Case Law Details
M/s. Canara Nidhi Limited Vs M. Shashikala And Others (Supreme Court)
Conclusion: Since proceedings under Section 34 were summary proceedings and was not in the nature of a regular suit and in the arbitration proceedings, the parties had sufficient opportunity to adduce oral and documentary evidence, therefore, there was no necessity of adducing fresh evidence in the application filed under Section 34.
Held: Assessee-company was the financial institution advanced a loan of Rs.50,00,000/- to respondent No.1 and respondent Nos.2, 4 and 5 to 8 were the guarantors in respect of such loan. There was an arbitration clause in the agreement to resolve dispute between the parties. It was alleged that the first respondent did not repay the loan and failed to discharge the liabilities arising out of the transaction. The dispute between assessee and the first respondent was referred to arbitration to the third respondent-Arbitrator. Before the arbitrator, both the parties adduced oral and documentary evidence. The arbitrator passed an award and directed the respondents to pay an amount with interest at 14% per annum. Assailing the award, respondent No.1 filed an application under Section 34 of the Act in the Court of District Judge. District Judge further held that in any event, there was no necessity of adducing fresh evidence in the application filed under Section 34 of the Act. Aggrieved by the dismissal of their application under Section 151 CPC, respondent Nos.1 and 2 filed writ petitions before High Court under Articles 226 and 227 of the Constitution of India. High Court concluded that the reasoning of the District Judge not permitting respondent Nos.1 and 2 to file their own affidavits and affidavits of other witnesses to prove their case was erroneous and opposed to settled principles of law. Being aggrieved, assessee had preferred appeal before Supreme Court. It was held the proceedings under Section 34 were summary proceedings and was not in the nature of a regular suit. In the arbitration proceedings, the parties had sufficient opportunity to adduce oral and documentary evidence. High Court did not keep in view that respondent Nos.1 and 2 had not made out grounds that it was an exceptional case to permit them to adduce evidence in the application under Section 34. The said directions of the High Court amounted to retrial on the merits of the issues decided by the arbitrator. When the order of the District Judge dismissing the application filed by respondent Nos.1 and 2 did not suffer from perversity, High Court, in exercise of its supervisory jurisdiction under Articles 226 and 227 of the Constitution of India, ought not to have interfered with the order passed by the District Judge and the impugned judgment could not be sustained. The order of the District Judge dismissing the application filed under Section 151 CPC was affirmed.
FULL TEXT OF THE SUPREME COURT JUDGMENT
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