Zenith Credit Limited. Vs. Dinesh Kr. Paswan and ors. - Court Judgment

Excerpt:
[mr. justice huluvadi.g.ramesh,j.] these writ petitions are filed under articles 226 and 227 of the constitution of india praying to quash the revisional order passed by commissioner of commercial taxes under section 8-d of ket act, 1958 dated 5.8.2010 vide annexure-d, amd the order of even number dated 22.9.2010 passed under section 6-c of the said act in the rectification application filed by the petitioner vide annexure-e as the orders passed without jurisdiction under section 8-d of ket act, 1958 ultra vires definition of admission' in section 2(a) of ket act, 1958 and as opposed to principles of harmonious construction.1. this application is at the instance of the petitioner of a proceeding under section 9 of the arbitration and conciliation act, 1996 and is directed against the order no.27 dated may 27, 2008 passed by the learned judge, city civil court at calcutta in misc. case no.1349 of 2005 thereby allowing an application under order 1 rule 10 of the code of civil procedure filed by the opposite party no.3.2. the short fact is that the petitioner filed the said proceeding for recovery of money advanced with regard to a motor vehicle. the opposite party nos.1 is the hire purchaser and the opposite party no.2 is the guarantor of the said transaction. for non-payment of the money, the petitioner filed the said title suit praying for an award of rs.3,57,434/-, declaration that the petitioner is the.....

Judgment:
1. This application is at the instance of the petitioner of a proceeding under Section 9 of the Arbitration and Conciliation Act, 1996 and is directed against the order no.27 dated May 27, 2008 passed by the learned Judge, City Civil Court at Calcutta in Misc. Case No.1349 of 2005 thereby allowing an application under Order 1 Rule 10 of the Code of Civil Procedure filed by the opposite party no.3.

2. The short fact is that the petitioner filed the said proceeding for recovery of money advanced with regard to a motor vehicle. The opposite party nos.1 is the hire purchaser and the opposite party no.2 is the guarantor of the said transaction. For non-payment of the money, the petitioner filed the said title suit praying for an award of Rs.3,57,434/-, declaration that the petitioner is the owner of the said motor vehicle, recovery of possession and other reliefs. During pendency of the said proceedings under Section 9 of the Act of 1996, the applicant /opposite party no.3 herein filed an application under Order 1 Rule 10 of the C.P.C. contending, inter alia, in fact he is the owner of the said motor vehicle and he purchased the same upon taking a loan from the ICICI Bank. He has been paying the monthly instalments to the said bank and as such, he is the owner of the vehicle in question. Therefore, he should be added as a party to the proceeding. That application was allowed by the impugned order. Being aggrieved, the petitioner has preferred this revisional application.

3. The learned Advocate appearing on behalf of the petitioner submits that the proceeding under Section 9 of the Arbitration and Conciliation Act, 1996 was initiated for taking interim measures with regard to the subject matter of the property in dispute. Since the proceeding has been instituted under the Special Act, the parties to the suit should be as per terms of the arbitration agreement held between the parties. He has referred to the definition of party as per Section 2(h) of the Act of 1996. The arbitration agreement has also been defined in Section 2(b) of the said Act of 1996 and the Section 7 of the said Act lays down what is the arbitration agreement. Therefore, according to such provisions of the Special Act, the applicant is neither a necessary party nor a proper party to the arbitration proceedings.

4. So, the learned Trial Judge has committed a wrong in allowing the application under Order 1 Rule 10 of the C.P.C. It must be set aside.

5. On the other hand, the learned Advocate appearing on behalf of the opposite party submits that it is the applicant/opposite party no.3 herein who had purchased the vehicle in question upon taken loan from the ICICI Bank and the applicant has been paying the monthly instalments as per agreement with the bank. He has almost cleared up the dues to the bank and as such, he is the owner of the vehicle in question. Therefore, the applicant has an interest in the vehicle in question. So, the learned Trial Judge was justified in allowing the application under Order 1 Rule 10 of the C.P.C. So, the application under Article 227 of the Constitution should be dismissed.

6. Therefore, the point that emerges for decision in this application whether the impugned order could be sustained. Upon hearing the learned counsel for the parties and on going through the materials on record, I find that the subject matter of the proceeding under Section 9 of the Act of 1996 relates to a vehicle bearing registration no.JH 10E 2958. The plaintiff initiated the said proceeding for recovery of money and other reliefs contending, inter alia, that the vehicle in question was let out on hire by the petitioner to the opposite party no.1 under a hire purchase agreement in writing dated Mary 31, 2004. The opposite party no.2 is the guarantor of the transaction according to the contention of the petitioner. Thus, I find that in a proceeding under Section 9 of the Act of 1996, the party as defined in Section 2(h) of the said Act has been made the party to the proceeding. Section 2(b) of the said Act defines what is arbitration agreement and Section 7 of the said Act lays down elaborately the mode of creation of an arbitration agreement and the form of the agreement. Thus, I find that according to the definition of the arbitration agreement as per Section 7 of the said Act of 1996, the parties have been framed in the proceeding under Section 9 of the Act of 1996.

7. Now, Section 9 of the Act of 1996 lays down the provision for passing interim order, if the situation demands on urgent basis relating to protection, preservation and maintenance of the subject matter of the proceeding. This is a purely temporary measurement for giving custody of the subject matter of the proceeding. The ultimate decision will be taken by the arbitral proceeding according to the terms of the arbitration agreement. Since, the matter relates to a pure arbitration agreement, it should be confined within the parties to the arbitration agreement.

8. The applicant/opposite party no.3 herein was not at all a party to the said arbitration agreement and so his status with regard to the arbitration agreement is nothing but a third party. So, in a dispute between the parties to the arbitration agreement, if he is added, it will unnecessarily create widening the scope of dispute relating to the question of title over the subject matter of the proceeding amongst the parties to the proceeding. I have stated earlier that the proceeding under Section 9 of the Act of 1996 is purely for taking interim measures for protection over the subject matter of the arbitration agreement and in order to take such measures, the presence of the applicant /opposite party no.3 herein is not at all necessary at the time of hearing of the said proceeding.

9. The decision in the case of Sushil Paul v. HDFC Bank Ltd. & ors. in an unreported case of FMAT No.681 of 2006 (one of the Honble Division Benches of this Honble Court) has observed that the applicant need not added as a party to the arbitration proceeding. This was also followed by another Honble Single Judge (Justice S. P. Talukdar, as His Lordship then was) in C.O. No.4238 of 2006. It was also followed by another Honble Single Judge (Honble Justice S. K. Mukherjee) in an unreported case being C.O. No.1493 of 2001. These decisions are very much in consonance with the present case. Therefore, I am of the view that the applicant is neither a necessary party nor a proper party to the proceeding under Section 9 of the Act of 1996.

10. The contention of the opposite party no.3 is that he had purchased the vehicle in question upon taking a loan from the ICICI Bank and he has repaid a considerable amount to the bank. This, he has become the owner of the vehicle in question. So, he has got an interest in the vehicle in question. So, he should be impleaded as party to the proceeding under Section 9 of the said Act of 1996.

11. In this regard, upon due consideration of the matter in dispute between the parties to the arbitration proceeding, I am of the view that whatever the interest the opposite party no.3 may acquire in the vehicle in question, since he is not a party to the arbitration agreement, he should not be impleaded as an opposite party in the said proceeding. If the opposite party no.3 has acquired any interest in the vehicle in question, he has independent right over the vehicle in question and he can take the necessary steps by institution of an appropriate proceeding, if he is advised to do so, in accordance with law. So, the opposite party no.3 is at liberty to take appropriate steps for starting other proceedings / suit / case if he is advised to do so, in accordance with law. But, he has no right to interfere in a proceeding under Section 9 of the Act which is purely interim in nature for the protection and custody of the subject matter of the arbitration agreement. For that reason, he need not be impleaded as a party to the arbitration proceeding.

12. In view of what has been observed above, I am of the view that the learned Trial Judge has failed to exercise the jurisdiction vested in him and that he has committed errors of law in allowing the application under Order 1 Rule 10 of the C.P.C. by the impugned order.

13. Accordingly, the order impugned is not sustainable. So, the application succeeds. The impugned order is hereby set aside. The application under Order 1 Rule 10 of the C.P.C. filed by the opposite party no.3 on June 6, 2007 stands rejected. The application is allowed in the manner as indicated above. Considering the circumstances, there will be no order as to costs.

14. Urgent xerox certified copy of this order, if applied for, be supplied to the learned Advocates for the parties on their usual undertaking.