The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.13472 of 2016 Sanjib Kumar Routray Petitioner Mr. Goutam Charan Rout, Advocate …. -versus- Managing Director, M/s. Shriram Transport Finance Company Ltd. & others …. Opposite Parties Mr. Jyoti Pattnaik, Advocate (for O.P.3) CORAM: HON’BLE MR. JUSTICE MURAHARI SRI RAMAN Order No. 10. ORDER 20.12.2024 This matter is taken up through Hybrid Mode. 2. Challenging the notice dated 12.05.2016 issued to the petitioner by the opposite parties demanding a sum of Rs.1,71,486/- towards full and final settlement of the contract made between the petitioner and the opposite parties on 01.04.2006, this writ petition craving to invoke extraordinary jurisdiction of this Court under Articles 226 & 227 of the Constitution of India has been filed with the following prayer(s): “Under these circumstances the prayer prays that your Lordship‟s would graciously be pleased to admit this writ application, issue RULE NISI to the Opposite parties, calling upon them to show cause as to why the notice under Annexure- 5 shall not be quashed; And / if the Opposite parties do not show cause or show insufficient cause than the Rule be made absolute by quashing the order dated 12.05.2016 under Annexure-5, in the interest of justice; Page 1 of 12 And / or any other writ/writs, direction/directions, order/orders be passed as this Hon‟ble Court deem fit and proper; And for this act of kindness, the petitioner shall as in duty bound ever pray.” 3. Facts as adumbrated in the writ petition reveal that the petitioner being an unemployed and educated person, in order to earn his livelihood, had approached the opposite parties-financier for finance of 1612 TATA MOTOR Truck (1995) model in the year 2006 and, accordingly, the opposite parties sanctioned loan to the tune of Rs.1,93,500/- and thereafter an agreement was executed
Legal Reasoning
between the parties on 01.04.2006. 3.1. As per the terms and conditions of the said agreement, the opposite parties-financier have made hypothecation repayment schedule and as per the said schedule, the opposite parties-financier made 23 monthly instalments and the monthly instalment was fixed at Rs.8,415/- to be paid by the petitioner and the last instalment was fixed at Rs.4,370/-. 3.2. After the loan was sanctioned and disbursed, the petitioner purchased the vehicle, bearing registration No.CG-04-9533, and to ply it to eke out his livelihood. 3.3. The petitioner was going on repaying instalments regularly and has paid near about Rs.1,00,000/- to the opposite parties- financier. But, due to defect in the vehicle, the petitioner could not earn to make any further payment to the opposite parties-financier as he had to spend huge amount for repairing of the vehicle in question. When the vehicle was ready to ply, the opposite parties- Page 2 of 12 financier without prior intimation to the petitioner and without any notice, forcibly took over the possession of the vehicle. 3.4. Thereafter, the petitioner personally met opposite party no.2 to release his vehicle, but opposite party no.2 demanded the entire loan amount, to which the petitioner could not comply. Thereafter, the opposite parties-financier have sold away the said vehicle to an outsider without any intimation to the petitioner. It is emphatically stated by the petitioner that the opposite parties-financier did not afford any opportunity to the petitioner before selling away the vehicle. As such, the vehicle was sold at a lower price. 3.5. Notwithstanding appropriation of said sale proceeds, the opposite parties-financier have issued a letter on 23.08.2010 demanding a sum of Rs.1,10,688/- showing due as on 07.10.2008. Whereas the vehicle could have fetched about Rs.8,00,000/-, the opposite parties-financier had sold away the vehicle at meagre Rs.90,000/-. The Letter dated 23.08.2010 (Annexure-2) mentioned that failure on the part of the petitioner to pay the above amount within a week, the matter would be referred to the Arbitrator. The relevant portion of the said letter dated 23.08.2010 reads as follows:- “REGISTERED POST WITH ACK DUE 1. Sanjib Kumar Routray S/o. Tikayat Routray At/Po-Sankarpur Choudwar-P.S Cuttack (DIST) 2. Prakash Nayak S/o. Golak Nayak R/o. Haripur Po/Tikanpur Kendrapara Dist. Ref:Agreement No.STFC/SKM/75928, Vehicle No:CG 04 9533 Page 3 of 12
Legal Reasoning
Under instruction of my client M/s. Shriram Transport Finance Co. Ltd., represented by its G.P.A. holder & Authorized signatory, I issue the following legal notice to you for immediate compliance. With reference to the above contract there is a sum of Rs.1,10,688/- (Rupees One Lakh Ten Thousand Six Hundred Eighty Eight only) is due as on 07/10/2008 from you to settle the contract in full. On behalf of my client I call upon you that you have to pay the amount within one week from the date of receipt failing which the matter will be referred for Arbitration and the name of the Arbitrator and the address of the Arbitrator are as follows:- Mr. K. MOHANA RAO District & Sessions Judge (Retd), Door No.7-7-26, Balijapalli Street, Srikakulam. If the account is not settled within a week as started above further communication will be sent to you by Arbitrator ICHAPURAM DATE:23.08.2010 SD/- NARAYANA SAHU ADVOCATE” 3.6. The opposite parties-financier have appointed Justice B.V. Ranga Raju, retired Judge of Andhra Pradesh High Court due to sad demise of earlier Arbitrator as sole Arbitrator. When the matter was sub judice before the earlier Arbitrator, Sri K. Mohan Rao in Arbitration Application No.35 of 2010, the petitioner had filed his written version on dated 24.11.2010 denying the claim of the opposite parties-financier. 3.7. It is further alleged that as the petitioner was suffering from heart diseases and hypertension, he could not participate in the Page 4 of 12 above arbitration proceeding, for which an award was passed against the petitioner on dated 15.09.2011 by the sole Arbitrator, Justice B.V. Ranga Raju, thereby awarding a sum of Rs.1,65,940/- along with interest at the rate of 18% per annum and cost of Rs.2,453/-. The relevant portion of the award dated 15.09.2011 reads as under: “xxxxx xxxxxx xxxxxx The above arbitration proceedings were filed before Sri K. Mohan Rao, Former District Judge and as he has expired during the course of the proceedings, the claimant has appointed the undersigned as the Arbitrator to continue the proceedings. On 30.10.2010, notice for the appearance of the respondents on 1.12.2010 was ordered. On the said day, as the notices were not taken, fresh notice for their appearance on 4.1.2011 was ordered. On 4.1.2011, both the respondents were served and as they were absent, they were set exparte. The matter was posted to 27.1.2011 and in the meanwhile, as Sri K. Mohan Rao has expired, the claimant has appointed the undersigned as the Arbitrator to pursue the proceedings further. After transfer, on 20.6.2011, the matter was posted to 30.6.2011 for the claimant‟s evidence. On the said day, the claimant was filed the evidence affidavit of its Branch Manager & General Power of Attorney Holder and Exhibits A.1 to A.9, as mentioned in the Appendix were marked. The matter was posted to 15.9.2011 for passing the Award. It is seen from the evidence affidavit that on execution of the Loan-cum-Hypothecation Agreement (Exhibit A.3) by the respondents, the total loan amount was fixed at Rs.1,93,500/-, the same was repayable in 23 instalments and that the 1st respondent was the borrower, while the 2nd respondent stood as guarantor for the payment of money. It was further stated that the 1st respondent has paid only a Page 5 of 12 that further stated sum of Rs.41,665/-. It was the respondents failed to repay the further instalments, as such, the claimant had seized the vehicle and sold it for a sum of Rs.90,000/- and after deducting the said amount, as per the statement of account, the respondents became liable to pay a sum of Rs.1,10,688/- and as son the date of the filing of the claim petition, as sum of Rs.1,65,940/- was due. As per the claim petition, a sum of Rs.1,10,688/- was due as on 7.10.2008 as per the statement of account. Interest thereon @24% per annum from that date till 29.10.2010 claimed at Rs.54,752/-. Apart from the same, a sum of Rs.500/- claimed towards Registered Legal notice. Thus, the total amount claimed was Rs.1,65,940/-. So far as the account copy (Exhibit A.5) is concerned, I do not see any reason to disbelieve the entries made therein. It was signed by the duly authorized signatory. The instalments paid by the respondents and the amounts realized by the sale of the vehicle were given credit to. The respondents being parties to the agreement (Exhibit A.3) are bound by the terms thereof and there is no justification on their part to evade further payment. So far as the rate of interest is concerned, even though the claimant is entitled to get interest @36% per annum, they have done so at 24% per annum and I do not think that the same is on the high side. Thus, there shall be an award for a sum of Rs.1,65,940/- with interest at 18% per annum from the date of the award, till the date of realization. Apart from the same, the claimants have claimed an amount of Rs.2,453/- being the costs of arbitration, as per the cost memo filed. The respondents are also liable to pay this amount also. Both the amounts are to be paid by the respondents. The claimant, who sought arbitration should also be granted the above mentioned amount. Both the respondents have to pay the above mentioned amounts and this Award is enforceable as a decree of a Civil Court as per the code of the Civil Procedure, as per Section 36 of Arbitration and Page 6 of 12 Conciliation Act of 1996. This Award is signed by me at Visakhapatnam on 15.9.2011. Sd/- (JUSTICE B.V. RANGA RAJU) ARBITRATOR” It is also alleged that after the award was passed under 3.8. Annexure-4, the opposite parties-financier slept over the matter and on dated 12.05.2016 issued a notice demanding a sum of Rs.1,71,486/- as on 12.05.2016 and the petitioner was warned that failure to make payment within seven days, the matter would be referred to the Arbitrator. The relevant portion of the said legal notice dated 12.05.2016 reads as thus:- “LEGAL NOTICE BY R.P.A.D. TO, 1. MR. SANJIB KUMAR ROUTRAY DATE:12-05-2016 S/O. TIKAYAT ROUTRAY AT/PO-SANKARPUR, CHOUDWAR PS-CHOUDWAR. DIST-CUTTACK ORISSA-754028 2. PRAKASH NAYAK S/O. GOFAK NAYAK AT-HARIPUR PO-TIKANPUR, PS-PATAKURA DIST-KENDRAPARA. PIN-754211 DEAR SIR, REF: AGMT NO:TSLSKM0075928, VEHICLE NO.CG04 9533 UNDER AND INFORMATIION GIVEN BY MY CLIENT, M/S. SHRIRAM TRANSPORT FINANCE COMPANY LIMITED, CUTTACK- INSTRUCTIONS THE Page 7 of 12 1 BRANCH, REPRESENTED BY ITS BRANCH MANAGER, I ISSUE THE FOLLOWING REGISTERED LEGAL NOTICE TO YOU. WITH REFERENCE TO THE CONTRACT AS TO ABOVE STATED VEHICLE, A SUM OF RS.171486/- IS DUE AS ON DATE: 12-05-2016 FROM YOU TO SETTLE THE CONTRACT IN FULL. HENCE ON BEHALF OF MY CLIENT COMPANY I HEREBY CALL UPON YOU TO PAY THE ABOVE SAID AMOUNT TOGETHER WITH INTEREST @24% PER ANNUM WITHIN SEVEN DAYS FROM THE DATE OF RECEIPT OF THIS NOTICE, FAILING WHICH THE MATTER WILL BE REFERRED FOR ARBITRATION. THE NAME AND ADDRESS OF THE ARBITRATOR STATED BELOW. SIRISH CHANDRA MISHRA RETIRED DIST AND SESSIONS JUDGE HIG-192, K-6, KALINGA VIHAR BHUBANESWAR,KHURDA,ODISHA PIN.751019 IF THE ACCOUNT IS NOT SETTLED WITHIN SEVEN FURTHER DAYS COMMUNICATION WILL BE SENT TO YOU BY THE HON‟BLE ARBITRATOR. STATED ABOVE, AS SD/- (S.K.PANI) ADVOCATE” 3.9. It is the case of the petitioner that since the matter has already been adjudicated by an Arbitrator and an award was passed on dated 15.09.2011 (Annexure-4), appointment of another Arbitrator on the self-same issue is not permissible. 4. Mr. Jyoti Pattnaik, learned counsel appearing for opposite party no.3 referring to the counter affidavit filed by opposite party Page 8 of 12 no.3 submitted that this writ petition is not maintainable and the same may be dismissed. Paragraph-5 of the said counter affidavit reads thus: “5. That, in response to the averments made in the Writ petition regarding sanction of the loan amount, mode of repayment, cause towards committing defaults by the borrower, repossession and sale of the vehicle by the Financier, post-sale demand of the Financier, initiation of Arbitration Proceeding against the petitioner and passing of Award on 15.09.2011 in Arbitration Application No.35/2010 etc. are not denied by this Deponent, but fact remains that in spite of passing of award vide Annexure-4, the awarded amount is yet to be recovered from the petitioner and on the other hand despite sufficient knowledge about the award passed vide Annexure-4, the petitioner has no challenged the same before the appropriate Court of law. However, it is not acceptable that after passing of award vide Annexure- 4, the Financier has slept over the matter, and fact remains that the Opp. Parties are not debarred from executing the award passed against the petitioner since time to execute the said award has not been expired so far.” 5. During course of hearing, Mr. Jyoti Pattanaik, learned
Decision
Advocate raised objection as to maintainability of the writ petition. He submitted that since private non-banking financial institution does not come within the fold of Article 12 of the Constitution of India, this Court has no jurisdiction to proceed with the writ petition under Article 226/227. 6. In Phoenix Arc Private Limited Vrs. Vishwa Bharati Vidya Mandir, (2022) 1 SCR 950 it has been held as follows: Page 9 of 12 “12. Even otherwise, it is required to be noted that a writ petition against the private financial institution – ARC – appellant herein under Article 226 of the Constitution of India against the proposed action/actions under Section 13(4) of the SARFAESI Act can be said to be not maintainable. In the present case, the ARC proposed to take action/actions under the SARFAESI Act to recover the borrowed amount as a secured creditor. The ARC as such cannot be said to be performing public functions which are normally expected to be performed by the State authorities. During the course of a commercial transaction and under the contract, the bank/ARC lent the money to the borrowers herein and therefore the said activity of the bank/ARC cannot be said to be as performing a public function which to be performed by the State is normally expected the authorities. SARFAESI Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/or is maintainable and/or entertainable. ***” In Arif Khan Vrs. Branch Manager Mahindra Finance If proceedings are initiated under 6.1. MISC. BENCH No.21265 of 2020 disposed of on 12.01.2021 by Allahabad High Court (Lucknow Bench), it has been observed as follows: “The Apex Court in Federal Bank Ltd. Vrs. Sagar Thomas, (2003) 10 SCC 733, considered the scope of issuance of writ under Article 226 of the Constitution against a private Bank. Following was laid down paras 27 and 33: „27. Such private companies would normally not be amenable to the writ jurisdiction under Article 226 of the Constitution. But in certain circumstances a writ may issue to such private bodies or persons as there may be statutes which need to be complied with by all concerned including Page 10 of 12 in the private companies. For example, there are certain legislations like the Industrial Disputes Act, the Minimum Wages Act, the Factories Act or for maintaining proper environment say Air (Prevention and Control of Pollution) Act, 1981 or Water (Prevention and Control of Pollution) Act, 1974 etc. or statutes of the like nature which fasten certain duties and responsibilities statutorily upon such private bodies which they are bound to comply with. If they violate such a statutory provision a writ would certainly be issued for compliance of those provisions. For instance, if a private employer dispense with the service of its employee in violation of the provisions contained under the Industrial Disputes Act, the High Court innumerable cases interfered and have issued the writ to the private bodies and the companies in that regard. But the difficulty in issuing a writ may arise where there may not be any non-compliance or violation of any statutory provision by the private body. In that event a writ may not be issued at all. Other remedies, as may be available, may have to be resorted to. 33. For the discussion held above, in our view, a private company carrying on banking business as a scheduled bank, cannot be termed as an institution or company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. We don‟t find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor puts any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. ***‟ Page 11 of 12 It is not the case of the petitioner that the Mahindra Finance is an authority within the meaning of Article 12 of the Constitution, nor it is alleged that there is any violation of any statutory provisions in the present case. In view of the above, we are of the view that no grounds have been made out to issue any mandamus to a purely private body, namely, Mahindra Finance in the facts of the present case.” It is conceded at the Bar that Shriram Transport Finance Co. 7. Ltd. is not an Authority falling within the ambit of Article 12 of the Constitution of India and as such, this Court is afraid to issue any writ of mandamus to the opposite parties-company which is a purely private body. In such view of the matter, this Court desists from adjudicating the matter on merits. 8. With the aforesaid observation, the writ petition stands disposed of as not maintainable. Aswini/MRS (M.S. Raman) Judge Signature Not Verified Digitally Signed Signed by: LAXMIKANT MOHAPATRA Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 20-Dec-2024 20:21:58 Page 12 of 12