Research › Search › Judgment

Bombay High Court · body

2013 DIGILAW 212 (BOM)

D. Virendra v. Kotak Mahindra Bank Ltd.

2013-01-28

R.D.DHANUKA

body2013
Judgment : 1. By this petition filed under section 34 of the Arbitration & Conciliation Act, 1996, the petitioner seeks to challenge the award dated 30th June, 2011 allowing some of the claims made by the respondent. 2. Mr. Murthy, the learned counsel for the petitioner submits as under: (a) No notice was issued by the respondent to the petitioner before appointing the learned arbitrator. (b) The learned arbitrator did not disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality and thus the arbitrator has acted in breach of section 12 sub section (1) of the Arbitration & Conciliation Act, 1996. (c) Though the contract provides for payment of interest at the rate of 11% p.a., the learned arbitrator has awarded interest at the rate of 15.3% p.a. 3. As far as the first issue raised by the learned counsel for the petitioner that no notice to the petitioner was given before appointment of the arbitrator is concerned, clause 10.7(h) of the agreement provides that in the event of any dispute or differences arising under the agreement, including any dispute as to any amount outstanding, the real meaning or purport hereof, such dispute shall be finally resolved by the arbitration which shall be conducted in accordance with the provisions of the Indian Arbitration & Conciliation Act, 1996 by single arbitrator to be appointed by the lender. Perusal of the impugned award indicates that relying upon the arbitration clause which vests exclusive powers in the respondent to appoint arbitrator, the respondent vide its letter dated 14th December, 2009 had nominated the learned arbitrator as sole arbitrator to adjudicate upon the disputes and the claims made by it against the petitioner herein and asked for his concurrence to act as sole arbitrator. The learned arbitrator vide his letter dated 17th December, 2009 gave his concurrence to act as sole arbitrator. The award records that the copy of the said letter was also forwarded to the petitioner herein. Perusal of the written statement filed by the petitioner before the learned arbitrator, it is clear that no objection about the defect, if any, in the procedure for appointment of arbitrator was raised by the petitioner before the learned arbitrator. The award records that the copy of the said letter was also forwarded to the petitioner herein. Perusal of the written statement filed by the petitioner before the learned arbitrator, it is clear that no objection about the defect, if any, in the procedure for appointment of arbitrator was raised by the petitioner before the learned arbitrator. The learned arbitrator in para (ii) has rendered finding that after perusing clause 10.7(h) of the loan agreement, he was satisfied that his appointment was in order and he has jurisdiction. In view of the fact that no such objection was raised by the petitioner before the learned arbitrator, this issue cannot be allowed to be raised for the first time in this proceeding under section 34 of the Act. 4. In so far as next submission of the learned counsel for the petitioner that learned arbitrator did not comply with section 12(1) of the Act by not disclosing the circumstances likely to give rise to justifiable doubts about his independence or impartiality and thus the petitioner could not raise any objection under section 12 read with section 13 of the Act is concerned, I am of the view that on plain reading of section 12(1) of the Act, it is clear that if the arbitrator is of the opinion that his appointment would likely to give rise to justifiable doubts as to his independence or impartiality, only in such event the learned arbitrator has to disclose the same to the parties. If the arbitrator is of the view that there would be no circumstances likely to give rise to justifiable doubts as to his independence or impartiality, he is not bound to disclose the same under section 12(1) of the Act. In any event, the petitioner did not raise any such objection in its written statement or by filing an application under section 13 and 16 of the Act. In my view, such objection can not be allowed to be raised for the first time in the proceedings under section 34 of the Act. 5. In any event, the petitioner did not raise any such objection in its written statement or by filing an application under section 13 and 16 of the Act. In my view, such objection can not be allowed to be raised for the first time in the proceedings under section 34 of the Act. 5. In so far as last argument of the learned counsel for the petitioner that the agreement provides for interest at the rate of 11% p.a., as against which the sole arbitrator has awarded interest at the rate of 15.3% p.a., is concerned, clause providing for rate of interest at 11% p.a., and replaceable at the sole discretion of the lender. The respondent bank had claimed interest at the rate of 20% p.a., before the learned arbitrator, whereas the learned arbitrator has awarded interest at the rate of 15.3% p.a., on the outstanding amount with effect from 28th November, 2009 till the date of award and at thereafter at the rate of 16% p.a. In my view no infirmity can be found with the award made by the learned arbitrator. Perusal of the award indicates that the learned arbitrator has given detailed reasons while allowing the claim. In view of clause agreed upon between the parties, in my view, the learned arbitrator was justified in allowing the claim for interest at the rate of 15.3% p.a., from the date of award till payment. As far as rate of interest is concerned, the learned arbitrator has also placed reliance on clause 2.2 of the loan agreement executed between the parties which permits revision of rate of interest. 6. The award is a reasoned award. There is no infirmity found in the award. There is no other submission made by the learned counsel for the petitioner. Hence, the petition is devoid of merits which is accordingly dismissed. There shall be no order as to costs. 7. At the request of Mr. Murthy, the learned counsel for the petitioner, execution of the award is stayed for the period of four weeks from today.