IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29.07.2008 CORAM: THE HON'BLE MR.JUSTICE M.CHOCKALINGAM AND THE HON'BLE MR.JUSTICE R.SUBBIAH OSA.NO.199 OF 2007 M/s Sundaram Finance Ltd., rep. by Deputy General Manager (Legal) No.21, Pattullos, Road, Chennai 600 002. ...Appellant/1st Respondent Cause title accepted vide order of Court dated 23.7.2007 made in M.P.No.1/2007 Vs. 1.S.Humayun Kabir, 2. V.M.Sahul Hameed, 3. Raja Mohideen 4.Shri S.Santhanakrishnan ...Respondents/Petitioners The appeal filed under Order XXXVI Rule 1 of Original Side Rules against the order in O.P.No.318 OF 2006 dated 21.7.2006. For Appellant : Mr.M.S.Krishnan Senior Counsel for M/s Saravabhauman Associates For Respondents: Mr.M.Jaseen Mohamed 1 to 3 For Respondent No.4 : No appearance J U D G M E N T (Judgment of the Court was delivered by M.CHOCKALINGAM,J) Challenge is made to the order of the learned Single Judge of this Court dated 21.7.2006 made in O.P.NO.318 of 2006 whereby the arbitration award was sought to be set aside. https://hcservices.ecourts.gov.in/hcservices/ 2. The respondents 1 to 3 herein filed O.P seeking to set aside the award of the arbitrator under Section 34 of the Arbitration and Conciliation Act alleging that a Hire Purchase Agreement was entered into between the petitioners and the first respondent therein on 23.5.1995 for the purchase of lorry bearing Registration No.TN 60 4766. A sum of Rs.4,25,000/- was financed by the first respondent under the H.P.agreement in which the first petitioner was the hierer, second petitioner was the guarantor and the third petitioner has nothing to do with the said agreement. On 15.10.1997, the first petitioner paid a sum of Rs.3.30,000/- towards full and final settlement under the Hire Purchase Agreement and upon such payment, the H.P. agreement was terminated and no amount was payable thereafter. According to the first respondent company, it was intimated to the Assistant Registering Authority, Periyakulam that he has received full payment and hence requested the authority to delete the name of the company from the RC book of the vehicle. 3. While the matter stood thus, the first respondent has appointed the second respondent as an Arbitrator and an award came to be passed, as if all the three petitioners are liable to pay a sum of Rs.1,74,960/- with interest at 18% p.a. and hence the award has to be set aside for two reasons (1) the appointment of arbitrator is without jurisdiction and since the full payment was made, the matter should not have been referred to the Arbitrator. The application was resisted by the appellant herein. The Court made an enquiry and ordered the arbitration award to be set aside. 4. Challenging the same, the above appeal has arisen at the instance of the first respondent in the said O.P. 5. Now the point for consideration is whether the Arbitration award has got to be set aside for the reasons mentioned in the petition. 6. Heard the learned counsel on either side. 7. The factual position is not in dispute. Concededly, there was a hire purchase agreement entered into between the appellant herein as first party and respondents 1 & 2 as second party, where the first respondent is a hirer, second respondent was guarantor and the third respondent at that juncture has nothing to do. It is also an admitted position that a sum of Rs.3,30,000/- was paid on 15.10.1997 and it was also intimated by the appellant to the Assistant Registering authority that the first respondent company received payment in full and requested the authority to remove the name of the company from the RC book of the vehicle. But, it has not been done so. While the matter stood thus, the first respondent appear to have nominated the 2nd respondent as an arbitrator unilaterally and filed a claim petition claiming a sum of Rs.1,74,960/- with interest at 18% per annum from 15.10.1997 and the https://hcservices.ecourts.gov.in/hcservices/ second respondent/arbitrator passed an award on 11.12.1999 in favour of 1st respondent directing the petitioners 1 to 3 to pay a sum of Rs.1,74,960/- with interest at 18% p.a. from 15.10.1997 till its realisation. 8. What are all pointed out by the appellant before the learned Single Judge as well as here also is that the Hire Purchase agreement originally entered into between the parties was not terminated and it is continuing one and apart from that there was an undertaking given on the very day when the payment was made by the respondents. As per the said undertaking which was made by the first and second respondents, the amount was not fully paid. Under such circumstances, invoking the Arbitral Clause under the original agreement, the arbitrator was appointed. At the time of arbitration proceedings, the respondents were absent and they have not put forth their pleas. Considering the available materials, an arbitration award has been passed which is now questioned. Once an agreement was entered into and it has not been terminated and subsequently an undertaking was given, merely because an intimation was given to the Registering authority for removal of the name of the company, it cannot be stated that either the original Hire Purchase Agreement was terminated or arbitration clause in that agreement could not be invoked by the appellant herein. Having failed to appear before the Arbitrator, the respondents could not put forth all their contentions before this Court on the strength of the documents which were not actually available at that time. Further the respondents should have appeared before the arbitrator and they should have questioned the jurisdiction of the arbitrator and could have perused the documents placed before him. But, they have not done so. Under those circumstances, all the factual and legal position were not considered by the learned single judge and hence the order of the learned Single Judge has got to be set aside. 9. On the above contentions, learned counsel for the respondents 1 to 3 reiterated the very contentions made before the learned Single Judge. In the instant case, both the undertaking letter and also memorandum of deposit of title deeds produced by the appellant herein were actually a creation by using the blank stamp papers subsequently. The learned Single Judge has marshalled the evidence properly and has come to the correct conclusion by setting aside the award passed by the second respondent and hence the above appeal has got to be dismissed. 10. The Court paid its anxious consideration on the submissions made and looked into the materials available. 11. It is not in controversy that originally there was a hire purchase agreement entered into between the appellant and also respondents 1 & 2 whereby a sum of Rs.4,25,000/- was financed by the appellant. It is also an admitted fact that on 15.10.1997, a sum of https://hcservices.ecourts.gov.in/hcservices/ Rs.3,30,000/- was paid and according to the respondents 1 & 2, it was full and final payment and thus, the arbitration agreement came to a close. But, according to the appellant, it is not so. The payment of Rs.3,30,000/- was made for the purpose of releasing the vehicle alone and such an intimation was given to the Registering authority. Learned counsel for the appellant would further add that, in order to secure the balance amount, the respondents have come forward to execute an undertaking letter and also the third respondent has given a document and also executed a memorandum of deposit of title deeds. Under such circumstances, this Court is of the considered opinion that once the first contention that whether the arbitrator has got jurisdiction or not can also be considered by the Arbitrator. Apart from this, the documentary evidence adduced before the learned Judge can very well be adduced before the Arbitrator. Further, what is found in the original agreement admittedly was that whenever a dispute arise between the parties, it will be resolved before the Arbitrator. The respondents have not appeared before the Arbitrator appointed as per the Arbitration clause. The Arbitration clauses have been accepted by adducing evidence. 12. Under the facts and circumstances of the case, this Court is of the considered opinion that it would be fit and proper to set aside the award passed by the Arbitrator and refer the matter before the Arbitrator, before whom the parties can make their respective contentions and on making such contentions, the Arbitrator shall decide the question, first of all to entertain the claim and if at all what was the liability and pass suitable orders as one required under law. Accordingly, the Arbitration award is set aside and the matter is referred to Arbitrator. The parties shall appear before Arbitrator. 13. With the above observation, the Original Side appeal is disposed of. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar VJY To 1. The Sub Assistant Registrar, Original Side, High Court, Madras. https://hcservices.ecourts.gov.in/hcservices/ 2. The Sole Arbitrator, Mr.S.Santhanakrishnan, Retired District Judge, 23/4, Kanchi Natarajan Road, Vasundera Nagar, Chennai 83. 3. The Record Keeper, Original Side, High Court, Madras. 1 cc To Mr. M.J.Jaseem, Advocate, SR.40752. 1 cc To M/s.Sarvabhuaman Associates, Advocate, SR.40767. OSA.199 OF 2007 SGL(CO) RVL 18.08.2008 https://hcservices.ecourts.gov.in/hcservices/