CR 5517 of 2012 v. M/s Magma Fincorp Ltd & Anr.

dismissed. He has also challenged another order (Annexure P-7) passed by the aforementioned Court on the same date issuing CR 5517 of 2012 -2- non-bailable warrants against him. For the reason that the borrower did not pay the installments of the loan amount well within the time, the finance company appointed an Arbitrator, who passed the award dated

12.1.2009 for an amount of Rs. 6,04,485/-. In order to recover the awarded amount, the finance company applied for its execution. The finance company also moved an application under Order XXI Rule 37 CPC for confinement of the guarantor. The guarantor objected to the issuance of arrest warrants on the ground that in the first instance, the vehicle in question which was purchased on the basis of the loan amount and stood hypothecated, be attached and sold and so also the property of the borrower. The matter was put up in the Lok Adalat whereby the finance company, on the one hand, and the borrower, on the other, entered into a compromise on 18.2.2012 and as per the settlement, the borrower was to pay a sum of Rs. 3,00,000/- to the finance company. In case the same was not paid, the borrower to remain bound to pay the entire loan amount alongwith interest as agreed between the parties and settled by the Arbitrator without any objections. On 9.4.2012, a sum of Rs.1,00,000/- was paid by the borrower to the finance company in terms of order dated 18.2.2012 of the Lok Adalat. It was further agreed that the remaining amount of Rs. 2,00,000/- would be paid CR 5517 of 2012 -3- in two installments of Rs.1,00,000/- each. The first installment was to be paid on or before 15.5.2012 and the second on or before 15.6.2012. It was also agreed that in case the amount was not paid, as agreed, then the amount already paid would be forfeited and the finance company entitled to execute the award in accordance with law. It appears that when the borrower did not pay the remaining amount of Rs. 2,00,000/-, the finance company opted to proceed with the execution of the award. The guarantor pressed his objections submitted on 28.1.2012 on various grounds, viz. no notice of the award was served upon him; award having been passed by Mr. R.K.Jalawan and there was no resolution/authority letter authorizing him to act as the Arbitrator; the execution of the award was pre-mature as the terms of the agreement had not been completed; the vehicle purchased as per the hypothecation agreement could be recovered and sold to effect the recovery amount due; and, the execution could be carried out against the movable or immovable property of the borrower and not from the guarantor. Vide impugned order (Annexure P-6), the objections submitted by the guarantor against the award were dismissed. After taking into consideration the provisions of Section 128 of the Indian Contract Act, 1872 learned Additional District Judge, Narnaul vide separate order (Annexure P-7) passed on the same CR 5517 of 2012 -4- date held that the liability of the guarantor was co-extensive with that of the borrower and the guarantor had no right to restrain the execution against him until the finance company had exhausted its remedies against the borrower. While holding that the guarantor had failed to satisfy the award and also failed to give any list of his property, non-bailable warrants were issued against him for 31.8.2012. Having heard learned counsel guarantor/petitioner, this Court finds that once the Arbitrator had given its award dated 12.1.2009, no objections could be entertained against the same. The only remedy available to the petitioner was to file an application under Section 34 of the Arbitration and Conciliation Act, 1996. Even if the objections submitted by the petitioner are treated to be one under Section 34 of the Act, the same are not sustainable as they are not in terms of the said Section. Moreover, the award having been passed on

12.1.2009, its notice was given to the petitioner vide registered letter dated 20.1.2009. This fact was not denied by the petitioner. Therefore, the objections filed by him on 28.1.2012 were beyond the prescribed period of limitation. Still further, the petitioner has not denied about his standing as a guarantor for the loan advanced by the finance company to the borrower. In such a situation, the borrower as well as the guarantor are responsible CR 5517 of 2012 -5- for return of the loan amount and in the event of an award having been passed in terms of the agreement between the parties, to satisfy the same. Merely because the matter stood settled between the finance company and the borrower to pay an amount of Rs. 3,00,000/- only out of which Rs. 1,00,000/- stood paid, is no ground to hold that the petitioner is not responsible for satisfying the award. His liability of guaranteeing the repayment of the loan amount continues till the time it is paid of in terms of the award. Under these circumstances, no fault can be found with the impugned order dismissing the objections filed by the guarantor/petitioner. As regards the issuance of non-bailable warrants, it may be noticed that the petitioner having not satisfied the award and failing to provide the list of his property but not denying the fact that he had stood as guarantor for the repayment of the loan, the lower Court was justified in issuing non-bailable warrants against him. The impugned order (Annexure P-7), thus, calls for no interference. Resultantly, there is no merit in the revision which is, accordingly, dismissed. ( T.P.S. MANN ) JUDGE CR 5517 of 2012 -6- September 20, 2012 ajay-1