IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 31.03.2011 CORAM THE HONOURABLE MR. JUSTICE VINOD K.SHARMA O.P.No.253 of 2008 K.Seshagiri Rao ... Petitioner Vs. 1 Ashok Leyland Finance (A Division of Indus Ind Bank Limited), Rep. Byits authorised Representative, Sudharsan Building, No.86, Chamiers Road, Chennai 600 035. 2 M.Sri Hari Varma S/o Mr.Ranga Raju, Plot No.SF-2, Srivershini Residency, Near Alluri Seetharama Raju Statute, Seethammadhara, Vishakapatnam, Andhra Pradesh 530 001. 3 K.S.Gowthaman New No.49, 224-B, IV Cross street, Natesa Nagar, Virugambakkam, Chennai 600 092. ... Respondents For petitioner : Mr.R.Sathishkumar For respondents : Mr.P.Suresh ***** O R D E R This Original petition has been filed under Sec.34 of the Arbitration and Conciliation Act, 1996, to challenge the award dated 31.12.2007 in KSGLOAN/1/2006 passed by Mr.K.S.Gowthaman/sole Arbitrator/third respondent, in favour of the first respondent. 2 Mr.M.Sri Hari Varma, the respondent-2 herein, in order to avail the loan facilities , had approached M/s.Ashok Leyland Finance for purchase of Ashok Leyland vehicle. He was granted a loan of Rs.9,73,000/- (Rupees nine lakhs seventy three thousand only) by the first respondent herein. Total sum of Rs.11,62,961/- (Rupees eleven lakhs sixty two thousand nine hundred and sixty one only) was agreed to be repaid in 45 monthly installments, i.e. principal amount inclusive of interest and other charges. 3 On default by the principal debtor, Mr.M.Sri Hari Varma, in repayment of loan, vehicle was seized and sold by M/s.Ashok Leyland Finance. After adjusting the amount of sale, the claimant M/s.Ashok Leyland Finance claimed a sum of Rs.2,46,738/- (Rupees two lakhs forty six thousand seven hundred and thirty eight only) by invoking arbitration clause. 4 Inspite of notice, the petitioner herein, as well as principal debtor, chose not to appear before the learned Arbitral Tribunal, consequently, were proceeded ex-parte. 5 Before the Arbitral Tribunal, the claimant in support of the claim petition, filed loan agreement dated 7.5.2004, certified copy of the power of attorney authorising Sri.T.Karthikeyan, copy of the order of the Hon'ble High Court of Madras and Bombay, copy of the sale invoice, copy of the insurance certificate, copy of the notices, statement of account and notice of termination. 6 On the basis of oral and documentary evidence, the claim petition was accepted, and the award for a sum of Rs.2,46,738/- (Rupees two lakhs forty six thousand seven hundred and thirty eight only) was passed with interest @ 12% p.a. on the claimed amount, i.e. Rs.2,46,738/- (Rupees two lakhs forty six thousand seven hundred and thirty eight only), from 31.12.2007 till realisation. A sum of Rs.2000/- (Rupees two thousand only) was awarded towards arbitration fee and Rs.1000/- (Rupees one thousand only) towards cost. 7 The principal debtor did not challenge the award. 8 The learned counsel for the petitioner/Guarantor challenged the impugned award, on the ground that the petitioner was misled by the third respondent, by assuring the matter would be settled and therefore, the petitioner chose not to appear before the learned Arbitral Tribunal. This cannot be a ground to set aside the award. 9 Once it is admitted that notice was served on the petitioner, he had to appear before the learned Arbitral Tribunal, and contest the claim. 10 The learned counsel for the petitioner challenged the award by contending, that it is erroneous and not reasoned award, therefore not sustainable in law. This contention also cannot be accepted. The reading of the impugned award shows that the Arbitral Tribunal has given reasons for awarding the amount in favour of the claimant/first respondent herein. The findings of the learned Arbitral Tribunal is based on the documentary evidence produced before it. It cannot be said that no reasons are given in the award. 11 It is then contended, that the award is against the public policy, in as much as, it is outcome of misinterpretation of law and facts. There is no material whatsoever in support of this argument. The principal debtor has not taken a stand that he was misled on misinterpretation to enter into a contract. This plea cannot be raised for the first time in a petition under section 34 of the Act. 12 It is not disputed that the petitioner was a guarantor of the loan advanced to the principal debtor, i.e. the second respondent. 13 It is also the contention of the learned counsel for the petitioner that the interest charged is exorbitant, therefore arbitrator should have rejected the claim of interest. 14 This contention again misconceived, as interest @ 12% p.a. has been granted. Whereas under the Arbitration & Conciliation Act, in the absence of fixing any interest in the award, the interest payable is 18% p.a. The awarded interest otherwise is also less than the agreed rate of interest. 15 The learned counsel for the petitioner also challenged the award by contending that the statement of account did not reflect the true account of the installments paid by the second respondent. 16 This contention of the learned counsel for the petitioner also deserves to be rejected, on the ground that the principal debtor has chosen not to appear before the learned Arbitral Tribunal, or this Court, this point cannot be raised by the petitioner. In any case having not contested the claim before arbitral tribunal it is not open to raise this plea on petition under Sec.34 of the Act. 17 Even otherwise on merit, the grounds raised by the petitioner, cannot be a ground to set aside the award. The award passed by the Arbitral Tribunal, can only be challenged as per Sec.34 of the Arbitration & Conciliation Act and not otherwise. 18 For the reasons stated above, finding no merit, this original petition it is ordered to be dismissed, but no order as to costs. vaan