JUDGMENT
Sanjay Kishan Kaul, J.
1. The petitioner entered into a hire purchase agreement with the respondent in respect of compactor-cum-dryer machines on 28.06.96. The said hire purchase agreement is not available on record but a payment schedule dated 01.03.1996 has been placed on record which shows that the price of the equipment was 10,40,000/- and it was financed to the extent of Rs 9,26,000/- in 36 Installments of Rs 26,000. The agreement between the parties contained an arbitration clause and since the petitioner, after availing of the said loan facility against hire purchase of the machinery, failed to pay the Installments, the dispute was referred to the sole arbitration of Mr. Inderjit Gulati. The arbitrator made and published his award on 01.04.2001 and the petitioner aggrieved by the same has filed the present objections under section 34 of the Arbitration and conciliation Act, 1996 (hereinafter referred to as the ‘said Act’).
2. It may be noticed that the petitioner refused to participate in the arbitration proceedings. It is stated that some communications were addressed to the arbitrator objecting to the jurisdiction but the petitioner did not take any steps to file any reply or invite any order from the arbitrator on his jurisdiction.
3. Learned counsel for the petitioner does not dispute that the objections must fall within the parameters of Section 34(2) of the said Act as enunciated by the Supreme Court in Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd. in order to enable the petitioner to succeed in the present proceedings. In view of the said parameters, learned counsel for the petitioner has set forth the following submissions:
i) The claim of the respondent is barred by time.
ii) The respondent submitted to the jurisdiction of the Civil Court in Tirupur by filing a written statement in a Civil Suit filed by the petitioner and thus had given up the recourse to arbitration proceedings. The respondent had further not filed any comprehensive counter claim in response to the suit of the petitioner or an application under section 8 of the said Act.
iii) The award suffers from the vice of absence of reasons.
iv) The respondent re-possessed the machinery and the mitigation of losses, if any, of the respondent have not been taken into consideration by the arbitrator.
4. I consider it appropriate to deal each of these submissions in the sequence in which they have been made.
5. The plea of limitation arises from the payment schedule prescribed and the manner of default.
6. The payment schedule stipulated that the first Installment would be paid as per due date of 01.04.96. Learned counsel for the petitioner contends that the first five Installments were paid and the first default happened in respect of Installment due on 01.09.1996. Learned counsel drew the attention of this court to the terms and conditions agreed to between the parties. Interestingly, the agreement has not been filed but in this behalf a reference has been made to the statement of claim filed by the respondent before the arbitrator where the relevant conditions have been re-produced. The conditions referred in this behalf are conditions No. 8 & 9 which are as under:
Condition No. 8
The owners may, with or without notice to the hirer terminate the contract of hiring and forthwith retake the possession of the said machinery.
If any monthly hire or part thereof or any other amount due against the hirer for incidental expenses is in arrears and left unpaid for a period of seven days after the date fixed for its payments for any reason whatsoever and particularly notwithstanding any claim which the hirer may have in respect of the policy of insurance hereinafter mentioned.
b) If the Hirer commits or suffers any breach of the conditions/obligations therein stipulated, to be observed and performed by him or does anything or suffers any act to be done which in the opinion of the owners may prejudice their title to the said machiner.
Condition No. 9
Any such termination shall be without prejudice to any claim the owners may have in respect of any terms and conditions of this agreement and it is further agreed that if the hiring is terminated by the owners or by the hirer in the manner herein provided all hire including proportionate hire for part month up to the date of such termination and damage for breach of this agreement shall be paid by the hirers to owers and no payment, credit or allowance in respect of the payment previously made shall be made or allowed to the hirer.
7. Learned counsel for the petitioner contends that in case of any default for a particular month, and the amount remaining unpaid for a period of seven days thereafter, the respondent had a right to terminate the contract and forthwith retake the possession as per sub para (a) of Condition 8. Learned counsel further submits that the whole amount is liable to be recalled as per condition No. 9. It is however not disputed by learned counsel that in the present case no such recall took place but it is the submission of the learned counsel for the petitioner that for purposes of computation of period of limitation, the expiry period of 7 days from the first default of 01.09.1996 would be material. Learned counsel referred to Second Schedule of the Limitation Act, 1963 which reads as under:
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Description of suit Period of limitation Time from which period begins to -------------------------------------------------------------------------------------- 37. On a promissory When the default is made, note or bond payable unless where the payee or obligee by Installments, which do waives the benefit of the provides that, if default be provision and then when fresh made in payment of one default is made in respect of or more Installments, the whole which there is no such waiver. shall be due --------------------------------------------------------------------------------------
8. Learned counsel thus contends that the failure of the respondent to recall the loan would at best amount to a waiver of the right of the respondent. Again it is not in dispute that it was the option of the respondent to have recalled the loan or not to do so and the respondent cannot be mandated to exercise the option.
9. Learned counsel contends that such waiver has to be specific and mere inaction cannot be be construed as waiver. In this behalf learned counsel has referred to the judgment of the learned single judge of the Madras High Court in M. Thirumalachariar v. S.P. Varadappa Chettiar . It was observed in the said judgment that the period of limitation under Article 75 of the Limitation Act, 1908 (corresponding to Article 37 of the act of 1963) commences the moment there is a default made in the payment of any Installment due and a suit beyond three years from the date of such default would prima facie be out of time. It would however be within time only if the plaintiff had waived the benefit of the default provision. Learned single judge went on to observe that whether there is a waiver or not is a question of fact and would have to be pleaded and established. However the mere fact that waiver will be to the advantage of the plaintiff as it saves limitation will not ipso facto be a proper basis for the view that he should be assumed to have waived the benefit. On the language of the recall, it was observed that if the plaintiff wants to take benefit of waiver in order to save time, he must specifically plead and establish the same by evidence.
10. In my considered view, the plea is negated on two accounts. Firstly the conditions only gave the option to the respondent to recall the loan and did not mandate that the amount should be recalled. The fact that the respondent showed indulgence on account of the fact that there were Installments remaining unpaid and the period for payment of Installments had not expired would not come to the benefit of the petitioner. The last Installment payable is stated to be of 01.03.1999 and the agreement was terminated by the notice dated 26.05.2000 whereby simultaneously arbitration clause was invoked. Not only that, the submission of the learned counsel for the petitioner is only based on this schedule of payment dated 01.03.1996 and even the agreement has not been produced for the benefit of perusal of the court. Secondly as per the judgment in M.Thirumalachariar’s case (supra), waiver is a question of fact. The petitioner chose not to appear before the arbitrator and exercise his defense. It was for the petitioner to have taken the plea of waiver and in that eventuality the matter would have been examined on the evidence produced by the parties. The occasion for this did not arise because the petitioner did not appear before the arbitrator and did not set forth his defense. There is no cogent explanation for the non appearance of the petitioner and the petitioner cannot take advantage of his absence from the proceedings before the arbitrator.
11. It may be noticed at this stage that the provisions of Section 16(3) of the said Act permit the petitioner to raise a plea before the arbitral tribunal about the scope of its authority while Section 16(2) of the said Act deals with the plea that the arbitral tribunal does not have jurisdiction. The said two sub-sections are as under:
Section 16 Competence of arbitral tribunal to rule on its jurisdiction
…
(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defense; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
12. A plea about lack of jurisdiction of the arbitral tribunal is to be raised not later than the submission of statement of defense. The petitioner failed to appear and failed to file statement of defense. In case an order had been invited from the arbitrator on this aspect, it would have been open to the petitioner to have raised this contention. The petitioner did not do so.
13. In view of the aforesaid position, I am unable to accept the plea of learned counsel for the petitioner that the arbitrator was mandated to have discussed the issue of limitation on a presumption of lack of limitation and assuming that the petitioner would raise a plea of waiver whereby the onus would on the respondent to prove so. Such submissions based on hypothetical facts cannot be accepted and thus the plea is rejected.
14. The second plea arises from the suit filed by the petitioner. The suit was for injunction on account of threatened action of the respondent in not attempting re-possession of the machinery. It is submitted that an interim order was granted in favor of the petitioner, but learned counsel states that the order would possibly have been vacated since re-possession did occur. Learned counsel contends that the respondent filed the written statement but did not file any counter claim in respect of the amount due. In my considered view, the suit being purely of injunction, the respondent was not mandated to file its counter claim or from raising any such plea in those proceedings.
15. I am also unable to accept the plea of the learned counsel for the petitioner that the failure of the respondent to move an application under section 8 of the said Act would imply that the recourse to arbitration proceedings cannot take place. The arbitration proceedings are in respect of the monetary claim of the respondent. The suit was for the injunctive relief restraining the respondent from taking re-possession of the machinery. The scope of the two are entirely different. I see no reason to set aside the award on this ground, more so when the petitioner has not even cared to appear and contest the matter before the arbitrator.
16. Learned counsel for the petitioner sought to rely upon the judgment of the apex court in P. Anand Gajapathi Raju and Ors. v. P.V.G. Raju (dead) and Ors. where in Para 5 it has been observed as under:
5. The conditions which are required to be satisfied under sub-sections (1) & (2) of Section 8 before the court can exercise its powers are:
1) there is an arbitration agreement;
2) A party to the agreement brings an action in the court against the other party;
3) subject matter of the action is the same as the subject matter of the arbitration agreement;
4) the other party moves the court for referring the parties to arbitration before it submits his first statement on the substance of the dispute.
This last provision creates a right int he person bringing the action to have the dispute adjudicated by the court, once the other party has submitted his first statement of defense. But if the party, who wants to matter to be referred to arbitration applies to the court after submission of his statement and the party who has brought the action does not object, as is the case before us, there is no bar on the court referring the parties to arbitration.
17. The present case is not one where the petitioner had filed a suit in respect of the monetary claim and the respondent had failed to exercise the jurisdiction for seeking of reference of disputes to arbitration. The suit was in fact filed on 02.04.1997 which was much prior to the date of termination of the agreement on 26.05.2000 and the invocation of the arbitration clause. The question of the respondent claiming the amount would arise only on the termination of the agreement and recall of the amount which is an incident much after the plaint was filed by the petitioner restricted to an injunctive relief.
18. For all the aforesaid reasons, I find no merit in this contention.
19. The third plea of the absence of reasons in the award cannot be sustained as the award does not contain reasons. The plea of the learned counsel for the petitioner is that their ought to have been discussion of the evidence and the material on record before the arbitrator. I find there is discussion about the evidence and it must be kept in mind that an arbitrator is not like a court which writes a judgment. What is required to be done is that the thought process of the arbitrator should be available from the reasons set out. Not only this when the petitioner does not even appear before the arbitrator to contend and plead its stand, it can hardly be expected that the arbitrator goes into detailed reasoning to substantiate the pleas for the claims of the respondent.
20. The last aspect canvassed by the learned counsel for the petitioner arises from the re-possession hire purchase machinery. It is not clear in the absence of any plea by the petitioner before the arbitrator, as to what is the result of the re-possession of the hire purchase machinery. If such re-possession took place and the machinery has been sold, needless to say that the respondent would be liable to give the benefit of the same to the petitioner for any realization made by sale to third party and to that extent the liability of the petitioner would stand reduced.
21. Learned counsel for the petitioner in the end also sought to canvass that in respect of compensation charges for default and late payment a rate of 2 per cent instead of 3 per cent has been charged and interest has been levied at 18 per cent. Learned counsel for the petitioner sought to contend that this was not in terms of the agreement. Unfortunately, the petitioner has not even cared to file the agreement and thus it is not possible to examine as to what were the agreed rates of interest and what is the plea of the petitioner in this behalf.
22. In view of the aforesaid, I find no merit in the petition and the same is dismissed leaving the parties to bear their own costs.