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2022 DIGILAW 309 (MEG)

Mala Bhattacharjee v. Indusind Bank Limited

2022-11-21

H.S.THANGKHIEW

body2022
JUDGMENT (ORAL) 1. The petitioner by way of the instant revision application under Article 227 of the Constitution is aggrieved with the order dated 20.07.2018, whereby on the application of the defendant No. 1 under Section 5 and 8 of the Arbitration and Conciliation Act 1996, the matter has been referred to Arbitration. 2. The case of the petitioner in brief is that an agreement had been entered with the respondent No. 2 for sale of a vehicle bearing Registration No. ML-05K 7239, and to this effect an Agreement for Sale was executed on 12.03.2015. The arrangement arrived at was that the respondent No. 2 would pay the balance amount due, after obtaining a loan from the respondent No. 1 Bank. The petitioner it appears thereafter transferred the ownership of the vehicle in favour of the respondent No. 2 but however, the unpaid amount of Rs. 3,40,000/-(Rupees Three Lakhs Forty Thousand only) was never received by the petitioner. A Suit was then instituted being Title Suit No. 43 (H) 2016 before the Court of the Assistant District Judge, Shillong, praying for a decree for recovery of the vehicle and further for compensation and damages. The learned Lower Court as observed earlier, on the application under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996, returned the plaint to the petitioner by way of the impugned order. 3. The respondent No. 1, though had entered appearance before this Court and after initially contesting the matter has failed to appear after 16.11.2021, as such the matter proceeded ex parte against the said respondent. As far as the respondent No. 2 is concerned in spite of service of notice, the said respondent chose not to appear. 4. Mr. S.D. Upadhaya, learned counsel for the petitioner in his submissions has referred to the earlier Agreement dated 16.06.2013 entered into by the petitioner and the respondent No. 1, which is appended to the application under Sections 5 and 8 of the Arbitration and Conciliation Act 1996. He submits that it was the basis on which the impugned order was passed, and that the Agreement dated 16.06.2013, as per his submissions no longer exists, as the loan which was granted vide this Agreement has since been satisfied. He submits that it was the basis on which the impugned order was passed, and that the Agreement dated 16.06.2013, as per his submissions no longer exists, as the loan which was granted vide this Agreement has since been satisfied. He further submits that though both agreements referred to the same vehicle, the learned Lower Court below had committed grave error in dismissing the Suit by holding that the earlier Agreement dated 16.06.2013, still holds good, even though he submits the Suit related to a fresh transaction. He therefore submits that the conditions under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 not having met, the impugned order is patently illegal and is liable to be set aside and the Suit be allowed to proceed. 5. In support of his submissions, the learned counsel has placed reliance on the case of Booz Allen and Hamilton INC vs. SBI Home Finance Limited Ors. reported in (2011) 5 SCC 532 , wherein he submits that the Hon'ble Supreme Court has laid down certain condition pre-requisites that must be satisfied, as to whether a matter is to be referred to Arbitration. The learned counsel also refers to the conditions as laid down in the case of Yogi Agarwal vs Inspiration Clothes U Ors. reported in (2009) 1 SCC 372 , on the same point. 6. I have heard the learned counsel for the petitioner and examined the materials on record. An examination of the same reveals that the petitioner had obtained 2 loans from the respondent Bank, (i) for purchasing Maruti Swift Dzire and (ii) for purchasing Mahindra Bolero. It seems that the first loan of the petitioner, became a bad debt, and as the petitioner was not interested in getting the vehicle repaired, the matter went for arbitration wherein an award was passed against her, and as per the statement of accounts, there was an outstanding amount of Rs. 1,60,000/- (Rupees One Lakh Sixty Thousand only). On the second loan which has been obtained for purchasing the Mahindra Bolero, it is also seen that the said loan also became ineffective due to the non-payment of EMI by the petitioner on time. 1,60,000/- (Rupees One Lakh Sixty Thousand only). On the second loan which has been obtained for purchasing the Mahindra Bolero, it is also seen that the said loan also became ineffective due to the non-payment of EMI by the petitioner on time. It appears that it was at this juncture that the petitioner transacted the sale of this vehicle to the respondent No. 2, wherein the respondent No. 1 agreed to the said proposal to re-finance the purchase of the Mahindra Bolero by the respondent No. 2, from the petitioner. To this end, an Agreement was entered into between the respondent No. 1 and the respondent No. 2, for the said loan to which the petitioner is not a party. The loan sanctioned to the respondent No. 2 also became a bad loan for which the vehicle was then auctioned by the respondent No. 1. 7. It is in this backdrop that this Court is to decide as to whether an arbitration clause contained in the Agreement dated 16.06.2013, will also cover the subsequent dispute that the petitioner has with the respondent Bank. As noted earlier, the case of the petitioner is that (i) there is no subsisting agreement between the petitioner and the respondent Bank (ii) that the agreement entered between the petitioner and respondent No. 2, is independent of respondent No. 1 and (iii) that the parties in issue are not the same. 8. From the sequence of events that have unfolded, and from a perusal of the of the order of the learned Lower Court, it is seen that reliance has been placed on the Agreement dated 16.06.2013, and the parties were referred to arbitration, on the finding that clause 23.1, that contained the arbitration clause was couched in the widest terms to cover any dispute, and that clause 20.1 also allowed the lender (respondent No.1) to have lien over all the assets of the borrower/co-borrower, and the right to set off any money due to the lender for recovery of the lender's dues. 9. 9. To determine as to whether this agreement still subsists, it is seen that the respondent No. 1 Bank, by a certificate dated 13.10.2014, addressed to the Regional Transport Officer, had however, issued their no objection for Lien Endorsement Removal, on this Agreement that was entered into on 16.06.2013 i.e. much before the second Agreement was entered into on 12.03.2015, which shows that this Agreement dated 16.06.2013, stood terminated. 10. Coming to the case of Booz Allen and Hamilton INC vs. SBI Home Finance Limited Ors. (supra) cited by the learned counsel for the petitioner giving conditions which are to be met, Para-19 of the said judgment which is relevant, for easy convenience, is reproduced hereinbelow:- '19. Where a suit is filed by one of the parties to an arbitration agreement against the other parties to the arbitration agreement, and if the defendants file an application under Section 8 stating that the parties should be referred to arbitration, the Court (judicial authority) will have to decide: i) Whether there is an arbitration agreement among the parties; ii) Whether all the parties to the suit are parties to the arbitration agreement; iii) Whether the dispute which are the subject-matter of the suit fall within the scope of arbitration agreement; iv) Whether the defendant had applied under Section 8 of the Act before submitting his first statement on the substance of the dispute; and v) Whether the reliefs sought in the suit are those that can be adjudicated and granted in an arbitration.' The first pre-requisite is that there should be an arbitration agreement among the parties, which would mean thereby a subsisting agreement. The second requirement is that all the parties in the Suit should also be parties to the arbitration agreement. The other clauses will not be discussed, as they are not relevant to the present case. 11. In the instant case, the only relation that the petitioner had with the respondent Bank was vide an Agreement dated 16.06.2013, which provided for arbitration but however, as the said Agreement had since been terminated/determined, it cannot be held as on the date the application under Section 5 and 8 of the Arbitration and Conciliation Act 1996 was filed, that there was a subsisting arbitration agreement between the petitioner and the respondent Bank. Secondly, the Agreement entered into between the petitioner and the respondent No. 2, apart being independent from the respondent No. 1 Bank, does not contain any arbitration clause and is a plain agreement, though the respondent No. 1 is mentioned therein, it is not a signatory, to the agreement. 12. In view of the facts as discussed, the order of the learned Lower Court relegating the parties to arbitration seems to not have taken into consideration the fact that the application filed under Sections 5 and 8 of the Arbitration and Conciliation Act 1996, by the Bank squarely relied only on the agreement dated 16.06.2013, which no longer existed. 13. In this view of the matter, since the pre-requisite conditions to refer the matter to arbitration have not been met, as there was no subsisting arbitration agreement between the petitioner and the respondent No. 1, and further the second agreement being between two parties only, that is the petitioner and the respondent No. 2, the impugned order dated 20.07.2018 is hereby set aside, and the matter is remanded back to the learned Lower Court below for recommencement of the Title Suit. 14. With the above noted observations and directions, this revision application stands allowed and is accordingly disposed of.