Muthoot Vehicle and Asset Finance Ltd v. Ajayakhosh R

**OP(C) NO. 1277 OF 2022** **1** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE C.S.DIAS** **WEDNESDAY, THE 27[TH] DAY OF JULY 2022 / 5TH SRAVANA, 1944 OP(C) NO. 1277 OF 2022** **AGAINST THE ORDER IN CMA (Arb) 160/2022 OF ADDITIONAL DISTRICT COURT VIII, ERNAKULAM** M/S MUTHOOT VEHICLE AND ASSET FINANCE LTD MUTHOOT CHAMBERS, KURIAN TOWERS, BANERJI ROAD, KOCHI-18, REP. BY ITS POWER OF ATTORNEY HOLDER MR. ANILKUMAR S, AGED 46 YEARS, S/O P.A SREEDHARAN PILLAI, RESIDING AT ARACKAL HOUSE, PUKKATTAU ROAD, KIZHAKKEPRAM, N. PARAVUR P O, ERNAKULAM DISTRICT, PIN - 683513 BY ADV SHIJU VARGHESE ## **RESPONDENT/RESPONDENT:** AJAYAKHOSH R, AGED 60 YEARS S/O RAVEENDRAN, MANGALAPPALLY HOUSE, MUHAMMA P.O., MUHAMMA, ALAPPUZHA DISTRICT, PIN - 688525 THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 27.07.2022, THE COURT ON 5.8.2022 DELIVERED THE FOLLOWING: **OP(C) NO. 1277 OF 2022** **2** ## **C.S DIAS,J.** **--------------------------O.P (C)No.1277 of 2022** **----------------------------Dated this the 5[th] day of August, 2022.** ## **JUDGMENT** Aggrieved by the order in CMA (Arb) No.160/2022 of the Court of Additional District Judge – VIII, Ernakulam, the petitioner before the court below has filed this original petition. 2. The skeletal facts relevant for the determination of the original petition are: the petitioner is a public limited company registered with the Reserve Bank of India as a non-banking finance company engaged in providing loans on a hypothecation and guarantee basis. The respondent and his guarantor had entered into Ext.P1 agreement with the petitioner to purchase a motor car on hypothecation. It was, inter-alia, agreed by the parties that in the case of any dispute between them, the same would be settled in arbitration at Ernakulam. As per Ext.P1, the venue of **OP(C) NO. 1277 OF 2022** **3** arbitration is at Ernakulam. The respondent committed a breach of the agreement by not paying the outstanding amount due to the petitioner. The petitioner proposes to refer the dispute to arbitration. However, no tribunal has been constituted till date. In the meantime, the petitioner got information that the respondent was attempting to alienate the vehicle and defeat the award that would be passed against him. So, the petitioner filed CMA (Arb) No.160/22 (Ext.P2) before the court below. Along with the application, they also filed I.A No.2/2022 (Ext.P3) to appoint an Advocate Commissioner to take possession of the vehicle. The court below, by the impugned Ext.P4 order, has held that it has no jurisdiction to entertain Ext.P2, as the respondent is residing in Alappuzha. Ext.P4 is erroneous. Hence, the original petition. 3. Heard; Sri.Shiju Varghese, the learned counsel appearing for the petitioner. 4. Sri. Shiju Varghese argued that Ext.P4 order is **OP(C) NO. 1277 OF 2022** **4** patently wrong and erroneous because the court below has failed to consider the provisions of the Act and the law laid down by this Court on the point, in its proper perspective. The Arbitration and Conciliation Act is a selfcontained enactment emphasising party autonomy. An interim award can be enforced by the Court situated at the 'seat' or 'venue' as agreed by the parties to the agreement. There is no necessity to file the original petition where the respondent is residing as contemplated under the Code of Civil Procedure, which has no application. He placed reliance on the decision of the Honourable Supreme Court in **Sundaram Finance Limited v. Abdul Samad and another** [(2018) 3 SCC 622] and of this Court in **Muthoot Vehicle and Asset Finance Ltd. v. Gopalan Kuttappan** [2009 KHC 5086] to canvass the position that an award can be enforced anywhere in India and the property can be attached before judgment by a court even if the subject **OP(C) NO. 1277 OF 2022** **5** matter is outside its jurisdiction. Hence, the original petition may be allowed. 5. When this Court was proposing to admit the original petition and order notice to the respondent, the learned counsel drew the attention of this Court to the decision in **HDFC Bank Ltd v. Manaf Arakkaveettil** [2018 (4) KHC 84] and argued that this Court has dispensed with the issuance of prior notice to the respondent in cases of such nature, as it may entail in the vanishing of the security sought to be attached. 6. In the above factual and legal background, this Court decided to consider and dispose of the original petition without ordering notice to the respondent. 7. Ext.P1 agreement was entered between the petitioner – Muthoot Vehicle and Asset Finance Ltd (lender) and the respondent and his guarantor on 24.12.2020. Clause 16.5 of the Ext.P1 agreement reads as follows: **OP(C) NO. 1277 OF 2022** **6** “16.5. Law, jurisdiction and Arbitration: a. All disputes, differences and/or claim arising in connection with this Agreement shall be resolved by the sole Arbitrator nominated by the Lender, as per the Arbitration and Conciliation Act, 1996 and his award shall be final and binding on all the parties hereto. b. Dispute for the purpose of Arbitration includes any type of default committed by the Borrower in the event of, the Arbitrator to whom the matter has been originally referred to dies or becomes, unable to act for any reason, the Lender shall nominate another person to act as Arbitrator. Such person shall be entitled to proceed with the arbitration from the stage at which it was left by his predecessor. c. The venue of Arbitration shall be at Ernakulam. d. The arbitrator so appointed shall also be entitled to pass an Award on the Asset and also on any other securities available with the Lender form the Borrower/Guarantor. e. For all disputes arising out of this Agreement the jurisdiction shall be with courts of Ernakulam only to the exclusion of all other courts.” ## 8. The petitioner has averred in the original petition filed before the court below that, the respondent has **OP(C) NO. 1277 OF 2022** **7** committed a breach of Ext. P1 agreement by not repaying the loan amount within the agreed time period, compelling the petitioner to file Ext.P2 before the court below, under Section 9 of the Arbitration and Conciliation Act, 1996, (in short ' Act'), for an interim measure to appoint a Receiver/Advocate Commissioner and take possession of the vehicle. 9. The court below, by the impugned Ext.P4 order, placing reliance on Section 136 of the Code of Civil Procedure, has held that if the person to be arrested or the property to be attached is situated outside the local limits of the Court, then the said court has no territorial jurisdiction to entertain an original petition. Further, the decisions relied on by the petitioner are pertaining to the supervisory powers of the Hon'ble Supreme Court and this Court under Article 227 of the Constitution of India. Therefore, those decisions have no application to a petition filed under Section 9 of the Act. Likewise, the **OP(C) NO. 1277 OF 2022** **8** court below has also held that since the property is situated outside its jurisdiction, it would be practically difficult to appoint an Advocate Commissioner and take possession of the vehicle. 10. The Arbitration and Conciliation Act, 1996, is a self-contained enactment. In **BBR (India) Private Ltd** v. **S.P Singhla Constructions Pvt.Ltd** [2022 SCC Online SC 642] **,** the Hon'ble Supreme Court, relying on its earlier decisions, has held that the jurisdiction of the Court is as agreed by the parties to the agreement and party autonomy governs the field. Therefore, when the petitioner and the respondent have agreed to confirm the jurisdiction on the Court at Ernakulam, necessarily the Court at Ernakulam, would have the jurisdiction to entertain an original petition filed under Section 9 of the Act. 11. A similar view has been taken by the Hon'ble Supreme Court in **BBR (India) Private Ltd** v. **OP(C) NO. 1277 OF 2022** **9** **S.P.Singhla Constructions Private Ltd** [2022 SCC Online SC 642], that when the seat is also a convenient venue, several courts where the part of the cause of action arisen have the jurisdiction to entertain a petition filed under the Act. 12. The Hon'ble Supreme Court in **Sundaram Finance Ltd v. Abdul Samad and Another** [ 2018 KHC 6108], has held that an arbitration award can be enforced anywhere in the country and there is no requirement to transfer such award from one court which has the exclusive jurisdiction of the arbitral proceedings. 13. Even otherwise, the Division Bench of this Court in **Muthoot Vehicle and Asset Finance Ltd v. Gopalan Kuttappan** [ 2009 KHC 5086], has categorically held that even if a property is situated outside the jurisdiction of the Court, the court can order attachment before judgment under Order XXXVIII Rule 5 of the Code of Civil Procedure. **OP(C) NO. 1277 OF 2022** **10** 14. In the light of the above exposition of law, particularly the fact that the parties have agreed that the venue of the arbitration would be at Ernakulam, I am of the view that the impugned order passed by the court below is erroneous and is liable to be set aside. On a comprehensive consideration of the pleadings and materials on record and the law referred to above and after hearing the learned counsel appearing for the petitioner, in exercise of the supervisory powers of this Court under Article 227 of the Constitution of India, I dispose of the original petition with the following directions: - (i) Ext.P4 order is set aside. (ii) The court below is directed to re-consider CMA (Arb) No.160/2022, in the light of the decisions referred above. (iii) The court below shall following the judgment in **HDFC Bank Ltd** v. **Manaf Arakkaveettil [** 2018 (4) KHC **OP(C) NO. 1277 OF 2022** **11** 84] dispense with notice to the respondent. (iv) The court below is directed to dispose of CMA (Arb)160/2022(Ext.P2), in accordance with law, as expeditiously as possible, at any rate within a period of one month from the date of production of a copy of this judgment. ma/3.8.2022 Sd/- **C.S.DIAS, JUDGE** **OP(C) NO. 1277 OF 2022** **12** ## **APPENDIX OF OP(C) 1277/2022** PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE LOAN AGREEMENT DATED 24.12.2020 Exhibit P2 TRUE COPY OF CMA (ARB.) NO.160/2022 DATED 26.2.2022 Exhibit P3 TRUE COPY OF IA NO.2/2022 IN CMA (ARB.) NO.160/2022 DATED 26.2.2022 Exhibit P4 TRUE COPY OF THE ORDER IN CMA (ARB.) NO.160/2022 DATED 29.6.2022