MADANLAL AGGARWAL Vs. ABHYUDAYA CO-OPERATIVE BANK LTD.

JUDGEMENT

(1.) Heard learned Counsel for the parties. This arbitration petition challenges an award passed by the sole arbitrator under Sec. 84 of the Multi-State Cooperative Societies Act.

(2.) The first Petitioner is a partnership firm, of which the other Petitioners are partners/legal heirs of deceased partners. The Petitioner firm was a constituent of the Respondent bank and had availed of a loan from the latter. The loan liability was not discharged and, as a result, the account of the firm was treated by the bank as NPA. A recovery notice was issued by the bank and, thereafter, arbitration proceedings were commenced under Sec. 84 of the Multi-State Co-operative Societies Act. An award came to be passed for a sum of Rs. 81.53 lakhs, which included principal amount of Rs. 67 lakhs and balance interest. The award was challenged by the Petitioners before this Court. On that petition, this Court set aside the award and remanded the arbitration reference to the sole arbitrator for a fresh hearing in accordance with law. The arbitration reference, thereupon, recommenced before the sole arbitrator. In the meantime, the Respondent bank took an action under the SecuritisationReconstruction of Financial AssetsEnforcement of Security Interest Act, 2002 (SARFAESI Act) in respect of its security interest, namely, the shop premises of the Petitioners, which was mortgaged to it for repayment of the loan. The shop was, thereupon, sold under the SARFAESI Act and an amount of Rs. 62 lakhs recovered from the sale was appropriated by the Respondent bank. After giving credit of this amount of Rs. 62 lakhs towards its principal dues, the Respondent bank pursued its claim in the arbitration reference in respect of the balance principal amount of Rs. 5 lakhs and interest. The sole arbitrator passed an award in favour of the Respondent bank in the sum of Rs. 26,01,845.08 as of 31 July 2014 with interest on at the rate of 14.5% p.a. on the balance principal amount of Rs. 5 lakhs with effect from 1 Aug. 2014 and till payment or realization and also for costs. This award is the subject matter of challenge in the present petition.

(3.) Learned Counsel for the Petitioners submits that the award deals with a dispute not contemplated by, or falling within, the terms of the submission to arbitration and ought to be, accordingly, set aside under the provisions of sub-clause (iv) of clause (a) of subsection (2) of section 34 of the Arbitration and Conciliation Act, 1996. Secondly, learned Counsel submits that the arbitral procedure was not in accordance with the agreement between the parties and the award deserves to be set aside even under subclause (v) of clause (a) of subsection (2) of Sec. 34.