tWiBLEBEWeM Bil mTHEHIGHeOlMl'jQF^HHATTISGARH^CTBIIASPUR. W.P. No. ^^50'^ 2005 PETITIONER PLAINTIFF / Rakesh Tiwari, Aged about 39 <^ ' '^''.-. '.• .• years, S/o. Shri Sudarshan Tiwari, R/o. M.I.G. 22, Veer SawaFkar Nagar, Heerapur, 'Eahsil&DistrictRaipUTCe.G.) VERSUS RESPONDENT DEFEND^ ^^ z^^"' ' "^<-' ; / M/s. Ashok Ley LandFinance Lunited, Thrwugh BrancK Incharge, Babla Coiuplex, Near CoSee House, G.E, Road, Raipiur^ District Raipur (C.G.) WRIT PETITION i U1®ER aRtJCLE 226/227 ©F 1"HE CONSTFTUTION iQF IN0IA i'f)fe^^^^^ APPROPRIATE WKTT IN 'ralE ]SA? B^ 3<>F~^^l^^ CERTIORARI, ETG. OR IMRE<?@[©N /l QRDER IN THE I,IKE N^TUREETC. ; i' ! ; . . ::.: 1; To, i<;srr<?s liL—^?'; ^- THE HONS GmEP JIJigHFICE AND BlS HG] LE 1 COMPANION JUDGES OFimg; HQN'BLE HIGH GOURT 1 '^" .'-^/f OF CIfflEATTISGARH AT BIKASNRS; ^^^^^ ^^^^^^^^^ ti^''e^/'~~~~';: • ' : 1; 1'1^' , ; '•.:^"''. MAyTHIS PLEASB TO^OiIiRI Tfae hiimble petition of^b^;^6i®3!n^ ' Naniedabpve^in<>tre^»eGtflaI^^showe sa ^ii "I llllllfiBM 140 “M HIGH COIIRT OF JUDIOATURE AT BILASPUR {CHHATTISGARHI WritN Petition No.579 of‘2005 ' Ashok Leyland Finance Ltd. - Versus - Rakesh Tiwari M Writ Petition No.1804 oi 2005 Rakesh Tiwari - Versus - Ashok Leyland Finance Ltd. POST FOR ORDER OHPMUGUST, 2005 ‘ Sdl— } LC. Bhadoo Judge ' - »,w 141 mbE 60m? OF JUBIOAM AT WW [CHATTIGEARI’ Writ Petition 30.579 of 2005 Ashok Leyland Finance Ltd. — Versus - i l 1 I i Writ Petltion No. 1804 of 2005 ’ i I l - Versus ~ 1 z Prwent: — Rakcsh ’l‘Lwan Rakah Tiwari Ashok Leyland Finance Ltd. Smt. Z‘F‘oua‘a Mina, Advocate: g For petitionm‘ in W.P. No.579/05 for 1 ! ‘ respondent in W.P. 1804/ £005 Rajah P’andey, Advocate: For petitionar in W.P. No. 1 l 1804] 2005 i Shri Shri §achin S. Rajput, Advocatc: , For respondent in W.P. No. 579/ 05. \ O R D E R l (Passed onM August, 2005) v Before Hon’ble It. LO. Bhadoo, J. ‘ 1. iWrit Petition No.579f2005 med by Ashe]: Leyland Finance Ltd i :agajnst Rnkesh Tiwari & Writ Petition No.1804] 2005 Elai by gRakesh 'l‘iwari against Ashok Leyland Finance Ltd. are connected with each other and reintes to same issue, thereiore, they are being ;&sposed of by this common order. 2. gBrief facts necessary for disposal of these petitions are that M1s Ashok Finance L1mrted having its branch once at Raipm mm mam o$ce at Chennai engaged m nnancmg me whicles purchased by the general public. Accordingly, Rakeoh 'l‘iwaxi— ‘plaintin in the suit (hereinafter shall be referred as ‘the plaintm‘) PagelofZO 142 J» contacted the Ashok Leyland Finance Ltd- defendant in the suit (hadnafter shall be referral as ‘the defendama for Wang the vehiclw and accordingly, the defendant &anced an ammut of Rs.6 Lac against the truck No.6G04-9619 to the plajnw and antered into a hire purchase agecmant on 28.3.2001. Tha total value of the agemnent was Rs.7,39,900}- inclusive of all the charges. The defendant had also Enanced another truck bearing reg'stration number CG04-ZC-3393, hire purchase agreement was executed on 31.1.2002 and the total value of agreement was Rs. 131,520] -. Thereafter, the plaintiii‘ started paying installments. The plainufs case before the trial Court was that against the §rst hire purchase ageement he paid in all Rs.7,16,982/- including Rs.ll,000/- of the insurance amount and only an amount of Rs.23,018/— was outstanding against the plaintiE against Agreement No.1, out of which he paid Rs.4,500]- on 28.5.2004 thereby only Rs.18,518/- remained unpaid ayinst the Erst agremnent. 0n 7.7.2004 the plaintin went to the once of defmdant to pay the ranaining amount of Rs.18,518[— against the met ageement and Rs.l9,040/- against the second agreement, the defendant gave the statement of account dated 22.6.2004 to the plaintin‘ according to which an amount of Rs.1,39,099.99 yaise was outstanding against the plaintin against the hrst agenment and Rs.50,429.99 paise was outstanding against the second ageement. On the same day when the plaintin' was g'vitg explanation to the defendant, the plaintifs truck bearing ,regstration number _CG04-96 19 was stopped by the defa1dant and defendant started threatening that if the said amount is not pdd. then the vehicle will be repossessed. The plaintiE stated that ow Page3of20 15:3 cutire amount has been paid to the dd‘cndant and they had wrongly calculated the outstanding amount. Ultimately, the dd‘cndant ageed that if Rs.50,000/- is paid against the loan of both the trucks thm the truck in question will be released and thereafter, no amount will remain as unpaid. On this the plaintm' paid Rs.50,000] - through a post dated cheque and approached the defendant on 12.7.2004 for issuance of “no objection certihcate”, but the defendant had refused to give “no objection certihcate". When “no objection cern‘hcate" was not given, the plaintin med a civil suit in the Court of learned 3rd Civil Judge Class-II, Raipur on 13.7.2004 for injunction to the eEect that no amount is outstanding against the plaintin‘ against the said two agemnmts and the defendant be prohibited h‘om taking any truck/in their possession or sale. Along with the suit an application under Order 39 Rules. 1 as 2 read with Section 151 of the Code of Civil Procedure, 1908 (hereinafter shall be referred as the Code') was also med. After service of the summons of the said civil suit, the defendant \ appeared before the Court below on 31.7.2004 and hled a detailed reply to the application med by the plaintin under Order 39 Rules 1 & 2 read with Section 151 of the Code. On 8.12.2004 the defendant hled an application under Section 151 of the Co& raising objection with regard to the maintainability of the suit on the gound that there is an arbitration clause in the hire purchase ageement. After hearing learned counsel for the parties, learned trial Court while disposing of the application of plaintiE med under Order 39 Rules 1 & 2 read with Section 151 ofthe Code and the application Eed by the defendant under Section 151 of the Code /, \a . rage4of20 144 allowed the application of plaintw and directed the defendant to estore the possession of the plaintifs vehicle number CG04-9619, which was taken into repossession on 24.7.2004 t durm‘g the pmdency of the suit by the defendant Finance company. The trial Court further restrained the defendant not to stop another vehicle of the plainh'E bearing registration numba‘ CG04—ZC—3393. The learned Civil Judge rejected the application of the defendant med under Section 151 of the CPC aiso by the same order. Bdng aggieved by the said order the petitioner herein] defendant tiled a ‘ writ petition bearing W.P.579/ 2005 before this Court questioning the legality, propriety and correctness of order dawd 3.1.2005. However, after nling of this writ petition the petitioner herein has also med a miscellaneous appeal on 11.1.2005 before the learned / District Judge, Raipur against the same order and that appeal came to be reg'stered' as M.C.A. No.6/2005. The said appeal was transferred to the Court of learned I“ Additional District Judge, Raipur, who allowed the said appeal vide order dated 21.4.2005, set aside the order dated 3.1.2005 passed by the trial Court in respect of issuance of temporary injunction and rejected the application Eed by the plaintim respondent herein unda' Ordm' 39 Rules 1 & 2 read with Section 151 of the Code. Against the said order the plaintin‘ has preferred a writ petition Wre this Court bearing W.P.No.1804] 2005 quesu'oning the legality, propriety and correctness of order dated 21.4.2005 passed by learned l“ Additional District Judge, Raipur thereby reversing the orda passed by learned trial Court on 3. 1.2005. 4. I have heard learned counsel for the parties. In the drst instance, I ' will take up the Writ Petition No.579/ 2005. \ ' »,pr r Page 5 of 20 5. Smt. Fouzia Mir-2a, learned counsel for the petitioner] defendant argued that in Clause (18) of hire purchase agrermmt a provision has hem made that ‘in case of any dispute arising under the agreement the same shall be referred to an Arbitrator at the option of the owner and accordingly, the pet'tioner] defendant moved an application under Section 151 of the Code on 8.12.2004 raising objection that thd‘e is an arbitration clause in the hire purchase ageement and this suit has been hied against the said provision, therefore, it is not maintainable and also the application mowd by the plaintin Order 89 Rules 1 85 2 read with Section 151 of the Code is liable to be rejected on this ground alone. She further argued that in viwv of the clause (18) of the ayeement the trial 'Court'ought not to have decided the application of the plaintm' for temporary injunction and ought to have referred the parties to the Arbitrator for arbitration. On the other hand, Shri Sachin Singh Rajput learned counsel for the respondent argued that in the hrst instance, the Arbitrator was to be appointed at the option of the Owner i.e. the defmdant, but the defmdant had not appointed any Arbitrator and repossessed the vehicle without intervention of’the Court, therefore, the plaintih' was forced to hie the civil suit on account of illegal action of the defendant i.e. taking into repossession of the whicle of the plaintih‘. He further argued that the application died by the defendant under Section 151 of the Code was not in accordance with the provisions of Section 8 of the Arbitration & Conciliation; Act, 1996 (hereinafter shall be referred as “the Act of 1996”), thaefore, the same has rightly been rejected by the trial Court. // is ' N‘, A . ‘ 1&6 Page 6 of 20 Having Imard learned counsel for the parties, I have perused the hire-purchase ageemmt as well as otha‘ documents, pleadings of the parties and also the application $ed by the defandant unda' Section 151 of the Code. It is true that in Clause 18 of the agreement there is a provision regarding referring the matter to arbitration at the option of the owner i.e. mance company in case any dispute between the parties arising under the agreement. In this connection, if we look into the provisions of Section 8 of the Act of 1996 which envisages that: “8. Power to refer parties to arbitration where there is an arbitration ayeement- (1) A judicial authority before which an action is brought in a matter Whidi is the subject of an arbitran'on ageemeut shall, if a party so lies not Inter than when sub ‘ his statement on the substance at the i'sgute, refer the parties to arbitration \ \x" ' N», A (2) The application referred to in sub-section (1) sha“ not be entertained unless it is accompanied by the original arbitration ageement or a duly canned copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.” Accordingly, a judicial authority While dealing with the matter which is the subject matter of an arbitration ageement shall refer the parties to the arbitration only when: Page 7 of 20 a party should apply before the judicia] authority not htar than when submitting his mat statament on the substance of the dispute. b. the said ?application must be accompanied with orig'nal arbitration ageem ent or a duly certiEed copy thereof. If any application found lacldng in any of the above con¢'tions then the Court is not obliged to refa‘ the parties to the arbitration and I am fortihed in my View by the judgment of the Hon‘ble Apm Court in the matter of Sukanya Holding {P} Ltd. Versus Jayesh E. Fundy: and another reported in (2003) 5 Supreme Court Cases 531 wherdn the Court while interpreting Sections 5 8s 8 of the Act of 1996 held that: “Except Section 8, there is no other provision in the Act that in a pending suit, the dispute is required to be referred to the arbitrator. Further, the matter is not required to be rd‘erred to the Arbitral Tribunal, if: (1) the parties to the arbitration agreem ent have not med any such application for referring the dispute to the arbitrator; (2) in a pending suit, such application is not hled before submitting hrst statanent on the substance of the dispute; or (3) such application is not accompanied by the orig'nal arbitration agreement or duly certihed copy thereof. This would, therefore, mean that the Arbitration Act does not oust the jurisdiction of the civil Court to decide the dispute in a case where parties to the arbitration ageement do not take appropriate steps as contemplated under sub—sech'ons (1) and (2) of Section 8 of the Act." 9i In the light of above provision, if we look into the application (Armature P-5) dled by the ddendant/petitionm‘ herein under Section 151 of the Code on 8. 12.2004, in this application simply it Page8of20 1":8 was mentioned that there is a hire purchase ageamant executed between the parties, in that agreement thme is a pravision for arbitration and the plainti§ has requested for injuneu'on against that arbitration clause, therefore, the suit as well as the application Eed under Order 39 Rules l & 2 read with $ection 151 of the Code by the plajnw are not maintainable. But, I am of the considered opinion that this applicatinn was rightly rejected by the trial court, for the reason that the said application was not clothed with the original arbitration agrerment \or duly certihed copy thereof as per provision of sub—section (2) of Section 8 of the Act of 1996 and also for another reason that sub-secu'on (l) contemplates that " ifa party so applies not later than when submitting his jirst statement on the substance qr the dispute” and the defendant/petitioner herdn in response to the summons of the civil suit med by the plaintin‘l respondent herein put in appearance on 31.7.2004, med a detailed reply (Annexure P-4) of the application Eled by the plaintin' under Order 39 Rules 1 & 2 of the CPO and in this reply no objection was raised by the petitiona herein regarding maintainability of the suit or referring the parties to the arbitration or that there is any arbitration clause in the hire purchase agreanent. This reply contains four pages and refers to the whole dispute, regarding non-payment by the plainttE, advancement of loan and payment of installmmts by the plaintin/ respondent herein. Ifwe look into this reply thm it shows that the defendant in this reply raised full defence and gist and essence of this reply is as good as written statement of the plaint. Therefore, I am of the opinion that above statement nled by the defendant] petitioner herein in reply to the application hled by the xy it Page 9 of 20 plainti§ under Order 39 Rula l as 2 read with Section 151 of the Code falls in the category of $‘st statanent on the substancc of the dispute, therefore, the petitioner hardn/ dd‘endant had not iilcd application in conformity with the Section 8 of the 'Act of 1996 beforem of this reply or at the time of Eing of this reply. M the application under Section 151 of the Code was Eed much later i.e. on 8.12.2004, therefore, as per above cited decision of the Hon‘blc Apat Court, the trial court was not required to stay the proceedings and refer the parties to the arbitration. Learned counsel for the petitioner herein relied on the decision of Madhya Pradesh High Court renda‘ed in the matter ofBrahan Dutt Shukla. V. Ashok Leyland Finance reported in 2004 (2) JLJ 185, but on facts the said judgnent is of no help to the petitiona herein, as the facts of that case were entirely diEerent h‘om the present case. In that case the Ashok Leylarid Finance had already appointed the Arbitrator and when arbitration proceedings were going on the said Brahan Dutt Shnkla, the borrower Eled a suit b$ore the Civil Court at Jabalpur for permanent injunction alongwith an application under Orda‘ 39 Rules 1 at 2 of the Code for declaration and injunction that defendant/respondmt be injuncted mm initiating the arbitration proceedings as mentioned in the notice dated l6. 12.2000 at Chennai, wha‘eas, in the present matter, the petitioner berm/defendant has not wretcised his option of appointing the Arbitrator as per clause —18 of the hire purchase agreemmt, secondly, even the application was not med by the defendant] petitioner herein in conformity with the Secn'on 8 of the Act of 1996 before or at the n'me of hling of the reply to the sm‘d application hled by the plaintiE and as the petitiorg/22/ ' »,A Page 10 of 20 herdn/ defendant has already Ead the mt statanent on the substance of the dispute on 31.7.2004, now the defendant is not entitled to Ee any application. .Learned counsel for the petitioner also argued that now the petitioner has nled an application under Section 8 of the Act of 1996 before the trial Court, but for the foregoing reasons the petitioner has already nled the statement on the substance of the dispute, therefore, now nling of application under Section 8 of the Act of 1996 is meaningless. Moreover, we do not know whether this second application is in conformity of Section 8 or not. .As far as Writ Petition No. 1804/ 2005 hled by the plaintih— Rakesh 'l‘iwari questioning the legality, propriety and correctness of orda- dated 21.4.2005 passed by learned l“ Additional District Judge, Raipur in Misc. Civil Appeal No.6] 2005 is concerned, by this order learned Additional District Judge while allowing the appeal of defendant set aside the orda‘ dated 3. 1.2005 passed by the learned Civil Judge whereby he granted temporary injunction in favour of the plaintin‘ directing the respondentidefendant to restore the possession of the plaintifs truck bearing reg'stration mlmba' CG04-96 19. 1i is settled law that ggggllate Court in miscelianeous civil d a inst an interim order b the trial court caninte moral whentheorderis werse a ' the sewed Qn'ncg' les at law and comma to the documents & material available ‘ on record. The Hon‘ble Apex Court in the matter of Sree Jain Swetambar Tetapanthi Vid‘S} V. Phundan Bingh and others reported in AIR 1999 Supreme Court 2322 held that: “It is one thing to conclude that the trial Court has not recorded its p ‘ a facie satisfaction on merits but Y Cpl Page 11 of20 151 granted temporary injunction and it is anotha thing to hold that trial Court has gone Wrong in recording the prima facic satisfaction and setting aaide the nnding on the basis of the material on record because it has not considered the relevant material or because it has erroneously reached the nuding or conclusions on the facts established. In the mst situation, the appellate Court will be justihed in upsetting the orda‘ under appeal evm without going into the merits of the case but in the second eventuality, it cannot set aside the impugned order Without discussing the mata‘ial on record and recording a contrary nnding... .” 12. Based on the above principle, if we look into the facts of this case, the plainu'Elpen‘tioner herdn nled a civil suit for mandatory permanent injunction against the respondent] defendant directing them to restore the possession of truck No.CG04-96 19, which was illegal repossessed by the defendant on 24.7.2604 despite die fact that whole loan amount was repaid by the plaintih and further the defendant be directed not to take possession of another mick bearing registration number CG04-ZC-3393. The case of the plainti&' before the trial court was that the defendant/respondent haein advanced a loan of Rs.6 Lac to plaintiE/petitioner herm’n against the truck No.CGO4—96 19 and Rs. 1,17,000l- was estimatai as intaest, which ‘was to be repaid in 35 installmaits by the plaintin' and also Rs.ll,000[— of insurance charges. The defendant] respondent hera'n had also advanced a loan amount of Rs.1 Lac to the plaintiE against another truck No.CG04-$C—3398, interest on that amount was estimated to the tune of Rs.23,520/- and the Whole amount was to be repaid by the plaintid in 23 installments. The plaintin’s further case was that he paid almost r all the amount and only Rs.23,0 18f— was outstanding against the \3 Page 12 of20 1:32 mst contract and Rs. 19,040I- was outstanding against the second contract. On 28.5.2004 the plainw further paid Rs.4,500/- against the mst contract and thereby only Rs.18,518/— was ranained outstanding. When on 7.7.2004 the plainh'E went to the oEce of defendant/rwpondent herdn for hnal settlanent of loan account, he was informed by the defendant that an amount of Rs.1,39,099.99 paise is still outstanding. When the plaintin was explaining to the defendant/respondent that the outstanding amount has been wrongly calculated, in the meantime, the defendantlrespondent stopped the truck of the plaintiE/ petitionm’ bearing reg‘stration number CG04-96 19, on which a settlanent was arrived at between the plaintiE 8s the defendant and the defendant company directed the plaintin‘ that if he deposits Rs.30,000/ — against the nrst contact and Rs.20,000/ - against the second contract towards full & nnal settlement then the truck will be released, accordingly, the plaintih‘ paid the Whole amount and the vehicle was released. Thereafter, when the plaintid went to o$ce of defendant to take “no objection catihcate”, they refused to g’ve the same and again repossessed the plaintih‘s truck bearing number CG04-9619 illegally on 24.7.2004 and ultimately, he hled the civil suit. Therefore, the case of the plaintin‘ was that he paid all the loan amount due rather he paid more than the required amount to the defendant company and nothing was leh out, even then the defendant had illegally r@ossessed his truck. The trial court considering all these aspects of the matter reached to the conclusion that there is a prima facie strong case in favour of the plaintid' and therefore, granted tanporary injunction in favour of the plaintih‘. Page 13 0f20 1 5 3 13. Lcamcd counsclfor the rcsponglcnt/dcfcndant argucd that as fhc plainwlpetitioner herein did not pay the installments in u‘me, therefore, as per the clause (10) of the him purchase amement the respondent was entitled to charge interest @ 36% per annnm, as such the amount of Rs.1,39,099.99 was outstanding against the petih'oner and therefore, the defendant/respondent hemin has rightly Iepossessed the u'uck of the petitioner herein. 14.The appellate Court in Paragraph-11 of the onier hae wrongly held I that tuck in qucsh'on was fakcn into possession on 7.7.2004, whereas the civil suit was Eed on 13.7.2004. It is correct that the suit was med on 13.7.2004 but the truck was again taken into re-poeeession on 24.7.2004 during the pendency of suit and for which the plaintih' amended his plaint and thereafter, the temporary injunction was issued in the mandatoty form against the respondent. The other finding of the appellate Court was that the piaintih' can take the mpossession of truck she: making payment of loan amount and as such no inepamble injury would be caused to the plaintiff. Accordingly, the prima facie case was not made out in favour of the plainnh'. balance of convenience was also not in favour of the plaintin‘ and the plaintin was not able to prove the fact that if the injunction is not granted then how he will suner ineparable loss. This nnding of the appellate Conn is wholly perverse and contrary to the facts and reconis, for the mason that when the Whole agreed amount has been paid by the plaintin' as per agreement, then he had got a strong pn'ma-facic case in his favour. The only gievance of the defendant was that some installments Were not paid in time, therefore, nespondent was entitled to charge penal interest @ 36% per annum, but on this \ \x" »-A Page 14 of 20 ground it cannot bc said that thc plain1i§ has no prima facic cast in his favour, when the plainw has xepaid the whole principal amount plus awed intemst and the only dispute left was that the plainw did not pay the penal‘ interest which was due on account of