STATE BANK OF INDORE Vs. N C JAIN

JUDGEMENT

(1.) The petitioner by this writ petition seeks quashing of the order dated 3.3.2003, Annexure P-12, by which respondent No.1 Shri N.C.Jain, the Arbitrator under the Permanent Machinery for Arbitration, declined the petitioner's prayer against impleadment in the absence of an arbitration agreement with either the claimant or the respondent. The petitioner further seeks writ of prohibition to restrain respondent No.1 from adjudicating upon the liability of the petitioner, without an express or implied arbitration agreement.

(2.) The facts to the extent relevant for decision of writ petition may be noted briefly. Respondent No.2, State Bank of India through its Branch Manager, Satna, (M.P.) moved for appointment of an Arbitrator under the Permanent Machinery for Arbitration for settlement of its claim against respondent No.3, Sharda Gramin Bank, Regional Rural Bank. State Bank of Indore, respondent No.2/Claimant, State Bank of India, through the Branch Manager, Satna (M.P.) and respondent No3 Sharda Gramin Bank, are all Public Sector/Government Undertakings, falling within the ambit of Permanent Machinery of Arbitration.

(3.) Respondent No.2 filed its claim against the Sharda Gramin Bank. Sharda Gramin Bank had presented nine drafts, purported to have been issued by State Bank of India at Indore (Jabalpur) and State Bank of Indore, Kampoo Gwalior Branch, drawn on the State Bank of India, Satna Branch (M.P.) for clearing. The respondent No.2 claimant bank on scrutiny found the drafts to be in order and released the payment representing the proceeds of nine bank drafts to the collecting Bank. The total amount of the nine drafts was approximately Rs.70.26 lacs. The respondent Sharda Gramin Bank's Vigilance Department became suspicious of the transactions as these were high amounts for the volume of business transacted by the account holders through its Branches. The drafts drawn on the State Bank of India were suspected to be forged. It transpired that the said drafts had been stolen. Respondent No.2, therefore, claims refund of the sum of Rs.70.26 lacs together with interest from the date of payment. FIR was also lodged. Respondent No.2 claimed that payments were collected for account holders, who did not have any valid title to the drafts. Respondent No.2 made its claim against respondent No.3 alone.