Pel Industries Ltd. & Ors v. S.E. Investment Ltd

NAVIN CHAWLA, J APRIL 23, 2018 rv

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + OMP (COMM) 152/2016 Reserved on: 23th February, 2018 Date of decision : 23rd April, 2018 PEL INDUSTRIES LTD. & ORS. ..... Petitioners Through Mr.Vivek R. Mohanty and Ms.Priyadarshini Pattanaik, Advs. versus S.E. INVESTMENT LTD. ..... Respondent Through Mr.P.Nagesh and Mr.Dhruv Gupta, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') challenges the Arbitral Award dated 10.09.2014 passed by the Sole Arbitrator in the arbitration proceedings between the parties. 2. The petitioner no. 1 had availed a loan facility of Rs. 1.50 crores from the respondent for business purpose. The loan was repayable in 24 months and the schedule of such payment was mentioned in Schedule A to the Loan Agreement dated 18.06.2011 executed between the parties. 3. Admittedly, petitioner no. 1 had defaulted in the payment of the monthly installments and certain cheques issued by the petitioner nos. 2 to 5 had also been returned unpaid by the banks, pursuant to which the respondent had initiated proceedings under Section 138 of the Negotiable Instruments Act against the petitioners. The respondent also invoked the Page 2 Arbitration Agreement contained in Clause 19 of the Loan Agreement and appointed a Sole Arbitrator. 4. The Arbitration proceedings have resulted in the Impugned Award by which the Sole Arbitrator has granted the following relief in favour of the respondent and against the petitioner:- "In view of the above conclusions, the claim of claimant is allowed for a sum of Rs. 2,52,42,655/- (Rupees Two crores fifty two lacs forty two thousand six hundred and fifty five only) due as on 02.12.2013 with pendente lite interest of Rs. 1,41,86,372/- (Rupees One crore forty one lacs eighty six thousand three hundred seventy two only), as held in Issue no. (ii) above for the period of 03.12.2013 till 10.09.2014 making total of Rs.3,94,29,027/- (Rupees Three crores ninety four lacs twenty nine thousand twenty seven only). Thus, this Tribunal holds that the Respondent Nos. 1, 2, 3 and 4 are jointly and severally liable to pay to the Claimant amount of Rs. Rs.3,94,29,027/- (Rupees Three crores ninety four lacs twenty nine thousand twenty seven only) along with future interest @ 18% per annum compounded monthly from date of award till the payment of award money. The claimant is entitled to proceed against joint and several liability of Mr. Jayesh Harakchand Shah, who is arrayed as Respondent no. 5 in the statement of claim but is excluded from Arbitration proceedings on technical grounds mentioned in the previous paragraph hereinabove, in the manner the Claimant may deem expedient and feasible. This Tribunal further holds that Claimant is entitled to cost of Arbitration proceedings which is fixed at Rs.1,50,000/- (One Lac Fifty Thousand Only) and shall be paid by the Respondents jointly and severally and shall be included in the amount reached in this award." Page 3 5. The Impugned Award has been passed ex parte against the petitioners. The counsel for the petitioners submits that the petitioners had been wrongly proceeded ex parte by the Arbitrator. He submits that during the arbitration proceedings, as noted above, the respondent was also prosecuting proceedings under Section 138 of the Negotiable Instruments Act against the petitioners. The petitioners had been duly defending the same. The respondent had also filed an application under Section 9 of the Act before this court and the petitioners had appeared in the said proceedings as well. The counsel for the petitioners submits that the petitioners, therefore, had no reason not to appear before the Arbitrator in the arbitration proceedings and it was only because the petitioners were never made aware of the pendency of the same, that the petitioners could not appear before the Arbitrator. He further submits that it was only on 13.01.2015 that th