ASHIM KUMAR BANERJEE.J - (1.) THE appellant obtained credit facilities from Magma Fincorp Limited for purchase of one JCB 3DX Backhoe Loader for commercial purpose. THE parties entered into a Hire Purchase agreement on November 13, 2006. Under the agreement, total hire purchase price of Rs.19.32 Lacs was to be repaid by 35 monthly installments of Rs.55200 commencing from October 15, 2006 and subsequent installment by 15th day of each succeeding English calendar month. THE Respondent No. 2 guaranteed the loan so advanced by Magma in favour of Ravi. According to Magma, Ravi took possession of the asset in terms of the agreement. He paid five installments and a part of the sixth installment and thereafter defaulted in making payment of the balance. Magma issued a notice of demand claiming a sum of Rs.1698655 as on October 31, 2007 as claimed in the notice of demand appearing at page 58 60 of the paper book. From the notice of demand we find that Magma claimed all arrear installments as per the agreement apart from delayed payment charge for Rs.65,255. THEy also claimed damage for Rs.1840 per day on and from October 29, 2007. Magma subsequently referred the dispute to arbitration vide letter dated March 29, 2008 as claimed by them. Magma also approached Learned Single Judge inter-alia praying for interim protection under Section 9 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as the said Act of 1996). We also find that the named arbitrator Sri Pulin Bihari Das published an award on December 5, 2008 inter-alia for a sum of Rs. 1837276. THE arbitrator also declared that the loader being the subject matter of the Hire Purchase agreement belonged to Magma. THE arbitrator awarded interest at the rate 36% per amount on the awarded sum from the date when the appellant committed default till the date of the award as well as interest at the rate of 24% per amount from the date of the award till payment. THE arbitrator awarded cost of Rs.4000. Needless to mention, it was an ex-parte award.
(2.) BY an order dated May 13, 2008 the Learned Single Judge appointed an advocate of this Court as receiver to make an inventory of the equipment and submit a report. The petition came up for hearing again on July 31, 2008 when the respondent appeared and prayed for time to resolve the dispute amicably. Accordingly, the matter was adjourned. BY a subsequent order dated August 5, 2008 the learned Single Judge directed inventory of the vehicle coupled with an order for taking possession of the same. Accordingly, the receiver took possession on August 14, 2008 as we find from the report appearing at pages 72-73 of the paper book. The learned Single Judge passed a subsequent order on February 27, 2009 issuing an order of restraint on sale of the equipment. His Lordship also recorded that an award was published in the meantime as reported to His Lordship. Ultimately the interim order of restraint was vacated and the Court permitted the receiver to sell the equipment/vehicle by public auction. The matter went up to the Division Bench. BY an order dated February 7, 2011 the Division Bench permitted the appellant to bring suitable purchaser. His Lordship also directed application for setting aside to be heard by the learned Single Judge. There was another round of litigation on the confirmation of sale. Ultimately the Division Bench vide order dated May 16, 2011 confirmed the sale in favour of the appellant for a sum of Rs.6.1 which was Rs.10,000 more than the offer given by an outsider and confirmed by the learned Single Judge. The application for setting aside of the award made by the appellant as also the application for appropriate injunction made by the respondent came up for hearing before the learned Single Judge. We are told by the respondent, learned Single Judge granted repeated adjournments to have a final solution through negotiation. Ultimately His Lordship passed an order on February 2, 2002 with the consent of both the parties. The appellant however would dispute the same. On perusal of the said order dated February 2, 2012 we find, learned Single Judge set aside the award by consent of parties and referred the dispute for sole arbitration of Mr. Dhruba Ghosh, an advocate of this Court. His Lordship directed further payment of Rs. 10 lacs by two installments. His Lordship passed an order of injunction restraining appellant from alienating or encumbering the subject equipment/vehicle and in default of payment, receiver to take possession that became subject matter of two appeals by the appellants. In one of the appeals, the appellant contended, they did not give any consent to have the second application disposed of. The respondent approached the learned Single Judge for clarification. Learned Single Judge observed, "A false statement is irresponsibly made by the advocates appearing for the respondent hirers and guarantors to the effect that the order dated February 2, 2012 was not by consent in its entirety. The entirety of the order was by consent. " Hence, the appellants preferred the other appeal. We heard both the appeals on July 10, 2012 when it was time to time adjourned. On September 6, 2012 we concluded the hearing and kept it for judgment on September 10, 2012 so that Magma could make appropriate submissions as their counsel Mr. Sakya Sen could not appear on the earlier occasion. On September 10, 2012 we heard Mr. Debojyoti Basu, learned Counsel for the appellant again and Mr. Sakya Sen learned Counsel for the respondent Magma and concluded the hearing. Mr. Basu contended, the judgment and order dated February 2, 2012 was passed by consent of parties only to the extent it disposed of the application for setting aside. The second part of the order that disposed of the application for injunction was not by consent. On factual matrix, Mr. Basu contended, the learned Single Judge set aside the award and referred the dispute to the new arbitrator. Hence, question of making further payment would not arise. According to him, the payment of further sum of Rs.10 lacs did not have any basis at all. Initially the loader could not be used in absence of appropriate registration certificate that Magma had delayed for a considerable period causing substantial loss to the appellant. The receiver took possession of the loader in August 2008. Since then the appellant could not use the same, hence question of payment of further installment would not arise at all. The sale in favour of the appellant on May 16, 2011 was subsequent to termination of the agreement. Today, Magma could have a simple money claim and would not have any special interest on the loader for which the learned Judge could pass an order of injunction. Mr. Basu further contended, as per the agreement he was to pay back Rs.19.32 lacs. He already paid five installments of Rs.51.200 and a part of sixth installment that would take care of about Rs.3 lacs apart from the purchase price of Rs.6.1 lacs. Hence there could not be any amount to the extent of Rs.10 lacs due and owing. Commenting on the order of the learned Single Judge Mr. Basu contended, the consent was recorded in the first paragraph that would take care of A.P. No. 218 of 2009 that was recorded as disposed of in internal page 2 of the said order. A.P. No. 599 of 2011 was disposed of by the subsequent part that did not record any consent at all, hence His Lordship was not correct to say that the order was by consent in its entirety. His Lordship further directed the receiver to take possession of the loader which stood sold to the appellant. Hence, such direction was without jurisdiction. So was the order of injunction. In any event His Lordship did not assign any reason while passing such drastic order. Mr. Basu relied on Division Bench decision of the Andhra Pradesh High court in the Case of Neel Madhav Mining P. Ltd. & Ors. VS- Authorised Officer, Union Bank of India & Ors. reported in 2005 Volume-127 Company Case Page-846 (Andhra Pradesh) wherein the Division Bench held, "At the stage of considering the interlocutory applications, the Tribunal, while deciding the question whether the creditor can be permitted to take possession of the agricultural land or not, cannot totally ignore the plea of the debtor that the land is agricultural land and impose a condition such as the one imposed in the order in question. " Citing the said decision Mr. Basu contended, His Lordship did not consider the contention of the appellant while passing the order of injunction and receiver. Opposing the appeal, Mr. Sakya Sen learned Counsel contended, the order dated February 2, 2012 could only be interpreted and construed by considering the back drop and the spirit for which the said order was passed. According to Mr. Sen, His Lordship appropriately recorded the consent that was categorically expressed in open Court by the learned Counsel appearing for the appellants. Mr. Sen contended, had the appellant been not ready to accept the second part of the order they would not have agreed to have the award set aside. He lastly contended, in case the Court of appeal would be inclined to set aside the second part of the order it should set aside the entire order sending both the application back to the learned Judge for being heard afresh. We have considered the rival contentions; the facts are somewhat ugly and embarrassing too. If we go by technicality and make a rigid construction we would have to allow the appeals. At the same time we cannot brush aside the circumstance that resulted in the said order. It would depict a different picture. We could imagine the true spirit behind the said order being passed. The learned arbitrator who passed the ex-parte award, was a common factor in the field of arbitration particularly where Hire Purchase agreements and/or lease agreements are involved. It is of common knowledge, he is a man of the financier. His award is always tainted. If we look to the award we would find that the arbitrator declared the vehicle to be belonging to the financer in addition to allowing the monetary claim in its entirety along with interest, that too, at the rate of 36% per annum. The award would certainly shock the conscience of the Court. We do not find any reason assigned by him that was the prime requisite in an award under the said act of 1996. Considering the award, we would have no hesitation to say, the award was contrary to public policy. Under the said Act of 1996, His Lordship was not competent to name the personale unless consented to by the parties. His Lordship very rightly set aside the award and appointed an independent member of the bar to act as a sole arbitrator in the matter. The first two paragraphs of the order are quoted below: "By consent of parties, the award dated December 5, 2008 is set aside and the parties agree that a fresh reference of the disputes may be made. Since it is open to the financier to nominate an Arbitrator, the financiers suggest that the reference be made to Mr. Dhruba Ghosh an advocate in which the hirer concurs. "
(3.) FROM the paragraphs quoted (Supra) we would find, the parties rather helped His Lordship in having the award set aside and dispute resolved through an independent arbitrator although being technically nominated by the financier and concurred by the hirer. This part was definitely by consent. Mr. Basu also agreed. We would now come to the later part of the order. His Lordship, after giving consequential direction as to the conducting of the fresh arbitration, recorded that AP No. 218 of 2009 was disposed of. His Lordship then proceeded to dispose of the financier 's application being A.P. No. 599 of 2011. On a plain reading we do not find any consent recorded from the text of the order. However, the consent given by the financier in the first limb of the order agreeing to, setting aside of the award is possibly reciprocation of the gesture of the appellant in not seriously opposing the financier in the other application being AP No. 599 of 2011. Hence His Lordship was also correct to say that the other part was also by consent, although technically speaking no consent was recorded. It was nothing but an attempt to do substantial justice striking a balance and protecting both the parties. We appreciate the gesture. In the light of the above, let us now examine the later part. His Lordship considered the financier 's contention that a sum of Rs.16.1 lac was still due and payable. His Lordship deducted Rs.6.1 lac being the purchase price received by the financier and directed payment of the balance sum of Rs.10 lacs. With great humility and expressing our deepest regard we have for His Lordship, we feel, interest of justice would sub serve, if we reduce the amount. In our view, His Lordship should have considered the fact that the appellant was out of possession of the vehicle for a considerable period since August 2008. A person obtains financer support from a financer for purchase of equipment with the intension; commercial exploitation of the equipment would enable them to repay the financial support together with interest. One would not except someone to purchase an equipment with financial support repayable with high rate of interest and would be obliged to repay the same without having the benefit of commercial exploitation of the equipment. On the issue of appointment of receiver we feel, the vehicles stood sold to the appellant at a price higher than the best one received by the receiver. Had this vehicle been sold to the third party, the order of injunction or direction upon the receiver as contained in the order would have been without any effect. Merely because the appellant purchased the equipment, the financier was not entitled to have receiver appointed over the equipment/vehicle again. We are unhesitatingly of the view, financier had no right, title or interest over the vehicle that they lost absolutely on the sale being confirmed in favour of the appellant. What is left is the simple money claim that is to be discharged by the debtor being the appellant herein. The direction upon the receiver to take possession of the vehicle in question once again would be little harsh. The order of injunction would suffice in the interest of justice. Since we have already held that the second part of the order was not strictly by consent, we wish to modify the same by directing appellant to pay Rs.4 lacs instead of Rs.10 lacs for the time being. The said sum of Rs.4 lacs must be paid by two equal monthly installments payable on September 30, 2012 and October 31 2012. The direction upon the receiver to take possession, is set aside. The order of injunction as contained the judgment and order is affirmed. The judgment and order impugned stands modified accordingly. In default of payment of anyone of the aforesaid installments, this order would stand recalled and appeals would stand dismissed. Otherwise the appeals are disposed of. There would be however no order as to costs. Urgent certified copy of this judgment, if applied for, be given to the parties on their usual undertaking.;