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2016 DIGILAW 2746 (HP)

Ram Transport Finance Company Ltd. v. Roop Lal

2016-12-27

DHARAM CHAND CHAUDHARY

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JUDGMENT : Dharam Chand Chaudhary, J. (oral). 1. The sole respondent has refused to accept the notice hence while treating him to be served legally and validly, he is proceeded against exparte. 2. The order under challenge has been passed by learned Civil Judge (Junior Division), Court No.2 Nalagarh, District Solan in an application under Section 8 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as ‘the Act’ in short), registered as CMA No.52-6 of 2016, whereby the application has been dismissed and the prayer to set aside the proceedings in the suit and to refer the dispute, brought to the Court by the respondent (hereinafter referred to as the plaintiff) to the Arbitrator, has been declined. 3. Petitioner herein is the defendant. Consequent upon the agreement Annexure P-5, the defendant-Company has financed a vehicle bearing registration No.64-2972. The money borrowed by the plaintiff from the defendant was to be returned in 57 installments during the period from 5.12.2012 to 5.8.2017. The plaintiff, however, failed to adhere to the provisions of the agreement, which has led in taking over the possession of the vehicle financed by the defendant, being hypothecated property. The plaintiff instead of adhering to the financial discipline by regularizing the loan installments has filed a suit for permanent prohibitory injunction restraining the defendant from taking over the possession of the vehicle. 4. The defendant when put to notice had entered appearance and filed an application under Section 8 of the Act with a prayer to stay the proceedings in the suit and refer the dispute to the Arbitrator in terms of the conditions in the agreement. 5. Learned trial Judge, after having taken on record the reply to the application filed by the plaintiff and placing reliance on the judgment of the High Court of Kerala in M/s T.M.L. Financial Services Ltd. versus Vinod Kumar, 2010 (1), Civil Court Cases 726 (Kerala) has concluded that in a hire purchase agreement like Annexure P-5 in the case in hand, the illegal seizure of vehicle is not a dispute covered by the Arbitration clause. The application, therefore, was dismissed. 6. The legality and validity of the impugned order has been questioned before this Court on several grounds, however, mainly that the same is in complete departure and violation of the law laid down by the Apex Court as well as by a Coordinate Bench of this Court. The application, therefore, was dismissed. 6. The legality and validity of the impugned order has been questioned before this Court on several grounds, however, mainly that the same is in complete departure and violation of the law laid down by the Apex Court as well as by a Coordinate Bench of this Court. 7. As noticed at the very outset, the plaintiff has refused to accept the notice. He as such has allowed himself to be proceeded against exparte. 8. Now coming to the question that the possession of vehicle taken over in an unlawful manner has been considered and decided by a Coordinate Bench of this Court in CMP No.120 of 2015 titled Shri Ram Transport Finance Company Ltd. versus Ashwani, it is seen that the facts of that case were identical as that of this case. The order under challenge was also identical in nature. The Bench has quashed the same and allowed the application under Section 8 of the Act filed by the petitioner-Company therein. The point in issue in this petition is thus squarely covered in favour of the defendant by the Judgment in Ashwani’s case supra. 9. It is worth mentioning that learned Single Judge while deciding Ashwani’s case has placed reliance on the judgments of the apex Court in Ranjit Kumar Bose & Another versus Anannya Chowdhury & Another, (2014) 11, SCC, 446 in which while taking note of the entire case law, it has been concluded that Section 8 of the Act is in the form of legislative command to the Court and once the prerequisite conditions are satisfied, the Court must refer the parties to the arbitration. 10. In the case in hand, there is no statutory bar to refer the dispute to arbitrator for the reason that Clause 6-B of the hire purchase agreement empowers the defendant to take possession of the hypothecated assets, in the event of the borrower commits any act of default. Since in the case in hand the claim of the defendant is that the plaintiff has failed to repay the loan amount as agreed upon and has violated the terms and conditions of the agreement, therefore, it has every right to take possession of the vehicle, which admittedly is the hypothecated property. Since in the case in hand the claim of the defendant is that the plaintiff has failed to repay the loan amount as agreed upon and has violated the terms and conditions of the agreement, therefore, it has every right to take possession of the vehicle, which admittedly is the hypothecated property. Since the defendant is competent to take possession of the vehicle, therefore, taking over the possession of the vehicle cannot be said to be an act illegal in nature. The arbitration clause i.e. clause 15 provides that all disputes, differences or claims arising out of the agreement could only be settled by way of arbitration, therefore, the dispute could only be settled by the Arbitrator. 11. Learned trial Judge has failed to appreciate the terms and conditions of the agreement and also the law applicable in its right perspective. The impugned order as such is not legally sustainable and the same is quashed and set aside. Consequently, the application under Section 8 of the Act is allowed. 12. With these observations, this petition stands disposed of, so also the pending application(s), if any.