J.P.S. SANDHU Vs. PATIALA AUTO ENTERPRISES

JUDGEMENT

(1.) PETITIONER is a retired Colonel from Indian Army and is an unfortunate victim of mechanism of civil smart respondent, business person. He stands to loose his hard earned fortune of Rs. 25 lacs. He was deceived to loan, perhaps his entire saving of Rs. 25 lacs, to respondent No. 1 M/s Patiala Auto Enterprises, Patiala. He appears to have been hooked by crooks well and proper. Enticed by respondent No. 3 Parkash Chand Bansal, the petitioner entered into an agreement (Annexure P-1) with respondents, which is signed by respondent No. 3, posing himself to be a managing partner of respondent No. 1 M/s Patiala Auto Enterprises, Patiala. Respondent No. 3 signed an agreement with the petitioner for accepting loan of Rs. 25 lacs which was to be the working capital of respondent No. 1 M/s Patiala Auto Enterprises, Patiala. To secure this loan, even house No. 22, Brar Street Patiala was hypothecated in favour of the petitioner (first party) as a collateral security on behalf of 2nd party i.e. the respondents herein. The parties had also mutually agreed that respondents would pay an interest @ 24% per annum or Rs. 300/- per scooter on number of scooters sold in one calendar month which was to be payable by the Second party i.e. respondents by 5th of each month to the First party i.e. the petitioner. While accepting this loan on behalf of respondent No. 1, respondent No. 3 posed himself as Managing Partner and took responsibility in all respect on behalf of every one as can be seen from the following averments in the agreement :-

(2.) RESPONSIBILITY on behalf of the respondents, as such, was undertaken by respondent No. 3, who also is the lone signatory to this agreement on behalf of the respondent borrower. As can be seen, respondent No. 3 had signed as a borrower in this case. The respondents, however, failed to repay the loan and also did not adhere to the terms of the agreement Annexure P-1. Not only that the house, which was hypothecated as a collateral security, was also sold in a clandestine manner by the guarantors etc. When the issue hotted up, the respondents allegedly issued a cheque amounting to Rs. 23.50 lacs on 30.9.2001 as re-payment of the loan amount. This cheque, drawn on the Bank of Punjab, was signed by respondent No.2 as a partner of M/s Patiala Auto Enterprises, Patiala. Cheque was on behalf of respondent No. 1 concern and not in individual capacity. The cheque, when presented by the petitioner, was not encashed and was returned with the remarks "insufficient funds". The petitioner, thereafter, issued legal notice and failing to get response from the respondents, he filed a complaint under Section 138/142 of the Negotiable of Instruments Act on 11.4.2002. Copy of the complaint is annexed with the petition as Annexure P-2.

(3.) IT may also require a mention that the parties to the agreement had liberty to take the dispute and differences arising out of a claim to be settled by the arbitration in accordance with the Indian Arbitration Act 1940. Even the arbitrator had been appointed in the agreement itself and was Sh.Suresh Kumar Mittal, C.A. In case of his death, refusal, neglect, inability or incapability to act as an arbitrator, Lt.Col. Mandeep Singh Sandhu (Retd.) was to act as a sole arbitrator.