Tata Motors Finance Ltd. vs Nazeer M. and Another

R. Basant, J.—This appeal, u/s 37(1)(a) of the Arbitration and Conciliation Act, 1996, is filed by the appellant who was the claimant before the arbitrator. At a time when the arbitral proceedings had not commenced, the appellant had gone to the District Court claiming relief under Section-9 of the Arbitration and Conciliation Act, 1996. The appellant is a financier and the respondent had availed a loan from the appellant for purchase of vehicle under a hypothecation agreement which contained a stipulation regarding repossession. There was default in payment of monthly installments due. Invoking the provisions in the loan/hypothecation agreement for arbitration, the dispute was referred for arbitration. Inter alia the relief of appointment of a receiver to repossess the vehicle was claimed by the appellant u/s 9 of the Act. The District Court by the impugned order granted the lesser relief claimed - of injunction against alienation. It is brought to our notice that even on the date of the impugned order the award had already been passed. That fact, it is submitted at the Bar, was brought to the notice of the learned judge also. However, the learned judge by the impugned order took up for consideration only the point whether the appellant is entitled to get an order of injunction as prayed for. The first grievance raised is that the District Court did not at all consider the question whether the appellant was entitled for the relief of appointment of receiver which was specifically prayed for.

We have no hesitation to agree that the learned District Judge must have considered that question. Not considering the same certainly amounts to an error and impropriety.

But the more important question is whether this appeal deserves admission now. It is admitted before us that the award was passed even prior to the impugned order. It is admitted that no application u/s 34 was filed by the respondent to challenge the award passed by the arbitrator. That means that the award passed by the arbitrator is ripe for execution. The appellant can certainly seek execution of the award.

Counsel for the appellant points out that under Section-9 relief can be granted prior to, during and after the award is passed. There can be no dispute or quarrel with that proposition. The short question is whether at this juncture, this Court should entertain this appeal.

We have already taken the view that the District Judge ought to have considered the acceptability of the claim for appointment of a receiver. But, considering the present stage of events, we are not persuaded to admit this appeal as relief by execution can be sought by the appellant. At this stage, we find no reason to invoke the jurisdiction u/s - 9 and to issue directions post award when the award can straight away be executed in accordance with Section 36 of the Act. This is not to say that post award, the jurisdiction u/s 9 cannot be invoked in any case. The court under Section-9 certainly has jurisdiction to issue directions after the passing of the award also. But in a case where the award is ripe for execution under Section-36, we find no reason to invoke the discretion under Section-9. In the facts and circumstances of this case, we do not find any sufficient and adequate reason to invoke such jurisdiction to pass directions post award. For that reason, we feel that this appeal does not deserve admission. The learned counsel for the appellant submits that District Courts appear to entertain the erroneous impression that the relief of appointment of receiver cannot be granted u/s 9 of the Act and hence the question deserves to be settled. There can be no room for any such erroneous impression. The jurisdiction of the District Court u/s 9 of the Act to appoint a receiver to protect the subject matter of the lis prior to, during or subsequent to the award cannot possibly be doubted. But when the prayer is to appoint the receiver after the passing of an award, when the award has become executable such jurisdiction under section-9 shall be invoked by the Court only when special reasons are shown. In execution the vehicle can be repossessed. The District Court itself is to execute the award also. In such a situation, we find no adequate reason to invoke the jurisdiction u/s 9 of the Act. It is hence that we say that this does not appear to us to be a fit case for admission. This appeal is in these circumstances dismissed.