Suresh Kumar T.V. and P.P. Francis v. Sundaram Finance Ltd.

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: N. Nagareesh
Judgment Date: 2022-12-16
Court Decision / Holding: The Arbitration Request is dismissed. The court held that Annexure-R1 contemplates the seat of Arbitration as Chennai, and no Arbitration Request is maintainable before this Court.
Final Disposition: AR 74/2022 dismissed; no arbitration to be conducted by this Court; seat of arbitration deemed Chennai per Annexure-R1.

Parties to the Case

Appellants / Petitioners

Suresh Kumar T.V.
P.P. Francis

Respondents

Sundaram Finance Ltd.

Legal Representation & Advocates

Counsels for Petitioners

• G. Hariharan
• Praveen H.
• K.S. Smitha
• V.R. Sanjeev Kumar Anjaly
• T.A. Siddhiqul Akbar
• K.A.

Counsels for Respondents

• Panicker V.P.K

Case Synopsis & Summary

This Arbitration Request (AR 74/2022) before the Kerala High Court arises from a loan transaction between Suresh Kumar T.V. and P.P. Francis and Sundaram Finance Ltd. The petitioners sought to invoke Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996, to appoint a neutral arbitrator for settlement of disputes arising from the loan agreement dated 04.08.2017. They contend the respondent unilaterally appointed a Sole Arbitrator in contravention of Section 11(3)(a) and that the arbitration clause provides that the Managing Director of the lender will nominate the sole arbitrator, with the award to be final. The petitioners attribute the Covid-19 lockdown and the resulting economic stress to their inability to pay, but they maintain that the remedy lies in arbitration rather than court litigation. The respondent maintains that the loan was advanced for purchasing a bus (KL-07CL-3601); after default, the vehicle was surrendered and sold, with some liability remaining. Mediation efforts failed. The court examined Annexure-R1 Article 22, which fixes Chennai as the venue and seat of arbitration, and concluded that the arbitration clause contemplates Chennai as the seat, thereby lacking jurisdiction to appoint an arbitrator under the Act. The court also notes TRF Ltd. v. Engineering Projects Ltd. to the effect that unilateral appointment is frowned upon. On these grounds, the arbitration petition was dismissed, reinforcing the primacy of the agreement’s seat clause and the court’s limited role in appointing arbitrators under the statute.

Provisions of Law Cited

Section 11(5) of the Arbitration and Conciliation Act, 1996Section 11(6) of the Arbitration and Conciliation Act, 1996Section 11(3)(a) of the Arbitration and Conciliation Act, 1996

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners submit that the respondent unilaterally appointed a Sole Arbitrator in contravention of Section 11(3)(a) of the Arbitration and Conciliation Act, 1996, and that such appointment violates established principles as enunciated in TRF Ltd. v. Engineering Projects Ltd. They contend that the arbitration clause provides that the Managing Director of the lender will nominate the sole arbitrator, with the venue/seat fixed as Chennai per Annexure-R1 Article 22, giving this Court no jurisdiction to entertain the AR. They seek appointment of an independent arbitrator and for the matter to be settled as per the agreement dated 04.08.2017.

Contentions of Respondents

The respondent contends that substantial amounts were advanced, the borrowers defaulted, the vehicle was surrendered and sold, and liability remains. Mediation failed. They argue that Annexure-R1 Article 22 fixes Chennai as the seat, thus the Court has no jurisdiction, and the petition should be dismissed.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
TRF Ltd. v. Engineering Projects Ltd.	2017 (8) SCC 377	Mentioned Only	The judgment cites TRF Ltd. to note that unilateral appointment of an arbitrator is frowned upon, using it to contextualize the petitioner's argument, but does not apply a TRF holding as controlling authority for its own dismissal of the AR.

Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **FRIDAY, THE 16[TH] DAY OF DECEMBER 2022 / 25TH AGRAHAYANA, 1944** ## **AR NO. 74 OF 2022** ## **PETITIONERS:** **1 SURESH KUMAR T.V. AGED 67 YEARS S/O. VIJAYA KURUP P.N, RESIDING AT 11 744A, THEKKINETH HOUSE, POYYACHIRA, NEAR PRESS ACADEMY, KAKKANAD, ERNAKULAM - 682030. 2 P.P. FRANCIS S/O. P. PAILY, RESIDING AT PEREPARAMBIL HOUSE, MARKET ROAD, TRIPUNITHURA, THEKUMBHAGOM, ERNAKULAM - 682301.** **BY ADVS. G.HARIHARAN PRAVEEN.H. K.S.SMITHA V.R.SANJEEV KUMAR ANJALY T.A SIDHIQUL AKBAR K.A.** ## **RESPONDENT:** **SUNDARAM FINANCE LTD. CHITTOOR ROAD, KACHERIPADY, KACHERIPADY, CHITTOOR ROAD, KACHERIPADY, ERNAKULAM - 682018, REPRESENTED BY ITS BRANCH MANAGER. BY ADV. PANICKER V.P.K** **THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 16.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **AR No.74 of 2022** **2** ## **ORDER** ## _**Dated this the 16[th] day of December, 2022**_ The petitioners are before this Court invoking Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996. The petitioners seek to appoint an Arbitrator for and on behalf of the parties for the settlement of disputes listed by the petitioners in accordance with the terms of agreement dated 04.08.2017. 2. The petitioners state that the 1[st] petitioner availed a loan from the respondent-Company for the purchase of a bus bearing registration No.KL-07CL-3601 as per loan agreement dated 04.08.2017. The petitioners were paying loan installments promptly. Due to countrywide Covid-19 lockdown, the entire transport industry collapsed and the petitioners could not repay the amount. 3. The petitioners state that the respondent hastily initiated arbitration proceedings under Sections 11(5) and 11(6) **AR No.74 of 2022** **3** of the Arbitration and Conciliation Act and unilaterally appointed a Sole Arbitrator without making any request as provided under Section 11(3) (a) of the Arbitration and Conciliation Act. 4. The petitioners would urge that the unilateral appointment of a Sole Arbitrator is frowned upon by the Hon'ble Apex Court in _**TRF Ltd. v. Engineering Projects Ltd.** [2017 (8) SCC 377]._ Therefore, this Court shall interfere in the matter and appoint an independent Arbitrator. 5. Standing Counsel entered appearance on behalf of the respondent and submitted that the huge amounts were advanced to the petitioners towards purchase of bus. The petitioners failed to remit the loan amount along with interest. The vehicle was surrendered to the respondent. The vehicle was sold and the amounts adjusted towards liability. Still a huge amount is due from the petitioners. In spite of mediation through the High Court Mediation Centre, the matter could not be resolved. **AR No.74 of 2022** **4** 6. The Standing Counsel for the respondent submitted that Annexure-R1 is the loan agreement executed by the 1[st] petitioner and the respondent. Article 22 of Annexure-R1 agreement would show that the seat of arbitration should be in Chennai. Therefore, this Court has no jurisdiction to entertain the Arbitration Request. 7. I have heard the learned counsel for the petitioners and the learned Standing Cousel for the respondent. 8. Article 22 of Annexure-R1 agreement executed by the ## 1[st] petitioner and the respondent reads as follows: a) All disputes, differences and/or claim, arising out of this Agreement, whether during its subsistence or thereafter shall be settled by arbitration in accordance with the provisions of The Arbitration and Conciliation Act, 1996 or any statutory amendments thereof and shall be referred to the sole Arbitration of an Arbitrator nominated by the Managing Director of the Lender. It is agreed that the Sole Arbitrator nominated under this clause shall adjudicate the disputes, differences and/or claims on the basis of written pleadings, documents and submissions filed by the parties, dispensing with the oral evidence and technical formalities. The award given by such an arbitrator shall be final and binding on the Borrower/Co-Borrower to this agreement. **AR No.74 of 2022** **5** It is a term of this agreement that in the event of such an arbitrator to whom the matter has been originally referred is dying or being unable to act for any reason, the Managing Director of the Lender, at the time of such death of the arbitrator or of his inability to act as arbitrator, shall appoint another person to act as arbitrator. Such a person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. (b) The arbitrator so appointed herein above, shall also be entitled to pass an Award on the hypothecated asset/s and also on any other securities furnished byor on behalf of the borrower. (c) It is agreed that within 45 days from the date of receipt of the Arbitral Award, any party, with notice to the other party, may request the Sole Arbitrator to correct any computation errors, any clerical or typographical errors or any other errors occurring in the Award or to give an interpretation of a specific point or part of the Award. (d) It is agreed that within 45 days from the date of receipt of the Arbitral Award, any party, with notice to the other party, may request the Sole Arbitrator to make an additional Arbitral Award as to the claims presented before the Sole Arbitrator but omitted from the Arbitral Award. (e) It is further agreed that the Sole Arbitrator is entitled to correct errors on his/her own initiative or at the request of any one of the parties, and/or to give an interpretation of a specific point or part of the Award, or to make an additional Arbitral Award including the claims that have been omitted from the original Arbitral Award without notice to the parties within the time-limit mentioned under the Act, provided such errors, **AR No.74 of 2022** **6** interpretation or Inclusion do not affect the merits and interest of the parties. - (f) The Venue of arbitration shall be CHENNAI. The office of the respondent is also at Chennai. The respondent would submit that the final execution of the agreement was also in Chennai. 9. After a perusal of Article 22 wherein both parties have agreed that the venue of arbitration shall be Chennai, and taking into consideration the other facts of the case, I am of the view that Annexure-R1 contemplates the seat of Arbitration as Chennai. Therefore, no Arbitration Request is maintainable before this Court. The Arbitration Request is therefore dismissed. **Sd/N. NAGARESH JUDGE** sss **AR No.74 of 2022** **7** ## **APPENDIX OF AR 74/2022** ## **PETITIONERS' ANNEXURE** ## **ANNEXURE I** **TRUE COPY OF THE RC STATUS OF THE VEHICLE BEARING REGISTRATION NO.KL-07CL3601.** **ANNEXURE II TRUE COPY OF THE NOTIFICATION ISSUED BY THE GOVERNMENT OF INDIA ON 24.03.2020. ANNEXURE III TRUE COPY OF THE LETTER SENT BY RESPONDENT'S OFFICE ADDRESSED TO SRI. DR. S.S.P DARWESH, FORMER PRINCIPAL DISTRICT AND SESSIONS JUDGE (SUPER TIME), INTIMATING HIM HIS APPOINTMENT AS THE SOLE ARBITRATOR ON 01.02.2021.** - **ANNEXURE IV TRUE COPY OF THE NOTICE DATED 11.02.2022 SENT BY THE SOLE ARBITRATOR ADDRESSED TO THE PETITIONERS.** - **ANNEXURE V TRUE COPY OF THE COMMUNICATION SENT BY THE RESPONDENT ON 30.12.2021 BY THE RESPONDENT ADDRESSED TO THE 2ND PETITIONER.** - **ANNEXURE VI TRUE COPY OF THE DETAILED OBJECTION FILED BY THE PETITIONERS AGAINST THE LETTER DATED 02.03.2022 SENT BY THE RESPONDENT.** - **ANNEXURE VII TRUE COPY OF THE INTERIM ORDER PASSED IN CONNECTED WITH A.R. NO.7/2022 DATED 19.01.2022 BY THIS HON'BLE COURT.** - **RESPONDENT'S ANNEXURES** - **ANNEXURE-R(1) A TRUE COPY OF THE LOAN AGREEMENT DATED 04/08/2017 BETWEEN THE 1ST PETITIONER AND THE RESPONDENT.** - **ANNEXURE-R(2) THE DEED OF GUARANTEE EXECUTED BY THE 2ND PETITIONER DATED 04/08/2017 IN FAVOUR OF THE 2ND RESPONDENT.** **AR No.74 of 2022** **8** **ANNEXURE-R(3) A TRUE COPY OF THE COMMUNICATION DATED 24/12/2021 FROM THE DEPUTY MANAGER (LEGAL) TO THE 2ND RESPONDENT. ANNEXURE-R(4) A TRUE COPY OF THE COMMUNICATION DATED 01/02/2022 ISSUED BY THE MANAGING DIRECTOR TO THE ARBITRATOR APPOINTING HIM AS THE ARBITRATOR TO ARBITRATE ON THE DISPUTE, WITH NOTICE TO THE PETITIONERS .**