(Judgment of the Court was delivered by M.CHOCKALINGAM, J.,) Challenge is made to an order of the learned single Judge of this Court dated 09.06.2008 made in O.P.No.283 of 2004, whereby an arbitral award sought to be set aside, was dismissed.
2. The appeal came to be filed in the following circumstances:
A lease agreement was entered into between the 1st respondent in the original petition and the petitioner on 21.11.1997 in respect of a 1997 Model IMP-Spinning machine and the lease purchase amount of Rs.98,14,345/- was payable in 48 monthly instalments. It commenced on 20th March, 1998 and it would end on 19th March 2002. The petitioner made 25 instalments and thereafter, there was a default. Under such circumstances, the 1st respondent invoked the arbitration clause and appointed the 2nd respondent as sole Arbitrator. The sudden downfall in the textile industry, ruined the petitioner's business and hence in the year 2000, the petitioner informed the 1st respondent to take possession of the machinery and effect sale of the same in order to recover the balance amount payable at that time. The Arbitrator passed an award on 17.03.2004, directing the petitioner to pay a sum of Rs.68,27,071/- along with interest at 18% per annum and also with costs. Aggrieved over the award, the petitioner has filed the instant application, which was contested by the 1st respondent, and the learned single Judge took a view that the contention put forth by the petitioner's side did not carry any merit and hence, confirmed the award. Under such circumstances, the appeal has been taken before this Court.
3. Advancing the arguments on behalf of the appellant, the learned counsel would submit that it was a case where 25 instalments were actually paid; that it is true that the balance was to be paid, but even though the appellant sent a communication that the 1st respondent could take possession of the machinery and sell the same towards the recovery of the balance amount, despite the communication, the 1st respondent did not act so; that on the contrary, invoked the arbitration clause; that apart from that, an application under
section 9 of the Arbitration and Conciliation Act for the seizure of the machinery was also made; that the Court by its order dated 12.12.2001 appointed an advocate commissioner to take inventory of machinery and the inventory was actually taken and a report was filed on 21.01.2002 and thus, when the appellant/petitioner has made it clear that if the machinery had been taken possession by the 1st respondent even at the earliest and had it been sold, it could have been adjusted towards the dues, but the same was not done so by the 1st respondent, the fault is on the part of the 1st respondent.
4. Learned counsel would further point out that it was a case where due to the unexpected developments, the industry itself was completely ruined; that even the appellant came forward to make an offer of Rs.40 lakhs in full and final settlement; that out of the total amount of Rs.62 lakhs and odd, the appellant had paid Rs.51 lakhs and odd and thus, if the machinery was actually taken by the 1st respondent at the earliest, the entire balance would be wiped out, but not done so; that on the contrary, the 1st respondent has not only invoked the arbiral clause but also has approached this Court for getting interim orders; and that under such circumstances, the learned single Judge has not taken into consideration the above aspects and passed the order, confirming the award, which has got to be set aside.
5. There is no representation on the respondents side.
6. After going through the materials available, this Court is of the considered opinion that the order of the learned single Judge has got to be confirmed. It is not in controversy that the parties to the arbitral proceedings entered into a hire purchase agreement on 21.11.1997 and the total lease purchase amount was fixed at Rs.98,14,345/-. It is also an admitted position that out of 48 monthly instalments, only 25 instalments were paid and there was a default thereafter. While there was a default on the part of the appellant, he cannot be permitted to find fault with the 1st respondent to invoke the arbitral clause, which was very well available under the agreement entered into between the parties. It is pertinent to point out that it was only a hire purchase agreement and so long as the last instalment was not paid, the ownership would be continued to be with the 1st respondent and the appellant will be a lessee. Though it is contended by the appellant's side that at the earliest there was a communication addressed to the 1st respondent for taking possession of the machinery, no material was placed to prove the same. On the contrary, it was the 1st respondent, who moved the application under
section 9 of the Arbitration and Conciliation Act for taking possession of the machinery and pursuant to the order of the Court, an Advocate Commissioner was appointed and he has taken possession of the machinery and also filed the report. Further, as per
<act id=_LGxPokB_szha0nWKtKy section=22>section 22(1) </act>of Sick Industries Act, the application before the arbitral proceedings is not a suit and hence,
<act id=_LGxPokB_szha0nWKtKy section=22>section 22(1) </act>cannot be a bar and thus, what are the contentions now raised by the appellant before this Court were actually raised before the learned single Judge and those were found to be meritless, as recorded by the learned single Judge.
7. Under such circumstances, the Court is unable to notice any reason to disturb the order of the learned single Judge, which has got to be affirmed. At this juncture, learned counsel for the appellant submits that liberty has to be given to raise the contentions before the BIFR., where the proceedings are pending, and accordingly, the same is granted. The appeal is disposed of. No costs.
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