NAFIS KHAN vs TATA MOTORS FINANCE LTD.

The Court : This post-award application under Section 9 of the Arbitration and Conciliation Act, 1996 (in short "the Act of 1996") is at the instance of the respondent in the arbitral proceeding, whom the arbitrator directed to pay Rs.7,89,652/- to the claimants, the respondent herein. Admittedly, in terms of an agreement between the parties, which also contains an arbitration agreement, the petitioner obtained loan for purchasing a vehicle which was hypothecated in favour of the respondent. In this application the petitioner has prayed for orders directing release of the vehicle from the custody of the respondent and to allow him to run the said vehicle.

At the very outset of the hearing of this application, a strong objection was raised on behalf of the respondent with regard to the maintainability of this application. It was contended that the arbitral tribunal passed the award against the petitioner on April 15, 2014 which has not been challenged by the petitioner. It was further submitted that an earlier application filed by the petitioner under Section 9 of the Act of 1996, being AP No.1541 of 2015 was rejected by a learned Single Judge of this Court on the ground that in spite of opportunities being granted to the petitioner, he defaulted to pay the admitted principal due of the respondent, the financier with whom the vehicle was hypothecated. For all these reasons, according to the petitioner, this application by the petitioner praying for the aforementioned reliefs is not maintainable.

On the other hand, it was submitted by the petitioner that in terms of the orders passed by a learned Single Judge of this Court in the said application, AP No.1541 of 2015 the respondent returned possession of the vehicle in question to him but subsequently, in utter disregard of the order dated March 29, 2017 passed by a learned Single Judge in the said application, the respondent has illegally and without taking recourse to law took possession of the said vehicle. It was submitted by the petitioner that the present application is well maintainable.

In view of the rival contentions raised by the parties, it is necessary for this Court to consider the facts of the case as stated hereunder.

In the arbitral proceeding before the arbitrator, the respondent herein was the claimant and the present petitioner was the respondent.

On April 15, 2015 the arbitrator passed an award directing the present petitioner, to pay Rs.7,89,652.91 together with interest assessed at Rs.5,000/- to the respondent, the claimant. The petitioner has not challenged the said award dated April 15, 2015 on the ground that the arbitrator had not forwarded a copy of the award to him as mandatorily required under Section 31(5) of the Act of 1996. However, till this date, the petitioner has not issued any communication to the arbitrator raising any grievance with regard to the non-service of the award upon him as per Section 31(5) of the Act of 1996.

It appears that the respondent had taken possession of the vehicle from the petitioner. When the petitioner filed the first application, AP No.1541 of 2015, under section 9 of the Act of 1996, on October 14, 2015 an order was passed by a learned Single Judge restraining the respondent from creating any third party right in respect of the vehicle in question and to ensure that the same remains roadworthy, as well as in the same condition as it was taken possession. On May 2, 2016 upon the petitioner making over a demand draft for Rs.24,900/- to the respondent, a learned Single Judge directed the respondent to return possession of the vehicle in question to the petitioner and the respondent made over possession of the subject vehicle to the petitioner. On September 27, 2016 a learned Single Judge of this Court directed the petitioner to pay Rs.25,000/- to the respondent within October 31, 2016. The petitioner, however, failed to pay Rs.25,000/- to the respondent. By an order dated December 20, 2016 a learned Single Judge recorded the default of the petitioner to pay Rs.25,000/- to the respondent and that the affidavit filed by the respondent disclosed that as on that date Rs.2.27 lakh (approx.) was due and payable by the petitioner to the respondent only on account of principal. Therefore, while adjourning the hearing of the application till January 17, 2017, the learned Single Judge directed that if the petitioner pays the outstanding amount of Rs.2.27 lakh to the respondent before the adjourned date of hearing of the application, the respondent shall not take steps for possession of the subject vehicle. By the said order, the learned Single Judge, however, directed that in the event of any default on the part of the petitioner to pay the said amount of principal outstanding due, it would be open for the respondent to take appropriate steps in accordance with law. On the next date of hearing, that is, on January 25, 2017 the petitioner submitted before the learned Single Judge that it only owes Rs.1 lakh to the respondent and not Rs.2.27 lakh as claimed by the respondent. Based on such submission made on behalf of the petitioner, by an order dated January 25, 2017 the learned Single Judge directed the petitioner to pay the admitted amount of Rs.1 lakh within February 15, 2017. On February 17, 2017, an order was passed appointing a Receiver with a direction upon him to take possession of the vehicle in question from the petitioner and to keep the same at a place to be provided by the petitioner. The Receiver, however, could not take possession of the vehicle. On March 29, 2017 an order was passed by the learned Single Judge dismissing the petitioner?s application, AP No.1541 of 2015. In the said order, it was recorded that the petitioner did not surrender the vehicle to the Receiver and that the respondent as the award holder shall be entitled to pray for possession of the vehicle in an appropriate proceeding.

Passing of all the above orders, in AP No.1541 of 2015 and the directions contained therein are the admitted facts. Even in this second application, the petitioner has not disclosed that he has made any payment to the respondent as directed by the earlier order dated January 25, 2017 passed in AP No.1541 of 2015. As mentioned earlier, the petitioner has not even challenged the award passed by the arbitrator.

For all the foregoing reasons, I find that as rightly contended by the respondent, the present application filed by the petitioner is not maintainable.

However, there is another admitted fact in this case. Although by the order dated March 29, 2017 the learned Single Judge of this Court allowed the petitioner to pray for possession of the subject vehicle in appropriate proceeding but without taking any recourse to law, the respondent has taken possession of the subject vehicle from the petitioner. This conduct of the respondent cannot be accepted. Mr. Banerjee, in his usual fairness, did not make any attempt to justify such conduct of the petitioner in taking possession of the subject vehicle from the respondent without taking recourse to law and in utter disregard of the direction passed by the learned Single Judge of this Court in the said order dated March 29, 2017. Therefore, the only direction that can be passed in this application against the respondent is to pay costs assessed at Rs.30,000/- (Rupees Thirty Thousand only) to the petitioner.

Accordingly, the respondent is directed to pay costs assessed at Rs. 30,000/- (Rupees Thirty Thousand Only) to the petitioner by way of Pay Order/Demand Draft within February 19, 2018.

Let this application appear under the heading "To Be Mentioned" on February 20, 2018 to ascertain whether, in the meantime, the respondent has complied with above direction for payment of costs.