The article is written by Susmita Kundu. The present article provides a detailed analysis of Usha Bansal v. Genesis Finance Co. Ltd. (2023 SCC Online Del 7820). It elaborates on the factual background, facts, issues, judgement of the Court, opinions of the judges and the laws applied in the said case.
Date of Judgment:December 8, 2023
Judge:Hon’ble Mr. Justice Sachin Datta
Parties: Mrs. Usha Bansal (Petitioner 1) and Sanjeev Bansal (Petitioner 2), M/S Genesis Finance Co. Ltd. (Respondent)
Facts:
M/S Genesis Finance Co. Ltd. provided loan facilities to Mrs. Usha Bansal and Sanjeev Bansal with a repayment obligation at a 24% interest rate per annum based on the loan agreement dated 30.09.2015. The Petitioners created an equitable mortgage on their property to secure the loan and submitted the original title documents to the Respondent. On 29.10.2021, the Respondent issued a legal notice demanding repayment of the loan amount and interest totalling Rs. 14,23,35,065.The Petitioners acknowledged a debt of Rs. 14,76,05,315 and proposed to pay Rs. 7,00,00,000 by 28.12.2022.In return, the Respondent agreed to release the property’s title documents upon receiving the full amount by 28.02.2022. However, as the payment was not made, the Respondent filed an application on 18.01.2022 following the rules of the Commercial Courts (Pre-Institution Mediation & Settlement) Rules, 2018[1], which was referred to the Delhi High Court Mediation and Conciliation Centre later on.
The parties participated constructively in mediation sessions, resulting in a settlement agreement reached on 14.03.2022. According to the agreement, the Petitioners agreed to pay Rs. 7 Crores with 14% interest per annum. The agreement specified that the dispute falls under The Commercial Courts Act, 2015, and both parties agreed to treat it as an Arbitral Award.Here Petitioner No.2 signed the agreement on behalf of Petitioner No.1 under coercion. As a result, Petitioner No.1 raised concerns about the validity of the agreement, claiming that she did not personally sign it and that her husband did not have the authority to sign on her behalf. Additionally, she alleged that the agreement was obtained through fraudulent means, coercion, and undue influence.
Issues:
- Does the contested settlement agreement provide sufficient grounds for invoking jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996?
- Have the current Petitions been filed within the time limit?
- Has the Respondent caused any coercion, fraud, or undue influence to the Petitioner?
Arguments:
Petitioner:
The petitioners argued that they did not receive the copy of the settlement agreement and they learned about it when they received a copy of the execution Petition filed by the Respondent.The Petitioners argued that they were under “undue influence and coercion” by the Respondent when they signed the agreement. They pointed out that the total amount payable increased significantly from Rs. 3,87,90,299/- to Rs. 14,23,35,065/- within five months.They highlighted the significant increase in the total amount and criticized the high-interest rate. They also accused the Mediator of acting illegally and withmalafide intention by merely recording the terms provided by the Respondent.
Respondent:
The Respondent contended that petitioner no.1 has not denied her connection to the email id used by her husband for communication regarding the settlement agreement. They claimed that a letter with her signature was sent from the same email ID, clearly representing the authorization for her husband to act on her behalf in the proposed settlement. It was also argued that petitioner No.1 was aware of the ongoing mediation proceedings and had informed the Delhi High Court Mediation and Conciliation Centre that petitioner No.2 was authorized to represent her. Therefore, the claim of the petitioner of not knowing the settlement proceedings became unacceptable.
Judgement:
The Delhi High Court confirmed that the Petitioner signed the Settlement Agreement, as required by Section 12A of The Commercial Courts Act, 2015. The presence of the Petitioner’s signature disproved the claim of not receiving a copy of the agreement. The Court also considered emails from the Petitioner authorizing her husband to act on her behalf. The Court made it clear that the argument that the Settlement Agreement is flawed because it didn’t acknowledge a previous communication from the Respondent, which stated a lower outstanding amount, has no impact on the validity of the Settlement Agreement and cannot be used to imply any form of coercion or pressure.The Court emphasised that allegations of fraud, coercion, or undue influence must meet a high standard of proof, as seen in previous cases like Bishnudeo Narain v. Seogeni Rai[2] and A.C. Ananthaswamy v. Boraiah[3]. Mere accusations are not enough to challenge the Settlement Agreement under Section 34 proceedings.
The Court found no evidence of fraud, undue influence, or coercion in this case. The Settlement Agreement showed that both parties agreed to the terms willingly. The petitioners did not object during mediation, indicating their voluntary participation. Even if there was disagreement, the petitioners could have defended their position in court but chose not to. The Court warned against rejecting settlements easily, as it could lead to one party taking advantage and causing unnecessary trouble. As a result, the petition was dismissed.
[1]Rule 3. Initiation of mediation process. – (1) A party to a commercial dispute may make an application to the Authority as per Form-1 specified in Schedule-I, either online or by post or by hand, for initiation of mediation process under the Act along with a fee of one thousand rupees payable to the Authority either by way of demand draft or through online;
(2) The Authority shall, having regard to the territorial and pecuniary jurisdiction and the nature of commercial dispute, issue a notice, as per Form-2 specified in Schedule-I through a registered or speed post and electronic means including e-mail and the like to the opposite party to appear and give consent to participate in the mediation process on such date not beyond a period of ten days from the date of issue of the said notice.
(3) Where no response is received from the opposite party either by post or by e-mail, the Authority shall issue a final notice to it in the manner as specified in sub-rule (2).
[2] 1951 AIR 280
[3] 2004 (8) SCC 588
