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2012 DIGILAW 893 (BOM)

Eagle Travel Agency v. Tata Motors Finance Ltd.

2012-04-27

ANOOP V.MOHTA

body2012
Judgment The present Petitions are filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, "The Arbitration Act"). 2. The Petitioner in all the four Arbitration Petitions, is a borrower-Sole proprietor of a titled firm i.e. Eagle Travel Agency, has challenged award dated 16 July 2011 passed by the Arbitral Tribunal constituted under the Arbitration agreements executed, on respective dates between the parties in view of independent and separate loan-cum-hypothecation Agreements for 4 buses. 3. Respondent No.1 is a Company registered under the provisions of Companies Act, and having been doing the business of leasing and finance of vehicle. It is registered as a Non-Banking Finance Company with the Reserve Bank of India. Respondent No.1 is, therefore, being a financier, and has provided the loan and as there was consistent defaults in payment, though demanded from time to time, filed the statement of four separate claims for recovery of stated amount. 4. Respondent No.2 is a co-borrower, though signatory and party to all the proceedings, never appeared and/or never challenged the demand, action and orders passed in favour of Respondent No.1. Admittedly, the Petitioner and Respondent No.2 who have taken the loan based upon the agreements, and took possession of all four vehicles described in respective claim Petitions/Arbitration Petitions. Admittedly, those vehicles have been used by the Petitioner and Respondent No.2 without any dispute. Admittedly, the possession of all the four vehicles have been taken by following the due procedure of law from them. Those vehicles are still could not be sold out because of pendency of the Arbitration proceedings. 5. Respondent No.2 being a Co-borrower, never challenged the action and even the awards passed. Therefore, the demands so raised by Respondent No.1 and all actions arising out of unchallenged contract and the awards as remained uncontroverted in all respect, have attained the finality, as contemplated under the Arbitration Act. 6. Respondent No.1, as noted, financed the four vehicle loans. The details of which are as under: (1) Contract/ Agreement No.5000034926 (2) Contract/ Agreement No.5000034930 (3) Contract/ Agreement No.5000034931 (4) Contract/ Agreement No.5000034933 7. Admittedly, the Petitioner from time to time based upon the four agreements, made part payment and/or Monthly Installments (EMI) to Respondent No.1. Those 4 respective statements and the receipts of the payment remained uncontroverted. The details of which are as under: (1) Contract/ Agreement No.5000034926 (2) Contract/ Agreement No.5000034930 (3) Contract/ Agreement No.5000034931 (4) Contract/ Agreement No.5000034933 7. Admittedly, the Petitioner from time to time based upon the four agreements, made part payment and/or Monthly Installments (EMI) to Respondent No.1. Those 4 respective statements and the receipts of the payment remained uncontroverted. The fact of receipts of possession of those vehicles and use of those vehicles without due and timely payment, and as specifically not denied by the Petitioner and the co-borrower, confirmed and proved the case by Respondent No.1 about the existence of loan agreement. Both the parties have acted upon the same. The receipts of the received vehicles by the Petitioner and Respondent No.2 and the use of those vehicles till the possession taken by Respondent No.1, pursuance to the orders passed under Section 9 of the Arbitration Act, and some installments paid and receipt of the same which are part of record along with the detailed statement, goes to show that the Petitioner, one way or other deliberately has delayed and defeated the legal rights of Respondent No.1, by taking all unscrupulous and baseless defence, even of nonexistence of agreement and therefore, denying the liability of demanded amount. There is no dispute, even at any stage raised and in fact cannot be raised about the fact of possession of the vehicles and use of the same. The conduct of the Petitioner, therefore, apart from the above admitted position on record, goes to show that the Petitioner is admittedly defaulter and failed to make the payment, though demanded from time to time as per the loan agreement between the parties, and therefore, the action so initiated by Respondent No.1 including the respective awards so passed against the Petitioner need no interference. 8. On 30 July 2009, this Court while admitting Respondent No.1's Section 9 Petition, granted an injunction order. On 13 August 2009, the Petitioner appeared through the advocate and after hearing both the parties, the Court, by consent, appointed the Court Receiver. The Petitioner, based upon the order thereafter admittedly, handed over the possession of the vehicles to the Court Receiver. The public notices were issued for the sale of those vehicles on 12 April 2010. The prospective bidders inspected these vehicles on 19 April 2010. The offers were invited. The Receiver did not receive any bid till 28 April 2010. The Petitioner, based upon the order thereafter admittedly, handed over the possession of the vehicles to the Court Receiver. The public notices were issued for the sale of those vehicles on 12 April 2010. The prospective bidders inspected these vehicles on 19 April 2010. The offers were invited. The Receiver did not receive any bid till 28 April 2010. Respondent No.1 took out 4 Chamber Summons for seeking permission to sell the buses/vehicles by way of private treaty. However, pursuance to the directions, the Petitioner withdrew the Chamber Summons with liberty to file appropriate proceedings for the grant of permission of private treaty. Respondent No.1, thereafter took out 4 Notice of Motions, and the Court ultimately permitted to sell the vehicles by private treaty. On 1 October 2010, those Notice of Motions came up for final hearing whereby, the liberty was granted to Respondent No.1 to apply to the Court Receiver to make an appropriate report and accordingly all the Motions were disposed of. 9. The Receiver prepared a report on 15 November 2010 and based upon the letter dated 18 October 2010, ultimately by order dated 23 November 2010, the Court expressed that the vehicles could not be sold as the Arbitral References were pending. The fact remains that the vehicles could not be sold till this date. 10. Admittedly, in all these backgrounds one uncontroverted position is that the Co-borrower though served, never appeared even before the Court under Section 9 Petition and before the Arbitrator to oppose and/or to controvert the averments so raised by Respondent No.1 Company. Those averments remained uncontroverted, which were based upon the documents in question and so also the demand so raised based upon the statements placed on record. The contention of the Petitioner the borrower even objections to the existence of the agreements, as well as, the documents in question apart from the statements of claim so raised, itself destroy its own case in all respect. Mere objection that there exists no agreement between the parties and to the simple denial to the statements so raised in the background so referred above, is no way sufficient to deny the undisputed claims raised by Respondent No.1 based upon the documents on record. 11. Admittedly, the Petitioner-borrower appeared before the Tribunal and took steps to deal with the contra material and makes denial even to the existence of the documents. 11. Admittedly, the Petitioner-borrower appeared before the Tribunal and took steps to deal with the contra material and makes denial even to the existence of the documents. Normally, the burden lies upon the claimant to prove his case, but in a situation like this, where co-borrower never denied the averments, as well as, the existence of documents. The challenge so raised to the existence of those documents on various grounds, the Petitioner should have taken all steps to deal with the contra material on record basically in the background when there is no denial of the fact that the Petitioner, pursuance to those agreements, took all four vehicles and had been using the same and delayed the EMI/ monthly payment. This itself shows that the Petitioner throughout acted upon those loan agreements and had been used those vehicles without repayment. The Petitioner and/or such borrower, therefore, just cannot raise objection and/or ground of principle of breach of natural justice and/or equal opportunity, when the conduct, as well as, the grounds so raised, itself shows that the whole purpose and object was to avoid the due payment and delayed the whole Arbitration Proceedings. He deliberately did not take steps to prove his averments. 12. The Arbitrator has observed as under:- "9. On perusal of the Claim Petition, and the statement of accounts and the simulated Premature Termination report annexed by the Claimant the Respondents are jointly and severally liable to pay a sum of Rs.29,10,704.65/-as on 12th May, 2009 to the Claimant. While arguing the case of the Claimant, Advocate for the Claimant led me to pleadings, annexures and all documents filed on behalf of the Claimant. I have carefully considered and gone through the pleadings, submissions, and arguments of the Claimant, documents on record on behalf of the claimant." "10.......I am in complete agreement with the Ld. Advocate for the Claimant. Having once conceded to the appointment of the Court Receiver, the Respondents cannot take this contrary stand. It is abundantly clear that the Respondents had entered into the Loan Agreement dated 26th December, 2006. It is further clear that there are defaults in payments of the EMI's. The Respondents have breached the terms and conditions of the said loan Agreement. Further in the Averment No.19 of the Reply, the Respondents have admitted the delivery of the said vehicle to the Respondent no.1 i.e. the principal Borrower. It is further clear that there are defaults in payments of the EMI's. The Respondents have breached the terms and conditions of the said loan Agreement. Further in the Averment No.19 of the Reply, the Respondents have admitted the delivery of the said vehicle to the Respondent no.1 i.e. the principal Borrower. It is now clear beyond all doubts that the Respondent were plying the said vehicle and not paying the EMI's. The Respondent No.1 in his Written Arguments has also raised the issue of Jurisdiction and that the Statement of Claim is not filed by the competent person. The Ld. Advocate for the Claimant has filed before me the order dated 14th December, 2009 passed by the Hon'ble High Court in Arbitration Petition No.664 of 2009 along with other petitions. Both the issues raised by the Respondent No.1 vis-a-vis jurisdiction and competency of signing/executing the Claim Petition are dealt with therein. I am in complete concurrence with the said order and the judgments' cited therein for the same." 13. The conduct of the parties, in my view, is also relevant factor to consider and/or to adjudicate the claim between the parties based upon the Arbitration agreement. The invocation of principle of natural justice and/or equal opportunity and/or fair play, in my view, is not available for the person like the Petitioner as they knowingly and inspite of fact that they have used and utilized those vehicles still they raised the objection even to the existence of loan agreements based upon which all the parties have acted upon. The Petitioner-borrower, as record shows, admittedly made some 4-5 initial payments/installments. If there were no loan agreements, there was no question of delaying the payment and the possession of all those loan vehicles. 14. Admittedly, Respondent No.1 when filed Petition under Section 9, as there was consistent default in payment after due notice, the Petitioner-principal borrower appeared before the Court. After hearing both the parties this Court appointed the Court Receiver. The Court Receiver, based upon the order took possession of those vehicles from the Petitioner. Therefore, the contention that the Arbitrator failed to appreciate and/or to give opportunity to the Petitioner and/or not directed Respondent No.1 to lead evidence to support, the submission of claims is without substance. It is unacceptable. The Court Receiver, based upon the order took possession of those vehicles from the Petitioner. Therefore, the contention that the Arbitrator failed to appreciate and/or to give opportunity to the Petitioner and/or not directed Respondent No.1 to lead evidence to support, the submission of claims is without substance. It is unacceptable. In the present facts and circumstances, I am of the view that the Arbitrator committed no wrong to proceed with the matter based upon the undisputed facts and the averments so made read with the documents so placed on record. 15. The facts and circumstances itself make the position different than the facts of the cases referred and relied. The law on the subject is not in dispute. Its application makes the difference in view of the admitted position on record. I am not inclined to accept the case of the Petitioner that the impugned award is based upon the no evidence and liable to be quashed and set aside. Mere denial to the existence of the agreement, that itself in my view, was to delay the Arbitration proceedings and the undisputed liability. Therefore, the defence so raised by the Petitioner, including the grounds so raised in the Petition, in no way sufficient to interfere with the reasoned awards so passed by the Arbitrator. 16. So far as the interest is concerned, as per the agreements between the parties, the Petitioner and/or borrower is liable to pay interest @ 36% p.a. on defaulted amount. The contract so terminated and/or demand so raised on 12 May 2009, the learned Arbitrator however, restricted the said claim interest @ 18% p.a.. Therefore, considering the background and as the learned Arbitrator himself reduced the rate of interest so recorded, I see there is no reason to interfere with the same and so also the costs amount so awarded. ORDER (i) Resultantly, the Arbitration Petition is dismissed. The award dated 16 July 2011 passed by the learned Arbitrator in Arbitration Case Lot 3912 B/4563 of 2009, is maintained. (ii) The learned counsel appearing for Respondent No.1 makes further submission that all those vehicles are lying with the Court Receiver. Those vehicles could not be sold till this date, though from time to time the order was passed by this Court. The vehicles which are lying with the Court Receiver, need to be disposed of in accordance with law. (ii) The learned counsel appearing for Respondent No.1 makes further submission that all those vehicles are lying with the Court Receiver. Those vehicles could not be sold till this date, though from time to time the order was passed by this Court. The vehicles which are lying with the Court Receiver, need to be disposed of in accordance with law. The liberty is granted to Respondent No.1 to dispose of those vehicles in accordance with law with due notice to the Court Receiver, as well as, to the Petitioner. The amount so recovered needs to be adjusted towards the decree based upon the award in question. (iii) The parties are still at liberty to settle the matter. (iv) The learned counsel appearing for the Petitioner seeks stay to the effect and operation of the order so passed. Considering the facts and circumstances of the case and reasoning so given, there is no case made out to grant any stay. The request is accordingly rejected.