Sree Nithyakalyani Textiles Ltd. v. Sundaram Finance Ltd.

In the High Court of Judicature at MadrasDated: 02.09.2009CoramThe Honourable Mr.Justice M.CHOCKALINGAMandThe Honourable Mr.Justice R.SUBBIAHOriginal Side Appeal No.10 of 2009Sree Nithyakalyani Textiles Ltd.,rep.by its Managing DirectorMr.NagappanChinnakeeramangalam, Thiruvadanai, Ramnad District, Tamil Nadu-623 407. ..Appellant-vs-1. Sundaram Finance Ltd., No.47, Whites Road, Chennai-600 014.2. S.Santhanakrishnan ..RespondentsOriginal Side Appeal filed under Order XXXVI Rule 1 of OriginalSide Rules read with Clause 15 of Letters Patent, against the orderdated 09.06.2008 passed by a learned single Judge of this Court inO.P.No.283 of 2004.For Appellant : Mr.B.Ravi RajaFor Respondents : No appearanceJUDGMENT(Judgment of the Court was delivered by M.CHOCKALINGAM, J.,)Challenge is made to an order of the learned single Judge ofthis Court dated 09.06.2008 made in O.P.No.283 of 2004, whereby anarbitral award sought to be set aside, was dismissed.2. The appeal came to be filed in the following circumstances:A lease agreement was entered into between the 1st respondent inthe original petition and the petitioner on 21.11.1997 in respect ofa 1997 Model IMP-Spinning machine and the lease purchase amount ofRs.98,14,345/- was payable in 48 monthly instalments. It commenced on20th March, 1998 and it would end on 19th March 2002. The petitionermade 25 instalments and thereafter, there was a default. Under suchcircumstances, the 1st respondent invoked the arbitration clause andappointed the 2nd respondent as sole Arbitrator. The sudden downfallin the textile industry, ruined the petitioner's business and hence https://hcservices.ecourts.gov.in/hcservices/ in the year 2000, the petitioner informed the 1st respondent to takepossession of the machinery and effect sale of the same in order torecover the balance amount payable at that time. The Arbitratorpassed an award on 17.03.2004, directing the petitioner to pay a sumof Rs.68,27,071/- along with interest at 18% per annum and also withcosts. Aggrieved over the award, the petitioner has filed theinstant application, which was contested by the 1st respondent, andthe learned single Judge took a view that the contention put forth bythe petitioner's side did not carry any merit and hence, confirmedthe award. Under such circumstances, the appeal has been takenbefore this Court.3. Advancing the arguments on behalf of the appellant, thelearned counsel would submit that it was a case where 25 instalmentswere actually paid; that it is true that the balance was to be paid,but even though the appellant sent a communication that the 1strespondent could take possession of the machinery and sell the sametowards the recovery of the balance amount, despite thecommunication, the 1st respondent did not act so; that on thecontrary, invoked the arbitration clause; that apart from that, anapplication under section 9 of the Arbitration and Conciliation Actfor the seizure of the machinery was also made; that the Court by itsorder dated 12.12.2001 appointed an advocate commissioner to takeinventory of machinery and the inventory was actually taken and areport was filed on 21.01.2002 and thus, when theappellant/petitioner has made it clear that if the machinery had beentaken possession by the 1st respondent even at the earliest and had itbeen sold, it could have been adjusted towards the dues, but the samewas not done so by the 1st respondent, the fault is on the part of the1st respondent. 4. Learned counsel would further point out that it was a casewhere due to the unexpected developments, the industry itself wascompletely ruined; that even the appellant came forward to make anoffer of Rs.40 lakhs in full and final settlement; that out of thetotal amount of Rs.62 lakhs and odd, the appellant had paid Rs.51lakhs and odd and thus, if the machinery was actually taken by the 1strespondent at the earliest, the entire balance would be wiped out,but not done so; that on the contrary, the 1st respondent has not onlyinvoked the arbiral clause but also has approached this Court forgetting interim orders; and that under such circumstances, thelearned single Judge has not taken into consideration the aboveaspects and passed the order, confirming the award, which has got tobe set aside.5. There is no representation on the respondents side.6. After going through the materials available, this Court is ofthe considered opinion that the order of the learned single Judge has https://hcservices.ecourts.gov.in/hcservices/ got to be confirmed. It is not in controversy that the parties to thearbitral proceedings entered into a hire purchase agreement on21.11.1997 and the total lease purchase amount was fixed atRs.98,14,345/-. It is also an admitted position that out of 48monthly instalments, only 25 instalments were paid and there was adefault thereafter. While there was a default on the part of theappellant, he cannot be permitted to find fault with the 1strespondent to invoke the arbitral clause, which was very wellavailable under the agreement entered into between the parties. Itis pertinent to point out that it was only a hire purchase agreementand so long as the last instalment was not paid, the ownership wouldbe continued to be with the 1st respondent and the appellant will be alessee. Though it is contended by the appellant's side that at theearliest there was a communication addressed to the 1st respondent fortaking possession of the machinery, no material was placed to provethe same. On the contrary, it was the 1st respondent, who moved theapplication under section 9 of the Arbitration and Conciliation Actfor taking possession of the machinery and pursuant to the order ofthe Court, an Advocate Commissioner was appointed and he has takenpossession of the machinery and also filed the report. Further, asper section 22(1) of Sick Industries Act, the application before thearbitral proceedings is not a suit and hence, section 22(1) cannotbe a bar and thus, what are the contentions now raised by theappellant before this Court were actually raised before the learnedsingle Judge and those were found to be meritless, as recorded by thelearned single Judge. 7. Under such circumstances, the Court is unable to notice anyreason to disturb the order of the learned single Judge, which hasgot to be affirmed. At this juncture, learned counsel for theappellant submits that liberty has to be given to raise thecontentions before the BIFR., where the proceedings are pending, andaccordingly, the same is granted.The appeal is disposed of. Nocosts.Sd/-Asst. Registrar/True Copy/Sub.Asst. RegistrarglToThe Sub Assistant Registrat,Original Side, High Court, Madras.+ 1 cc to Mr.George Cherian, Advocate in SR.44299. Judgment in O.S.A.No.10 of 2009SJ (CO)A.S. /18.09.2009