P. SIVAGURUNATHAN Vs. DUGAR FINANCE & INVESTMENTS LIMITED

JUDGEMENT

(1.) This Arbitration Original Petition has been filed by the petitioner seeking to set aside the award dtd. 25/3/2022 passed by the learned sole Arbitrator.

(2.) The case of the petitioner is that the petitioner has entered into Hypothecation-cum-loan Agreement with the respondent and borrowed a sum of Rs.4,50,000.00 by virtue of Loan Agreement No. HP 9261 dtd. 26/2/2015 for the purchase of vehicle namely SCORPIO, bearing registration No. TN 73W 1333. The petitioner has admitted the fact about the disbursement of the said loan. As per the terms and conditions of the aforesaid agreement, the petitioner has to repay the total sum in the form of 36 equated monthly installments of Rs.18,500.00p.m. The petitioner further submitted that after the purchase of the said vehicle, the 1st respondent got the original RC book and gave promise to return it, but failed to issue the original RC book even after several repeated requests. The petitioner was regularly paying the monthly installments without default . In this case, the petitioner had stopped paying the EMIs from 26th EMI. When the petitioner approached the 1st respondent financial institution to close the loan, a person who was handling the above said loan had started demanding exorbitant repayment of amount. Subsequently, the petitioner offered to make Rs.1,50,000.00 as One Time Settlement, hereinafter referred as OTS , but was refused by the 1st respondent and they demanded a sum of Rs.5,50,000.00 for the OTS. Thereafter, the 1st respondent's authorized representative gave an offer to pay Rs.1,95,000.00 as OTS to settle the loan. So, by believing the words of the authorized representative the petitioner paid a sum of Rs.1,95,000.00 through IMPS transfer (Ref No. 101312523117) from the petitioner Indian Overseas Bank, Valmiki Branch vide Account No. 147201000004398 to the 1st respondent bank account. Subsequent to the OTS, the petitioner had sent a legal notice dtd. 15/2/2021 requesting to release the original RC book and to issue NOC for the cancellation of the hypothecation endorsement. But even after the receipt of the OTS i.e., a sum of Rs.1,95,000.00 and the legal notice the 1st respondent failed to return the original RC book. Hence the petitioner lodged a police complaint. Since no action was taken by the inspector of police the petitioner lodged a complaint to the Commissioner of Police, Chennai dtd. 27/5/2021. After repeated requests and follow ups, inspector of Tiruvanmayur police station have issued the CSR bearing No.421 of 2021 dtd. 30/5/2021. After issuance of FIR, the 1st respondent have returned the original RC book but not the NOC. Then the 1st respondent even after the receipt of the OTS also they demanded to clear the outstanding through a notice dtd. 9/6/2021. The 1st respondent, on the receipt of OTS without intimation invoked the arbitration clause in the arbitration agreement and unilaterally appointed a sole Arbitrator and the Learned Arbitrator had sent a reference notice dtd. 27/7/2021. For which the petitioner has filed a Vakalath before the Learned Arbitrator and periodically case was adjourned for filing objection. But no other communications were received after the reference letter. The Learned Arbitrator without hearing has passed an ex-parte award on 25/3/2022. Despite non-appearance of the petitioner and without giving sufficient opportunity to the petitioner to contest and counter the matter in the arbitration, the Learned Arbitrator passed an ex-parte award dtd. 25/3/2022 against the petitioner,which is impugned and liable to be set aside.

(3.) The main grounds of challenge made by the petitioner is that the 1st respondent appointed the learned Arbitrator unilaterally and the ex parte award also came to be passed on 25/3/2022 without giving sufficient opportunity to the petitioner, such an award is in conflict with the most basic notions of morality or justice. The learned Arbitrator has not ordered fresh notice to the petitioner due to non-appearance of his counsel and also the respondent has not served any claim statement to counter it. Also the petitioner never received any notice from the respondent with regard to the appointment of the Arbitrator unilaterally appointed and claimed the sum of Rs.4,96,750.00 with interest 18% though One Time Settlement has been made, which is unlawful. Under these circumstances, without further any scrutiny, the learned Arbitrator passed an ex parte award dtd. 25/3/2022, which is liable to be set aside.