1 arbp418-08 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.418 OF 2008 Sukpreetsingh D. Singh & Anr. ....Petitioners V/s. Kotak Mahindra Primus Ltd. & Anr. ....Respondents Mr.A.M. Joshi i/b Ms.Lalita Panchakshari for the Petitioners. Mr.Nikhil Rajani i/b M/s.V. Deshpande & Co. for Respondent No.1. CORAM : S.J. VAZIFDAR, J. DATE : 26TH OCTOBER, 2010. P.C. :- 1. The petition has been filed under section 34 of the Arbitration and Conciliation Act, 1996 challenging the award dated 19.2.2008 made by the sole arbitrator. The learned arbitrator awarded a sum of Rs. 5,69,053=80 ps. to be payable by the petitioners to the respondents with interest at 18% p.a. from 14.11.2006 till payment. The costs of Rs.2500/- were also awarded in the respondents’ favour. 2. The disputes and differences between the parties arose in respect of a loan-cum-guarantee agreement dated 4.1.2005. Clause 10.16 thereof contains an arbitration agreement which reads as under :- “Clause 10.16 of the said agreements states as under :- “Unless the same falls within the jurisdiction of the Debts Recovery Tribunal established under the Recovery of Debts, Due to Banks and Financial Institutions Act, 1993, any and all claims and disputes arising out of or in connection with this Agreement or its performance shall be 2 arbp418-08 settled by arbitration by a single Arbitrator to be appointed by the Bank. The arbitration shall be held, in either Mumbai or New Delhi or Chennai or Kolkatta or in the place of execution of this Agreement, sole discretion to be exercised by the Bank at the time such arbitration is to commence, in accordance with the provisions of the Arbitration and Conciliation Act, 1996”. 3. Mr.Joshi submitted that the learned arbitrator did not have jurisdiction to entertain the reference and make the award as the subject matter thereof was excluded under the provisions of the Recovery of Debts, Due to Banks and Financial Institutions Act, 1993. 4. Mr.Joshi’s submission is not well founded as the claim was admittedly less than Rs.10,00,000/-. Faced with this, it was submitted that the actual claim of the respondents was more than Rs.10,00,000/- but that the respondents recovered a part of the amount by selling the vehicle that was hypothecated by the petitioners in favour of the respondents to secure the payment of the respondents’ dues. This would make no difference. The initial claim or the claim at any stage being more than Rs.10,00,000/- would not determine the jurisdiction of the D.R.T. The dues at the time of making the claim are relevant for the purpose of deciding the jurisdiction of the D.R.T. 5. The arbitrator therefore had jurisdiction to entertain the reference. 6. It was then submitted that the respondents had illegally taken possession of the hypothecated vehicle and sold the same at an under valuation. 7. It is not possible to entertain this submission in view of the fact that the petitioners did not raise this contention before the arbitrator. 3 arbp418-08 Despite sixteen adjournments having admittedly been granted as stated by Mr.Joshi himself, no reply to the statement of claim was filed. The petitioners at the final hearing did not even appear before the arbitrator. The petitioners did not cross-examine the respondents’ witnesses. These are questions of fact which in any event must normally be left to the decision of the arbitrator. 8. Mr.Joshi relied upon a judgment of the Supreme Court in the case of Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, in support of his contention that the possession of the vehicle was taken illegally and that therefore, the claim was unsustainable. He submits that the award which recognizes such an illegal act would be against public policy and liable therefore, to be set aside in view of the judgment of the Supreme Court in the case of ICICI Bank Ltd. v. Prakash Kaur & Ors., (2007) 2 SCC 711. 9. The judgments are of no assistance to the petitioners’ case. Merely because the holder of the security takes charge of the security, sells the same and appropriates the sale proceeds towards its dues, there is no presumption that the same was done illegally. The petitioners not having raised any contention to the effect that the respondents acted illegally and contrary to law in taking possession of the vehicle, cannot be permitted to raise the contention in a petition under section 34 of the said Act. 10. Lastly it was submitted that though the petitioners were granted sixteen adjournments for filing an affidavit in reply, their application for adjournment on the date fixed for cross-examination was wrongly 4 arbp418-08 rejected. Mr.Joshi submitted that around that time, the petitioner’s wife was undergoing medical treatment and it was therefore not possible for him to remain present. He stated that the petitioners informed the arbitrator of the same by a letter dated 2.1.2007. The letter does not mention anything of that sort. A medical certificate is now produced in this petition for the first time. I am not inclined to set aside the award on this ground. 11. In the circumstances, the arbitration petition is dismissed. There shall however be no order as to costs. The order is stayed for a period of eight weeks from today to enable the petitioners to challenge the same.