Tata Finance Ltd. v. Ajaya Kumar Biswal (SC) BS189017
SUPREME COURT OF INDIA

Before:- S.P. Kurdukar and R.P. Sethi, JJ.

Civil Appeal No. 149 of 2000, Arising out of SLP (C) No. 2475 of 1999. D/d. 7.1.2000.

Tata Finance Ltd. - Appellant

Versus

Ajaya Kumar Biswal and others - Respondents

Constitution of India - Article 226 - Maintainability of writ - Arbitration - Alternative remedy - Hire-purchase agreement - Truck given by appellant to respondent under the agreement - Respondent committing default in payment of instalments - Truck seized by appellant - Dispute referred to arbitration in terms of the agreement - During pendency of the arbitration proceedings, respondent filing writ petition before High Court challenging the seizure of the vehicle - High Court directing that on payment of Rs. 1 lakh vehicle be released and that the parties shall be governed by arbitration award - Held that, order of High Court not sustainable - Where arbitration proceedings are pending in terms of hire-purchase agreement, High Court under Article 226, is not justified in issuing order which would have the effect of frustrating or pre-empting arbitration award.

[Para 6]

ORDER

S.P. Kurdukar, J. - Leave granted.

2. Heard learned counsel for the parties.

3. The appellant is Tata Finance Limited which had given the truck to the 1st respondent under a hire-purchase agreement dated 4-1-1995. Under the said agreement the respondent was to pay a sum of Rs. 15,000 (fifteen thousand) per month as hire charges in addition to the additional deposit of Rs. 89,030. The regular and timely payment of hire charges was the essence of the contract and in the event of breach of any such payment the appellants were entitled to claim back the hired vehicle and also demand the balance money after giving due notice. It appears that the 1st respondent had committed breach of this agreement. Several cheques issued by him towards hire charges were dishonoured by the bankers due to insufficient funds in his account. Several letters were addressed by the appellant to the said respondent but the amounts were not paid. Finally on 5-9-1997 the appellant called upon the 1st respondent to pay a sum of Rs. 2 lakhs and 20 thousand which had become due and payable under the agreement or return the truck. After expiry of the said period under the letter dated 5-9-1997 and because of non-payment of hire charges by the 1st respondent, the appellant seized the vehicle. There doesn't seem to be any dispute that on 10-7-1998 the 1st respondent was liable to pay the outstanding hire charges of Rs. 2 lakhs and 20 thousand. The appellant in terms of the hire-purchase agreement referred the matter to the arbitrator on 1-12-1998 and the arbitrator has entered upon arbitration.

4. Respondent 1 on 7-8-1998 filed a writ petition under Article 226 of the Constitution before the High Court of Orissa at Cuttack challenging the seizure of the vehicle and a direction to the appellant to release the vehicle. The learned Division Bench of the Orissa High Court disposed of the said writ petition as under:

5. It is against this order the appellant has filed this appeal.

6. Despite several opportunities to the 1st respondent he had not filed any counter-affidavit. We have gone through the relevant material on record and are satisfied that the impugned order cannot be sustained. The effect of the impugned order is that the truck would be released to the 1st respondent and again in case he commits default, the appellant will have to run after him to follow the same procedure. Apart from this, if any damage is caused to the hired truck, that will complicate the issue further. It is also to be noted that the appellant has referred the matter to arbitration and the same is pending. In view of all these facts and circumstances of the case, the impugned order cannot be sustained and the same is required to be set aside. Accordingly, the impugned order is set aside and the appeal is allowed.

7. There will, however, be no order as to costs.

Appeal allowed.