SREI EQUIPMENT FINANCE PRIVATE LIMITED Vs. KHYODA APIK

JUDGEMENT

(1.) The answers to the common questions that have arisen in these three matters may decide the fate of a clutch of matters where arbitral awards have been put into execution before this Court.

(2.) Though every matter should be dealt with on its merits, the larger picture cannot be lost sight of. These three execution applications cannot be seen in isolation. The decree-holder in each case is a finance company. Two of the awards have been passed by the same arbitrator.

(3.) Over the last few months there has been a proliferation of execution proceedings filed by finance companies for implementation of arbitral awards. In most cases the finance company would have granted facilities for the acquisition of a vehicle or an agricultural equipment or an industrial implement. Generally, the agreements would be in the nature of hire-purchase transactions where monthly rentals would be payable over a period of time. Typically, the case of the finance company would be that the hirer had failed in making the installment payments whereupon the arbitration clause contained in the agreement had been invoked; and, more often than not, the reference would be before a select band of arbitrators. In a number of cases there would be proceedings under Section 9 of the Arbitration and Conciliation Act, 1996 before this Court either before or in course of the reference and in some of such cases the financier would have obtained an order for a receiver being appointed in respect of the asset. In most cases, the hirers would not be present to contest the arbitral proceedings and awards would come to be made, upholding the claim; often by providing for the penal rate of interest and exorbitant costs recognised in the agreements. Armed with ex parte awards, and on the basis of assertions that copies thereof had been served by the arbitrators on the hirers and the guarantors, the financiers would present the deemed decrees for execution by relying on Section 2(1)(e) of the 1996 Act, sometimes read with Section 42 thereof, for the implementation of the awards by this Court.