M VENUGOPAL MUNAGA Vs. KOTAK MAHINDRA BANK LIMITED

JUDGEMENT

(1.) This Original Petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, (Act) to set aside the award passed by the second respondent, Arbitrator, on a claim petition filed by the first respondent finance company. The petitioner herein availed a credit card facility from the first respondent and defaulted in payment of the dues. A legal notice dated 19.09.2009 was issued to the petitioner by the first respondent claiming a sum of Rs.1,45,741.56ps. Though the legal notice was served on the petitioner as he failed to pay the amount, the first respondent invoked clause 32.2 of the card holders agreement, which provides that any dispute or difference or claims arising out of or in connection with or in relation to the agreement shall be settled by Arbitration in accordance with the provisions of the Act. The dispute having been referred to the Arbitrator, the Arbitrator is stated to have issued notices to the petitioner and the notices returned with endorsement no such addressee or left. Ultimately, the Arbitrator passed the award dated 05.09.2010, for a sum of Rs.1,82,607.06ps. This award is put to challenge in this petition.

(2.) Mr.V.V.Sairam, learned counsel for the petitioner submitted that after the initiation of the Arbitration proceedings, no notice with regard to initiation of Arbitration proceedings was served on the petitioner and this is sufficient to set aside the impugned award. Further, the Arbitrator did not give any notice to the petitioner that he is going to set the petitioner exparte and this is a mandatory duty cast upon the Arbitrator. It is further submitted that the notices were sent to the wrong address of the petitioner, which will go to prove that if the first respondent had sent notices to the correct address and if the Arbitrator had sent notice to the correct address, the petitioner would have responded to the same and without making any reasonable enquiries as required under Section 3(b) of the Act, the petitioner has been condemned unheard. However, in the Execution Petition, the first respondent has mentioned the correct address of the petitioner which would go to show that no enquiry was made while initiating arbitration proceedings. In support of his contentions, the learned counsel referred to the decision of the Hon'ble Supreme Court in the case of Dharma Prathishthanam vs. M/s.Madhok Construction Pvt., Ltd., 2004 5 CTC 442442 and the decision of the Delhi High Court in the case of Union of India vs. The Kohinoor Tarpaulin Industries, 2009 156 DLT 106 and M/s.Lovely Benefit Chit Fund and Finance Pvt., Ltd., vs. Puran Dutt Sood & Ors., 1983 AIR(Del) 413.

(3.) Mr.S..Namasivayam, learned counsel for the first respondent company submitted that there is no reason for the first respondent to send the notice to an incorrect address and the notice was sent to the petitioner in the address given in the agreement, the last known address of the petitioner and this is in compliance of Section 3(a) of the Act. After resorting to proper procedure, the learned Arbitrator has passed the impugned award and when the award was to be executed the team of officers in Chennai had made extensive enquiry and investigation and were able to ascertain the present place of residence of the petitioner and the said address has been given in the Execution Petition and this is not a ground on which the impugned award could be set aside. Further, it is submitted that the scope of Section 34 of Act is limited and this Court will not interfere with the speaking award. Further, it is submitted that the decisions relied on by the learned counsel for the petitioner are under the 1940 Act and cannot be applied to the present proceedings.