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2023 DIGILAW 2972 (MAD)

Indusind Bank Limited, Chennai v. MLR Auto Limited, Telengana

2023-08-31

ABDUL QUDDHOSE

body2023
JUDGMENT 1. A.No.1662 of 2023 has been filed under Section 27 of the Arbitration and Conciliation Act, 1996 seeking to summon the persons 1 to 3 to produce the documents morefully described in the schedule to the judges summons, pursuant to the order dated 21.01.2023 passed by the Arbitrator. A.No.3486 of 2023 has been filed under Section 29A of the Arbitration and Conciliation Act, 1996 seeking extension of time period for making an Award for a further period of six months. 2. By the order of the Arbitrator dated 21.01.2023 passed under Section 27 of the Arbitration and Conciliation Act, 1996, the Arbitrator has allowed the request of the applicant to examine three witnesses and for production of documents. There is a dispute between the applicant and the respondent arising out of three Memorandum of Understandings dated 25.07.2016, 25.07.2017 and 25.07.2018. There is an Arbitration Clause available in all the three Agreements. Pursuant to orders passed by this Court under Section 11 of the Arbitration and Conciliation Act 1996, the Sole Arbitrator, who is presently adjudicating the dispute between the parties, was appointed as an Arbitrator. Pleadings are complete before the Arbitrator and the examination of the witnesses on the side of the applicant has also been commenced. The applicant herein is the claimant in the Arbitration and the respondent herein is the respondent in the Arbitration. The respondent is a Manufacturer of auto rickshaws. Under the aforesaid agreements, which are the subject matter of dispute, the respondent had agreed to buyback the auto rickshaws from the applicant whenever the borrower committed default and the default period should not exceed more than 20 equated monthly instalments. The applicant has made a claim against the respondent claiming that the respondent has committed breach of the three Memorandum of Understandings referred to supra. However, the same is disputed by the respondent. As seen from the counter statement filed by the respondent before the Arbitrator, issues were also framed by the Arbitrator and the Trial in the Arbitration has been commenced and the applicant has also examined three witnesses. 3. However, the same is disputed by the respondent. As seen from the counter statement filed by the respondent before the Arbitrator, issues were also framed by the Arbitrator and the Trial in the Arbitration has been commenced and the applicant has also examined three witnesses. 3. In view of the dispute raised by the respondent, the applicant had made a request to the Arbitrator as per the provisions of Section 27 of the Arbitration and Conciliation Act, 1996 seeking to examine three more witnesses, who according to them are independent witnesses and also for production of certain documents by the said three witnesses. The same was objected to by the respondent in the Arbitration by filing a counter to the application filed by the applicant under Section 27 of the Arbitration and Conciliation Act, 1996. However, the objections raised by the respondent was overruled by the Arbitrator by passing the order dated 21.01.2023 by allowing the application filed by the applicant under Section 27 of the Arbitration and Conciliation Act, 1996 as prayed for. However, liberty was granted by the Arbitrator for the respondent to raise all objections available to them under law with regard to the examination of the fresh witnesses and production of all documents by the fresh witnesses in the main Arbitration. The applicant has now filed these applications seeking approval of the Arbitrator''s order dated 21.01.2023 as per the provisions of Section 27 of the Arbitration and Conciliation Act, 1996 and extension of time period for making an Award for a further period of six months. 4. A serious objection has been raised by the learned counsel for the respondent for entertaining these applications. He would submit that in the claim statement filed by the applicant, there is no prayer sought for by the applicant with regard to the alleged payments made by the respondent to the customers of the applicant. Without there being a prayer, the present applications filed before the Arbitrator seeking for examination of additional witnesses and for production of documents are not maintainable. 5. Without there being a prayer, the present applications filed before the Arbitrator seeking for examination of additional witnesses and for production of documents are not maintainable. 5. Learned counsel for the applicant, on the other hand, would submit that once the Arbitrator has taken a decision allowing the request made by the applicant under Section 27 of the Arbitration and Conciliation Act, 1996 permitting the applicant to examine additional witnesses and for production of additional documents, the approval sought for by the applicant before this Court as per the provisions of Section 27 of the Arbitration and Conciliation Act, 1996 is only a formal approval. In support of his contention, the learned counsel for the applicant drew the attention of this Court to the following authorities: 1)M/s.National Insurance Company Limited vs M/s.S.A.Enterprises reported in 2015 SCC Online Bombay 5063; and 2)Montana Developers Private Limited, Mumbai vs. Aditya Developers, Mumbai and others reported in 2016(6) Mh.L.J 660; 6. However, learned counsel for the applicant, in particular, referred to paragraph Nos.35, 36 and 40 in the judgment of M/s.National Insurance Company Limited vs M/s.S.A.Enterprises and paragraph Nos.12, 13, 14 and 19 in the judgment of Montana Developers Private Limited, Mumbai vs. Aditya Developers, Mumbai and others referred to supra. 7. As seen from the aforesaid judgments, it is clear that the legislature has inserted Section 27 of the Arbitration and Conciliation Act to empower the Arbitral Tribunal as well as the parties to take assistance of the Court and the Court is also empowered to issue direction to a party or even third party if the Arbitral Tribunal has granted permission and is of the opinion that it would be necessary for proper and effective adjudication of the dispute. It is also clear from the aforesaid judgments as well as from Section 27 itself that the procedure prescribed under Section 27(1) of the Arbitration and Conciliation Act, 1996 for taking assistance of this Court for issuing summons in terms of the order passed by the Arbitrator is not an adjudicatory proceeding. Once the Arbitrator is satisfied on the application made by any of the parties to the dispute seeking for production of witnesses or documents, the Courts role under Section 27(1) of the Arbitration and Conciliation Act, 1996 is limited. 8. Once the Arbitrator is satisfied on the application made by any of the parties to the dispute seeking for production of witnesses or documents, the Courts role under Section 27(1) of the Arbitration and Conciliation Act, 1996 is limited. 8. In the case on hand, the respondent has been adequately protected by the order of the Arbitrator passed under Section 27(1) of the Arbitration and Conciliation Act, 1996 as they have been granted liberty to raise all objections with regard to the examination of the new witnesses and the production of additional documents by the new witnesses and they are also given liberty to cross examine the witnesses once they are examined before the Arbitrator. The rights of the respondent to disprove the claim of the applicant before the Arbitrator has not been curtailed by the order passed by the Arbitrator under Section 27(1) of the Arbitration and Conciliation Act, 1996. The role played by the Court under Section 27(1) of the Arbitration and Conciliation Act, 1996 is not an adjudicatory role, but only to grant formal approval of the Arbitrator''s order and enforce the said order by issuing summons to the witnesses sought to be examined by the applicant, which has been approved by the Arbitrator. Once there is no glaring error found in the order passed by the Arbitrator under Section 27(1) of the Arbitration and Conciliation Act, 1996, the question of interfering with the same by this Court will not arise. 9. As observed earlier, the rights of the respondent has not been curtailed in the order passed by the Arbitrator. Since this Court is satisfied with the order passed by the Arbitrator, this Court is issuing summons to the witnesses to appear before the Arbitrator and for production of documents sought for in the application, which is morefully described in the schedule to the judges summons, The said witnesses shall appear before the Arbitrator, on receipt of the summons from the Registry of this Court. 10. The learned Arbitrator shall inform both the parties about the date when the witnesses will have to appear before him. Both the parties are permitted to cross examine the new witnesses to be examined pursuant to orders passed by the Arbitrator under Section 27(1) of the Arbitration and Conciliation Act, 1996, which is the subject matter of the application. 11. The learned Arbitrator shall inform both the parties about the date when the witnesses will have to appear before him. Both the parties are permitted to cross examine the new witnesses to be examined pursuant to orders passed by the Arbitrator under Section 27(1) of the Arbitration and Conciliation Act, 1996, which is the subject matter of the application. 11. Insofar as Section 29A application namely, A.No.3486 of 2023 is concerned, the said application has been filed on 28.04.2023 immediately within two months after the expiry of the period stipulated under the Arbitration and Conciliation Act for passing an Arbitral Award. The applicant is a Scheduled Bank governed by the regulations of the Reserve Bank of India. They have branches all over India. 12. Infact, the condone delay application filed by the applicant was also condoned and only thereafter, Section 29A application came to be numbered. 13. This Court is satisfied with the reasons contained in the affidavit filed in support of the Arbitration Application No.3486 of 2023 filed under Section 29A of the Arbitration and Conciliation Act seeking for extension of time for the Arbitral Tribunal to pronounce the Arbitral Award. 14. According to the respondent, only due to the applicant, there has been a delay in the pronouncement of the Arbitral Award. However, the same is disputed by the learned counsel for the applicant. Since the Trial has already commenced and some of the witnesses of the applicant have already been examined, no prejudice would be caused to any of the parties if further extension of six months is granted for the Arbitrator to pronounce an Arbitral Award with regard to the subject matter of the dispute. 15. However, liberty is granted to both the parties to approach this Court once again if there is a necessity for further extension of time from this Court. Therefore, both the applications are allowed as prayed for by directing the Arbitrator to pronounce the Arbitral Award, within a period of six months from the date of receipt of a copy of this order.