NAGASRINIVASULU Vs. GALADA FINANCE LIMITED

JUDGEMENT

(1.) THE respondent in the arbitration proceeding is the petitioner in this Petition under Section 34 of the Arbitration and Conciliation Act, 1996. THE petitioner challenges the award dated 6.9.2005 granting the first respondent a sum of Rs. 4,59,206/- with interest at 36% per annum from 10.1.2004 till the date of realisation. THE Arbitrator rejected the claim of the petitioner herein for a sum of Rs.4,10,499/-

(2.) THE facts giving rise to the filing of this Petition are as follows:THE first respondent herein carries on the business of hire purchase of vehicles, leasing of equipment and machineries. THE first petitioner herein, entered into a Hire Purchase Finance Agreement for the hire purchase of vehicle on 9.5.2001. THE total finance facility offered was Rs.6,00,000/- with finance charges of Rs.3,24,000/-, thus totalling to a sum of Rs.9,24,000/- Petitioners 2 and 3 were the guarantors for the due compliance of the terms of agreement. On the same day, the first petitioner, along with the other two petitioners, entered into an arbitration agreement marked as Ex.A2. In terms of the Hire Purchase Agreement, the first petitioner was to repay the amount in 36 monthly instalments i.e., at Rs.25,700/- for the first 30 instalments starting from 8.6.2001 to 8.11.2003 and at Rs.25,500/- for the remaining 6 instalments starting from 8.12.2003 to 8.5.2004.

(3.) ON notice, the petitioners herein filed their defence statement. The petitioners took the stand that the claim was not properly verified and presented and that no authorisation whatsoever was produced by Om Prakash Sandu, who filed the Claim Petition and who is stated to be working as Field Officer of the first respondent-Company. The petitioners contended that on this ground, the Petition was liable to be dismissed. Apart from denying the liability to pay the sum of Rs.5,02,175/- with interest at 36% per annum till the date of realisation, the petitioners contended that the claim was liable to be dismissed that the entire sale consideration was not paid by the first respondent and hence, they disputed the claim of the first respondent that the petitioners were liable to pay a sum of Rs.9,24,000/- as per the Hire Purchase Agreement. The petitioners alleged that the first respondent suppressed the proposal terms and the promissory note dated 9.5.2001 and that they had failed to approach the Tribunal with clean hands. The petitioners further pointed out that their vehicle was repossessed by the first respondent in the month of July, 2003 and the arbitration proceedings were initiated in the month of January, 2004. Even assuming that the petition was maintainable, the first respondent was not entitled to claim interest beyond July, 2003 after the vehicle was repossessed. It is also alleged that the first respondent had not given due credit to the payment made by the first petitioner to the tune of Rs.2,97,601/- Taking the stand that the additional finance charges at 36% per annum was usurious, illogical and fanciful, the petitioners pointed out that when there was an offer for the sale of the vehicle for Rs.5,60,499/-, which was within the knowledge of the first respondent, there was no justification for the sale of the vehicle for a lesser sum. It is stated that the vehicle was taken possession as in full and final settlement of the claim. However, the first respondent failed to carry out the promise and sold the vehicle for a sum of Rs.3,50,000/- even during the subsistence of the agreement under the guise of a default in payment of the dues under the agreement. The petitioners took the stand that by selling the vehicle for a paltry sum of Rs.3,50,000/-, the first respondent had caused a wrongful loss of Rs.2,10,499/- Consequently, the petitioners claimed that there was loss of business notionally valued at Rs.2,00,000/- Thus a counter claim of Rs.4,10,494/- was made against the first respondent. The petitioners alleged that the first respondent had failed to produce the statement of accounts and the receipts, which would establish the ingenuity of the claim of the first respondent.