Mahindra and Mahindra Financial Services Limited vs Amrik Singh

K. Kannan, J.—The civil revision is against the order declining reference to arbitration, although there was a clause for an arbitration for recoveries by a financier for funding a purchase of a motor vehicle. There had been an alleged default in payment of the installments to the financier and the financier appears to have seized the vehicle in purported exercise of the power under hire-purchase document. This was sought to be restrained by the respondent himself on a suit for injunction referring to a clause for arbitration, the financier sought for a reference u/s 8 of the Arbitration and Conciliation Act. The petition was dismissed and hence, the civil revision is filed. The order passed is erroneous and the Civil Court had not power to adjudicate on a dispute that was essentially a matter between the financier and the hirer of a motor vehicle covered under an arbitral agreement. The Court ought to have referred the matter to arbitration and the failure to do so constitutes an error in jurisdiction that would require to be interfered.

The learned counsel for the respondent states that the vehicle had been seized more than 9 years back and they had at all times the benefit of the vehicle. The financier would argue that they could not take the benefit of even the seizure since there was an order of stay against all the further proceedings such as sale etc. subsequent to the seizure Either way, I only see not much progress has been done by allowing things to drift and by not taking any further action cannot help either party. I would stay confined to what is brought through a legal provision of whether it was appropriate not to have referred the matter to arbitration. I find the order to be erroneous and it is bound to be set aside. The civil revision is allowed and the matter is referred to arbitration. The Arbitrator shall be appointed in the manner contemplated by the arbitral agreement. The referral to arbitration shall be undertaken within 4 weeks from the date of receipt of copy of this order.