ANGEL INFIN PVT LTD Vs. ECHJAY INDUSTRIES LTD

JUDGEMENT

(1.) Petition has been filed under Section 34 of the Arbitration & Conciliation Act challenging the award dated 16-6-2006 made by the learned sole arbitrator partly allowing the claim made by the Respondents. The Respondents were the claimants before the arbitrator and the Petitioners were the Respondents. It was the claimants case before the learned arbitrator that they had advanced loan of Rs.1.5 crore to the Petitioners in two branches of Rs.50 lakh and Rs.1 crore under an agreement contained in two documents dated 6th April, 1998 and dated 29th May, 1998. While the document dated 6th April, 1998 provided for interest at the rate of 30% p.a. The agreement dated 29th May, 1998 provided for payment of interest at the rate of 27% p.a. In fact the Respondents claimed interest only at the rate of 27% p.a. on the entire loan of Rs.1.5 crore before the learned arbitrator. The loan advanced initially for a period of three months was to stand automatically extended for a further period of one month in each case, unless the Respondents give a notice to the Petitioners requiring them to pay the said loan on expiry of the notice period.

(2.) The Petitioners did not repay the said amount within the period stipulated in the said documents nor did they make any payment towards interest due thereunder. It was the Respondents case before the learned arbitrator that thereafter in a meeting held in September, 1998, the Petitioners sought deferment of the loan and interest and promised to make lump sum payments which they requested be appropriated first towards principal and then towards interest and that the Respondents agreed to this.

(3.) Subsequently, the Petitioners repaid the principal amount of Rs.1.5 crore during the period from 8th February, 1999 to 15th February, 2000. No payments were however made by the Petitioners during the said period or thereafter towards the interest due. By their letter dated 27th March, 2000 the Respondents raised a debit note of even date on the Petitioners debiting their account to the extent of Rs.50,85,985/- being the interest payable at the rate of 27% p.a. upto that date. The Petitioners did not make payment of interest demanded by the Respondent. The dispute thus arose between the parties in relation to the liability of the Petitioners to pay interest. By letter dated 12th December, 2002 the Respondents invoked the arbitration clause contained in the loan documents and the disputes between the parties were referred to Mr.Jitendra Shah, the named arbitrator in the Arbitration Clause.