.Vijayalakshmi at Chennai.
1/13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
CRP.No.81 of 2023
For Petitioner : Mr.V.Raghavachari
Senior Counsel
for Mr.Ashwin Prasad
For Respondents : Mr.Thalaimalai Karthikeyan for R1
No appearance for RR2 to 5
ORDER
This Civil Revision Petition has been filed invoking Article 227 of
Constitution of India, seeking to set aside the Arbitral Award in I.A.No.1 of
2022 in A.C.P.No.KMBL/CE/764205/689 of 2022 dated 23.03.2022 passed by
the learned Arbitrator, A.Vijayalakshmi at Chennai.
2.Heard Mr.V.Raghavachari, learned Senior Counsel for Mr.Ashwin
Prasad, learned counsel for the petitioner and Mr.Thalaimalai Karthikeyan,
learned counsel for the 1st respondent.
3.Mr.V.Raghavachari, learned Senior Counsel would submit that the
revision has been filed to set aside the Arbitral Award passed by the learned
Arbitrator in respect of a loan transaction between the petitioner and the 1 st
respondent/Bank to which the respondents 2 to 5 had stood as guarantors. The
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
learned Senior Counsel would further submit that the loan was agreed to be
repayable in 47 monthly installments, commencing from 05.06.2019 and the
petitioner had diligently paid 33 installments which is an admitted fact not
denied by the 1st respondent/bank. The learned Senior Counsel would further
submit that because of the intervention of the Covid-19 pandemic, the
petitioner's business suffered seriously and he was not in a position to continue
to fulfill his loan obligations.
4.The learned Senior Counsel for the petitioner would take me through
the arbitration clause in the loan cum guarantee agreement, which is extracted
hereunder for easy reference.
“11.17. In the event that the claim or dispute does not fall
within the jurisdiction of the Debts Recovery Tribunal
established under the Recovery of Debts due to Banks and
Financial Institutions Act, 1993, for the purposes of arbitration
mentioned in clause [11.11.2]. Subject to the provisions of any
law for the time being in force in India, the Courts in the state
where the Agreement is executed shall have exclusive jurisdiction
in relation to this Agreement, the arbitration and all matters
arising in connection herewith and therewith.”
5.The learned Senior Counsel would therefore state that the proper
interpretation of the said clause would indicate that only if the matter is outside
the purview or scope of the Recovery of Debts due to Banks and Financial
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
Institutions Act, 1993, alone the disputes are arbitrable and not otherwise. He
would therefore state that there is a fundamental jurisdictional error on the part
of the Tribunal in assuming jurisdiction and passing orders. He would further
state that the Arbitrator had issued a notice to the parties, including the
petitioner and called upon the parties to attend a preliminary meeting on
23.03.2022. However, the learned Senior Counsel would state that without
giving any opportunity to the petitioner, on the very same day, the Arbitrator
has proceeded to pass an award in I.A.No.1 of 2022. The learned Senior
Counsel would further state that pursuant to the award, the vehicle was also
seized by the 1st respondent/Bank arbitrarily and high handedly. The learned
Senior Counsel would also state that admittedly there is also a proceeding
pending before the Debt Recovery Tribunal and therefore, arbitration is clearly
not maintainable. The learned Senior Counsel would place reliance on the
following decisions:
1.Deep Industries Limited Vs. Oil and Natural Gas
Corporation Limited and Another ((2020) 15 SCC 706).
2.Bhaven Construction through authorised signatory
Premjibhai K.Shah Vs. Executive Engineer, Sardar Sarovar
Narmada Nigam Limited and Another ((2022) 1 SCC 75).
3.Perkins Eastman Architects DPC and Another Vs. HSCC
(India) Limited ((2020) 20 SCC 760).
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
4.Kalabharati Advertising Vs. Hemant Vimalnath
Narichania and Others ((2010) 9 SCC 437).
Relying on the above decisions, the learned Senior Counsel would
therefore state that the revision petition is maintainable and the petitioner need
not be driven to filing an appeal that is available under the statute.
6.Per contra, Mr.Thalaimalai Karthikeyan, learned counsel for the 1st
respondent/Bank would first and foremost contend that the revision is not
maintainable. If at all the petitioner questions the jurisdiction of the Arbitrator,
he contends that the petitioner ought to have moved an application under
Section 16 of the Arbitration and Conciliation Act and even as against the
interim award passed by the Arbitrator, an appeal lies under Section 37 of the
Act. He would further contend that the vehicle has been seized pursuant to the
interim award passed by the Arbitrator and is kept in the yard of the 1 st
respondent Bank. He would further state that the 1st respondent Bank has also
withdrawn the claim before the Arbitrator on 13.04.2022. The learned counsel
would therefore state that the revision cannot be entertained in view of the
aforesaid submissions and prays for dismissal of the Civil Revision Petition.
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
7.I have carefully considered the submissions advanced by the learned
Senior Counsel for the petitioner and the learned counsel for the 1 st respondent /
Bank.
8.The Hon'ble Supreme Court, in Deep Industries Limited's case, has
held that the statutory policy of the Arbitration and Conciliation Act, 1996, is
that time lines are set down for disposal of the arbitral proceedings as well as
for proceedings under Section 34 of the Act to ensure timely resolution of all
matters which are provided by arbitral awards. Relying on Section 5 of the Act,
the Hon'ble Supreme Court has held that the High Court, normally, will not
entertain petitions under Articles 226 and 227 of the Constitution of India,
bypassing the machinery created under the statute. However, in the very same
judgment, it is also held that petitions can be filed under Article 227 of
Constitution of India but the High Court has to be extremely circumspect in
interfering, taking into account the statutory policy of the Arbitration and
Conciliation Act.
9.In Bhaven Construction's case, the Hon'ble Supreme Court held that
the ambit of Article 227 of Constitution of India is broad and pervasive and
under exceptional circumstances, exercising jurisdiction by this Court invoking
Articles 226 and 227 of the Constitution of India would be permissible.
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
10.In Kalabharati Advertising's case, the Hon'ble Supreme Court held
that no litigant can derive any benefit from the mere pendency of a case in a
Court of law, as the interim order merges into the final order and therefore, the
party cannot be allowed to take any benefit of his own wrongs by getting an
interim order and thereafter blame the Court. It is further held that the
obligation to undo the wrong done to a party, by the act of the Court, where any
undeserved or unfair advantage is gained by one party, invoking the jurisdiction
of the Court, must be neutralized, since the institution of litigation cannot be
permitted to confer any advantage on a party by delayed action of the Court.
11.The decision on which the learned counsel for the 1st respondent has
placed reliance is the order of this Court in P.Krishnan Vs. M.Ramachandran
and Others in CRP.(NPD).No.1441 of 2021 dated 13.09.2021, where this Court
held that an order under Section 16 of the Arbitration and Conciliation Act can
only be questioned under Section 34 of the Act and not by way of exercise of
extraordinary power of the High Court under Article 227 of Constitution of
India. The said ratio, I am afraid, cannot apply to the facts of the present case
since this case is not one where the petitioner moved an application under
Section 16 of the Arbitration and Conciliation Act and after being unsuccessful
he has approached this Court under Section 227 of Constitution of India.
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
12.It is the categorical case of the revision petitioner that the constitution
of the Arbitral Tribunal in the first place itself was bad in the eye of law in view
of the arbitration clause agreed to between the parties. I have already extracted
the said arbitration clause. It is clear that the arbitration clause would become
available to the parties only in the event of the Debt Recovery Tribunal not
having jurisdiction. However, in the present case, the 1st respondent Bank has
already approached the Debt Recovery Tribunal and initiated proceedings
which are admittedly pending. While so, the very invocation of the arbitration
clause is certainly questionable and it goes to the root of the very jurisdiction of
the arbitral Tribunal to take up the matter.
13.Further, as already pointed out by learned Senior Counsel
Mr.V.Raghavachari, the conduct of the arbitrator also falls far short of fair play.
Treating both parties equally which is a fundamental requirement of the
provisions of the Arbitration and Conciliation Act.
14.From a careful reading of the judgments of the Hon'ble Supreme
Court, it is clear that there is no embargo for this Court to exercise the
discretionary power available under Article 227 of Constitution of India, when
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
there is inherent lack of jurisdiction and the same is brought to its notice by
way of a revision. Having already found that the invocation of the arbitration
clause itself was wholly unsustainable, this Court can certainly entertain the
revision and set aside the award passed by the Arbitrator.
15.Though it is contended by the learned counsel for the respondent that
the petitioner ought to have moved an application under Section 16 of
Arbitration and Conciliation Act before the Arbitrator and ought to have
challenged the award by way of an appeal under Section 37 of the Act, instead
of rushing to this Court by way of revision under Article 227 of Constitution of
India, in view of the inherent lack of jurisdiction on the part of the Arbitral
Tribunal, which has assumed jurisdiction and proceeded to pass the award in a
hasty manner, I am inclined to treat this as an exceptional case which would
warrant interference under Article 227 of Constitution of India. The interim
award passed by the Arbitrator is therefore clearly unsustainable and ex facie
illegal and liable to be set aside.
16.Moreover, it is seen that after having secured an interim award, the 1st
respondent Bank has secured the asset. Thereafter, the claim itself has been
withdrawn by the 1st respondent Bank. Having obtained an interim order and
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
derived benefit thereunder, it was highly unfair and improper on the part of the
1st respondent Bank to have proceeded to withdraw the claim itself.
17.In view of the above, it is a clear case where the 1 st respondent Bank
has proceeded to initiate Arbitration proceedings only with the ulterior motive
of seizing the asset from the petitioner and having achieved such object, they
have also chosen to not prosecute the main claim as well before the Arbitrator.
Such conduct of the 1st respondent Bank is certainly not appreciated. In any
event, the award being set aside, this Court is bound to ensure that substantial
justice is done to the necessary parties. Status quo has to be necessarily
restored in the present case and the respondent Bank shall therefore return the
asset, viz Excavator – JCB India LTD – CB-JS205 bearing
Sl.No.PUNJD20BHK2752649 to the petitioner forthwith.
18.With these above directions, the Civil Revision Petition is allowed
and the award dated 23.03.2022 in I.A.No.1 of 2022 in
A.C.P.No.KMBL/CE/764205/689 of 2022 is hereby set aside. There shall be no
order as to costs. Connected Civil Miscellaneous Petition is closed.
27.06.2025
Speaking/Non-speaking order
Index : Yes/No
ata
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
To
1.The Arbitrator, Chennai.
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
P.B.BALAJI.J,
ata
Pre-delivery order made in
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
27.06.2025
https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/06/2025 07:34:32 pm )
