Research › Search › Judgment

Madhya Pradesh High Court · body

2024 DIGILAW 634 (MP)

Shameem Khan v. Tata Motors Finance Limited

2024-09-24

ANAND PATHAK

body2024
JUDGMENT 1. Regard being had to the similitude of the controversy as all cases originate from the same cause of action, all these cases are taken together and heard analogously and decided by this common order. For convenience's sake, facts as narrated in A.A.No.39/2024 are taken into consideration. 2. Present appeal is under section 37 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act of 1996”) against order dated 18.3.2024 passed by Commercial Court Gwalior whereby application preferred by appellant under section 9 of the Act of 1996 is being dismissed. 3. Precisely stated facts of the case are that appellant runs transport business, for which he purchased the truck TATA 5530 SIGNA for which he received financial assistance of Rs.43,40,000/- from Tata Motors Finance Limited (respondent No.1 herein). As per the terms of the loan agreement, he was required to pay total Rs.54,16,315/- along with interest of Rs.10,76,315/- in 60 regular monthly installments within the period from 17.2.2021 to 28.2.2026. It appears that regular monthly installments were paid by appellant for some time, According to appellant, he paid amount till July, 2023 and became defaulter in August, 2023 when he did not deposit the installment. 4. Respondent No.1 caused the truck to be seized forcefully on 25.08.2023. Thereafter, appellant contacted respondent No.1 for deposit of due installments and demanded the questioned vehicle to be released after depositing two months due installments. However, respondent No.1 did not release the vehicle and went into arbitration proceedings. It appears that Arbitrator passed interim order on 10.11.2022 for seizure of vehicle. Meanwhile, proceedings continued and on 8.2.2023 final award has been passed by the Arbitrator. Thereafter, appellant preferred an application under section 9 of the Act of 1996 before Commercial Court for protection of his vehicle because respondent No.1 in pursuance to arbitration award wanted to dispose of the truck through sale in auction. 5. Said application under section 9 of the Act of 1996 is being dismissed by Commercial Court on the ground that appellant has remedy to approach the Arbitrator and/or to prefer appeal and on the point of jurisdiction. Therefore, appellant is before this Court. 6. It is the submission of learned counsel for appellant that he paid amount till July, 2023 regularly. Still vehicle has been seized on 25.8.2023. When he was regularly paying the installments then respondent No.1 had no occasion to seize the vehicle. Therefore, appellant is before this Court. 6. It is the submission of learned counsel for appellant that he paid amount till July, 2023 regularly. Still vehicle has been seized on 25.8.2023. When he was regularly paying the installments then respondent No.1 had no occasion to seize the vehicle. 7. It is the submission of learned counsel for appellant that once interim order was passed on 10.11.2022 by Arbitrator and thereafter final award was passed on 8.2.2023, then interim order directing the seizure of truck merges with the final order. Therefore, seizure of truck on 25.8.2023 is an arbitrary exercise having trappings of colourable exercise of powers. 8. Learned counsel for the appellant also raised the point of non-affording of opportunity of hearing. According to appellant, no notice ever received by appellant at the instance of Arbitrator so as to participate in the proceedings. In absence of any notice being received proceedings are sham proceedings and deserves to be set aside. 9. Learned counsel for respondent No.1 refers an application vide I.A. No.3878/2024 for dismissal of appeal and submits that appellant became defaulter much prior to initiation of arbitration proceedings. On becoming being defaulter intimation was given to the appellant about his conduct and thereafter arbitration proceedings were invoked following due process. Therefore, it is not the case where arbitration proceedings initiated much prior to appellant becoming defaulter. So far as opportunity of hearing is concerned, he refers the fact that thrice registered AD notice was issued by Arbitrator and when appellant did not turn up then because of the deeming fiction under section 27 of General Clauses Act, 1897 it is presumed that appellant received notice because it was registered AD notice. Appellant knew all these facts very well but deliberately avoided. 10. Learned counsel for respondent No.1 refers the judgment of apex Court passed in the case of Arcelor Mittal Nippon Steel India Limited v. Essar Bulk Terminal Limited reported in (2022) 1 SCC 712 to submit that after Amendment Act of 2015 section 9 and 17 are in unison to the extent that person aggrieved may make an application under section 17 also before the Arbitrator for same set of relief as can be provided under section 9 by a Court. Therefore, according to counsel for respondent No.1, apex Court discouraged the practice of invocation of section 9 application in arbitration matters. Therefore, according to counsel for respondent No.1, apex Court discouraged the practice of invocation of section 9 application in arbitration matters. Through the statements of different loan transactions, respondent No.1 stressed over the fact that appellant was defaulter in all his loan transactions. He prayed for dismissal of the appeal. 11. Respondent No.2 is a formal party as registering authority. He referred the factual details. 12. Heard the learned counsel for the parties and perused the material available on record. 13. The present case has been filed by the appellant/borrower as appeal under section 37 of the Act of 1996 against the order dated 18.3.2024 passed by the Commercial Court/Commercial Appellate Court, Gwalior. It appears from the impugned order that the appellant filed the said application under section 9 of the Act of 1996 for continuation of interim order/interim protection. 14. On close scrutiny it appears that final award has been passed on 8.2.2023. Therefore, earlier interim order dated 10.11. 2022 passed by the sole arbitrator under section 17 of the Act of 1996 is being merged in the final order. Said final order dated 8.2.2023 can be challenged by the appellant in appeal under section 34 of the Act of 1996 or any other remedy as available to him. So far as present appeal under section 37 of the Act of 1996 is concerned, it appears to be not maintainable. 15. The scope of section 37 of the Act of 1996 is well defined in section prescribing the exigencies where appeal is maintainable. Section 37 of the Act of 1996 is reproduced as under: “37. Appealable orders. (1) Notwithstanding anything contained in any other law for the time being in force, an appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely: (a) refusing to refer the parties to arbitration under section 8; (b) granting or refusing to grant any measure under section 9; (c) setting aside or refusing to set aside an arbitral award under section 34. (2) An appeal shall also lie to a Court from an order of the arbitral tribunal - (a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or (b) granting or refusing to grant an interim measure under section 17. (2) An appeal shall also lie to a Court from an order of the arbitral tribunal - (a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or (b) granting or refusing to grant an interim measure under section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.” Thus, the scope of appeal under section 37 of the Act of 1996 is defined in clause (a)(b) and (c) of sub-section (1) of the Act of 1996. 16. Scope of section 37 of the Act of 1996 is very well defined. When arbitration award has already been passed then scope of section 9 of the Act of 1996 does not exist for the appellant for agitation. Appropriate remedy lies somewhere else. 17. In the case of Arcelor Mittal Nippon Steel India Limited v. Essar Bulk Terminal Limited, (2022) 1 SCC 712 , scope of section 9 of the Act of 1996 has been discussed by the apex Court in detail: “61. However, sub-Section (3) of section 9 of the Arbitration Act, on which much emphasis has been placed both by Mr. Khambata and Mr. Kapil Sibal provides that once an Arbitral Tribunal has been constituted, the Court shall not entertain an application under sub section (1), unless the Court finds that circumstances exist which may not render, the remedy provided under section 17 efficacious. 62. Sub-Section (3) of Section 9 has two limbs. The first limb prohibits an application under sub-Section (1) from being entertained once an Arbitral Tribunal has been constituted. The second limb carves out an exception to that prohibition, if the Court finds that circumstances exist, which may not render the remedy provided under section 17 efficacious. 63. To discourage the filing of applications for interim measures in Courts under section 9(1) of the Arbitration Act, section 17 has also been amended to clothe the Arbitral tribunal with the same powers to grant interim measures, as the Court under section 9(1). The 2015 Amendment also introduces a deeming fiction, whereby an order passed by the Arbitral Tribunal under section 17 is deemed to be an order of Court for all purposes and is enforceable as an order of Court. 64. The 2015 Amendment also introduces a deeming fiction, whereby an order passed by the Arbitral Tribunal under section 17 is deemed to be an order of Court for all purposes and is enforceable as an order of Court. 64. With the law as it stands today, the Arbitral Tribunal has the same power to grant interim relief as the Court and the remedy under section 17 is as efficacious as the remedy under section 9(1). There is, therefore, no reason why the Court should continue to take up applications for interim relief, once the Arbitral Tribunal is constituted and is in seisin of the dispute between the parties, unless there is some impediment in approaching the Arbitral Tribunal, or the interim relief sought cannot expeditiously be obtained from the Arbitral Tribunal.” 18. In the conspectus of facts and circumstances of the case, no case for interference is made out. Appellant to pursue his other remedy if available to him in accordance with law. 19. Resultantly, all the Arbitration Appeals preferred by the appellant are hereby dismissed with the liberty as aforesaid.