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2013 DIGILAW 17 (PNJ)

Mehal Singh v. Punjab Kashmir Finance Pvt. Ltd.

2013-01-08

A.N.JINDAL

body2013
JUDGMENT Mr. A.N. Jindal, J.: - The Additional District Judge, Jalandhar, dismissed an application filed by Mehal Singh-appellant (hereinafter referred as ‘the appellant’) under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity ‘the Act’) for setting aside the Award dated 29.04.2000, which is now under challenge. 2. The factual background of the case is that the respondent is a finance company having different branches, including one at Delhi. The appellant had got financed a truck bearing registration No. HR-26-GA-0957 and obtained a loan of Rs.4 lacs from the respondent on interest at the rate of 16% per annum. The respondent got the lease agreement executed on 02.09.1997 at Delhi and Sukhchain Singh and Baldev Singh signed the said agreement being guarantors. As per the lease agreement, the appellant was to pay the loan amount in 35 monthly installments commencing from 26.09.1997 and ending on 26.07.2000. The total amount of Rs.5,56,000/- was to be paid by the lessee-appellant at the end of the lease term. The appellant having failed to pay the installments, the contract was terminated. On dispute having been arisen, the matter was referred to the Arbitrator, who passed the Award dated 29.04.2000 holding the respondent-company entitled to recover the arrears of overdue installments and charges amounting to Rs.3,19,383/- as on 20.01.2000 jointly and severally from the appellant as well as the guarantors along with interest at the rate of 36% per annum till the dues are fully paid off. The respondent-company was further held entitled to the physical custody of the vehicle. 3. Feeling aggrieved, the appellant filed the objection petition before the Court on 20.09.2006 for setting aside the aforesaid Award on the ground that the same was not speaking one; the Arbitrator has not given any terms of reference, as such he had no jurisdiction to enter into the reference; the arbitral Award deals with a dispute, moreover nature of the dispute was not specified; the Award was obtained by the respondent by suppressing the facts and misleading the Arbitrator and the copy of the Award was neither sent to the appellant nor received by him, as such the Award is bad in the eyes of law. 4. Upon notice, the respondent besides raising preliminary objections, admitted that it (respondent) is a non-banking finance company. 4. Upon notice, the respondent besides raising preliminary objections, admitted that it (respondent) is a non-banking finance company. It was also pleaded that the truck in question was given to the appellant on lease on the basis of the lease agreement, which was executed at Jalandhar. The loan was to be returned in 35 monthly installments, however, the appellant had defaulted in making the installments, whereupon the dispute arose and Shri K.L. Jain was appointed as an Arbitrator. Upon notice, the appellant did not appear despite service, therefore, he was proceeded exparte. It was further submitted that the Award is well founded and well reasoned and suggests no illegality and does not smell of any misconduct on his part. From the pleadings of the parties, following issues were framed:- 1. Whether the Award dated 29.04.2000 is liable to be set aside? OPA 2. Whether application is within time? OPA 3. Relief. 5. At the very outset, learned counsel for the respondent has raised a contention that the objections filed by the appellant before the Court after four years of passing of the Award, were time barred, therefore, even if the Award was not valid, the objections could be dismissed being barred by time and the present appeal is also devoid of any merit. 6. Having heard the contention, it has not been disputed that as per Section 34 (3) of the Act, the limitation to file the objection petition was to commence from the date of delivery of the copy of the order/Award and there was no evidence on record showing the date when copy of the said Award was delivered to the appellant. As such, the objection petition cannot be held to be time barred. The District Judge, Jalandhar, also made the following observations while holding the objection petition to be within limitation:- “13. In the award, the Arbitrator has also written that the copies of the award are ordered to be sent to respondent Nos. 1 and 2 for information and compliance as per rule. As per record, the copies were sent to the objector-petitioner, but there is no evidence that the copy of the award was delivered personally or through registered notice. Therefore, this petition cannot be held as barred by time.” 7. Now, coming the question that the Award was not speaking one. 1 and 2 for information and compliance as per rule. As per record, the copies were sent to the objector-petitioner, but there is no evidence that the copy of the award was delivered personally or through registered notice. Therefore, this petition cannot be held as barred by time.” 7. Now, coming the question that the Award was not speaking one. I have gone through the Award, which is based on the documents, which were properly dealt with by the Arbitrator. In any case, there is no specific requirement that the Award should be speaking one. The Arbitrator has to examine after scrutinizing the claims set up by both the parties and the evidence before it. The mental exercise, whatever he had done for reaching the conclusion, need not be introduced into the Award. The purpose of introducing the Arbitration and Conciliation Act, 1940 or 1996 was to take away the disputes arising out of the agreement from the purview of the Civil Courts, where the case before it reaches the culmination has to undergo the complicated and long procedure and the civil law requires the passing of the detailed judgment along with its reasons, but the Arbitration and Conciliation Act does not so require. Nevertheless, on account of inclusion of the legal assistance, the proceedings under the Act have involved complications and attracted different interpretations and the arbitration agreements are drafted in the shape of the Act, so as to bind the parties according to the terms of the said agreements. But, the Court should construe the agreement between the parties with true intent and purport and the circumstances in which it was drafted and read and interpret the same from the view point of the prudent man’s sense of judgment and no lengthy comprehensive judgments are expected or desired from the Arbitrators while deciding the disputes between the parties. 8. As regards the other contention that the interest awarded by the Arbitrator at the rate of 36% was beyond the scope of the arbitration agreement and it being highly exorbitant, award was against the public policy, deserves to be reduced. In this regard, it may be observed that the said agreement was executed between the financier and the loanee at the time of seeking loan. In this regard, it may be observed that the said agreement was executed between the financier and the loanee at the time of seeking loan. Under a distress and also in a hope to return the loan within a short period, a loanee always signs the papers and accepts the terms as laid down by the financier at that time of dire need, but such terms should not be made misuse or exploited by the financier and the Court should come at the rescue of such loanee, so that undue exploitation at the hands of the financier may not spoil his future life and render him pauper. Interest at the rate of 36% per annum is highly excessive. Such exorbitant rate of interest, if termed against the public policy, would not be reasonable. 9. Learned counsel for the appellant has placed reliance upon a judgment passed by a coordinate Bench of this Court in case Baldev Singh Vs. The Reliable Agro Engg. Services Pvt. Ltd. & others, FAO No.6322 of 2011 (decided on 06.08.2012), wherein 18% interest was awarded in such like situation. 10. In the present case, the Arbitrator has wrongly awarded interest at the rate of 36%, but the agreement reveals that it was only 30% per annum, which was agreed between the parties. However, interest at the rate of 30% per annum is also very exorbitant and cannot be awarded irrespective of the fact that the same was agreed by the loanee at the time of taking the loan under undue influence. 11. As such, while relying upon Baldev Singh’s case (supra), it would be quite reasonable, if interest at the statutory rate of 18% per annum is awarded in the present case. 12. Resultantly, this appeal is dismissed with the aforesaid modification in the impugned Award. ------------------