MS Cholamandalam Investment and Finance Company Limited v. Jyoti Maheshwari and Ors.

1. Present petition, filed under Article 227 of the Constitution of India, impugns order dated 07.06.2024 passed by learned Trial Court.

2. Admittedly, the petitioner herein had invoked arbitration and got an award in his favour.

3. When an execution petition, for the purpose of the enforcement of such award, was filed before the learned Trial Court, it noted that there was flagrant violation of various pronouncements of Hon’ble Supreme Court, as the appointment of Arbitrator, in unilateral manner, was prohibited. CM(M) 2903/2024 2

4. According to the petitioner, it was unaware about the above legal position but when it came to know about the same, it itself prayed before the learned Executing Court that it may permitted to withdraw the execution petition but instead of acceding to such request, learned Trial Court thought it appropriate to bring the conduct of the petitioner company to the notice of the Governor, RBI, Secretary, Ministry of Finance, Government of India for necessary remedial action. The Chairman of the petitioner company was also asked to submit his response about the conduct of the petitioner company by filing an affidavit.

5. The matter has accordingly been posted for 12.07.2024 by the learned Trial Court.

6. Attention of the Court has also been drawn towards one previous order dated 29.05.2024 passed by the learned Trial Court. Such order clearly records that an application had been filed by the Decree Holder seeking withdrawal of the execution petition. However, the learned Trial Court went to the extent of observing that the Arbitral Tribunal was also supposed to be aware of the law and the salutary pronouncements of the Hon’ble Supreme Court and should not have, therefore, ventured into arbitration. So much so, learned Trial Court directed the learned Arbitrator to attend the court proceedings through videoconferencing.

7. During course of the consideration, learned counsel for the petitioner has, very fairly, stated that in terms of Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Limited: (2020) 20 SCC 760, the appointment of the Arbitrator, in unilateral manner, was not appropriate. It is, however, stated that it was precisely for the said reason that petitioner company immediately moved an application seeking withdrawal of the execution petition. CM(M) 2903/2024 3

8. Petitioner is aggrieved as its request for withdrawal of execution has been kept in abeyance without any reason. It submits that after ascertaining the legal position when it had sought unconditional withdrawal, the learned court has rather given observations, indicating contempt and putting a question mark over its banking activity as well.

9. Apparently, learned Trial court was pained to note the manner in which the Arbitrator had been appointed. It had earlier also dismissed three execution petitions of the same petitioner and, therefore, observed that such act of the petitioner, despite suffering three dismissal orders with cost, seems to be an act of wilful defiance of judicial orders as defined under Section 2 (b) of Contempt of Court Act, 1971.It also thought it apposite to bring the same to the knowledge of RBI and Ministry of Finance.

10. The alleged conduct of the petitioner in appointing Arbitrator, unilaterally, has, evidently, nothing to do with its banking business. It cannot be construed as contempt either.

11. Be that as it may, since the petitioner had prayed for withdrawal of the execution, such request could have been acceded to, albeit, with a note of caution.

12. There was no requirement, to say the least, of asking learned Arbitrator, who had earlier been a District Judge, to join the court proceedings and to explain as to why it had entertained the claim.

13. The anxiety expressed by the learned Trial Court is though comprehensible and appreciable but not the manner of its translation.

14. During course of the consideration, learned counsel for the petitioner assured that any other matter pertaining to the petitioner company where the appointment of the Arbitrator was unilateral in nature, it would be ensured CM(M) 2903/2024 4 that no such execution petition is filed. And, if filed, the same is withdrawn, forthwith.

15. Keeping in mind the overall facts of the case and the aforesaid statement made by the learned counsel for petitioner, no real purpose would be served by keeping the aforesaid execution petition alive any longer and, therefore, the execution petition is permitted to be withdrawn.