ANNAMALAI FINANCE LIMITED REPRESENTED BY ITS SENIOR MANAGER-LEGAL Vs. BALAMURTHY TEXTILES (P) LIMITED REPRESENTED BY ITS MANAGING DIRECTOR

JUDGEMENT

(1.) The Civil Miscellaneous Appeal is filed against the fair and decretal order dated 13.07.2017 made in A.R.O.P.No.377 of 2005 on the file of the Principal District Court, Coimbatore, reversing the Award dated 30.11.2000 made in Arbitration Proceedings No.5 of 2000 passed by the Sole Arbitrator/Arbitral Tribunal, Coimbatore.

(2.) The appellant is the claimant and the respondents 1 to 4 are the respondents in Arbitration Proceedings No.5 of 2000 on the file of the Arbitral Tribunal, Coimbatore. According to the appellant, the appellant company is the Public Limited Company, first respondent company is the Private Limited Company and the respondents 2 to 4 are its directors. The first respondent has borrowed money and the respondents 1 to 4 and one P.Balasubramaniam are guarantors. A Hire Purchase Agreement was entered into between the appellant company and first respondent company on 006.1995. As per the Hire Purchase Agreement, the second opposite party/ Balasubramaniam has agreed to repay the loan in 36 instalments. The third opposite party/second respondent herein has deposited his original title deeds as a collateral security. The first respondent has failed to pay the monthly instalment as agreed upon in the Hire Purchase Agreement and defaulted in payment of instalment. The first opposite party/first respondent herein has paid only a sum of Rs.7,42,950/- and even after repeated demands, first respondent has not taken any steps to regularise the amount and a sum of Rs.34,13,175/- was due and payable by the respondents 1 to 4. The respondents 1 to 4 and 2nd opposite party have also executed a demand promissory note for the loan availed by them. The respondents 1 to 4 and the appellant have entered into a supplemental agreement dated 14.10.1999, whereby it was agreed that the dispute should be resolved by Arbitration Proceedings. The appellant invoking the said arbitration clause appointed fifth respondent as Arbitrator. Before the fifth respondent/Arbitrator, the appellant has filed claim statement.

(3.) The respondents 1 to 4 have filed defence statement and stated that there is no arbitration clause in the Hire Purchase Agreement dated 02.06.1995 for appointment of Arbitrator. On the other hand, it was specifically agreed that the dispute should be resolved by way of civil proceedings. The supplemental agreement is not valid and the second opposite party/Balasubramaniam did not sign the said agreement. There was no Board Resolution for entering into the supplemental agreement. The appellant has got the signatures in the supplemental agreement by threat and fraud by showing N.B.W., which was issued by the learned Judicial Magistrate No.VII, Coimbatore. The second opposite party has not signed the supplemental agreement and therefore, it is not a valid agreement. The respondents 1 to 4 signed the supplemental agreement without knowing the recitals in the agreement. The appointment of Arbitrator by the appellant is not valid, as no consent was obtained from the respondents 1 to 4 and second opposite party. The amount claimed by the appellant is not correct and the interest claimed is also exorbitant.