Bombay High Court
Lakshmi Machine Works Ltd vs Marathe Textiles Mills And Anr on 25 November, 2013
Bench: Anoop V. Mohta
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dgm
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
APPEAL FROM ORDER NO. 1105 OF 2013
WITH
CAA/1332/2013
Lakshmi Machine Works Ltd. .... Appellant
vs
Marathe Textiles Mills and anr
ig .... Respondents
Mr.Raju Subramanian, Senior Advocate with Mr. Paritosh Jaiswal with
Mr. Ashok Purohit and Shalaka Mali i/by M/s. Ashok Purohit & Co. for
the Appellants.
Mr. Rashid Khan with Ms. Priyanka Kothari and Mr. Balasaheb
Deshmukh i/by Mr. Balasaheb Deshmukh for respondent No.1.
Mr. Paritosh Jaiswal i/by Mr. Prashant Kulkarni for respondent No.2.
CORAM: ANOOP V. MOHTA, J.
DATE : November 25, 2013
ORAL JUDGMENT:
The Appellant/original Defendant has filed the present
Appeal from Order challenging Order dated 11.12.2012 passed by the
learned Joint Civil judge, Senior Division, Sangli, whereby
Applications at Exhibits 20 and 31, under Section 34 of the Arbitration
Act, 1940 (Act of 1940) were rejected and thereby directed the parties
to proceed expeditiously in the Suit. The Plaintiff filed the Suit on
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22.03.1993 for the breach of contract by mis-performance/delay in
supplying the machineries so agreed. The prayers are joint and
several against both the Respondents (Defendants). An mandatory
injunction was also sought against them to continue to supply the
spares of the machinery supplied by them and to provide service
maintenance.
Both the contesting Respondents/Defendants filed these
Applications within reasonable time i.e. 17.06.1994 and thereby
requested to stay the civil proceedings till the disposal of arbitration
proceedings in view of Section 34 of the Act of 1940. By the
impugned order, both the Applications were rejected. We are not
concerned at this stage the delay in rejecting such Applications which
is practically more than 19 years.
3 Admittedly, two Revisions filed by the Appellants within
limitation and thereafter challenged common order dated 11
December 2012. On 13 September 2013, the learned Judge, after
recording the submissions, permitted the Appellants to file an Appeal
from Order and thereby continued the ad interim reliefs granted in the
Revisions for four weeks. The Revision Applications were accordingly
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disposed of with liberty to the Applicants to file appropriate Appeals
from Orders. The Appeal is therefore preferred by the Appellants only
and not the Agents/Respondent No.2. There is no dispute with regard
to the acceptance of order/offer in question subject to the enclosed
General Conditions of Sale of Goods (Reference No. 771-D). Letter
dated 23 August 1989 also refers to "the enclosed General Conditions
of Sale of Goods". There is no dispute that the parties, based upon
proposal and offer, accepted the contract and proceeded accordingly.
There was no objection raised at any earliest point of time
immediately after receipt of the order of acceptance where reference
is made to the General Conditions of Sale of Goods. The objection
was raised for the first time only in reply filed to the Applications filed
by the Appellant about the non-receipt of General Conditions and
specifically the last pages which reflects arbitration clause in question.
The arbitration clause is reproduced as under :
"X ARBITRATION
Any dispute whatsoever touching the
quotation/contract including any dispute arising out of
resale under Clause VII (b) shall be referred to two
arbitrators each residing in Coimbatore holding
responsible position in a firm or company which is a
member of the Indian Chamber of Commerce
Coimbatore, one to be appointed by each party to the
dispute. The arbitrators shall before proceeding with
the arbitration, nominate an umpire qualified as above
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mentioned and in the event of their inability to agree
on an umpire the arbitrators will request the President
of the Indian Chamber of Commerce Coimbatore to
recommend an umpire and the umpire suggested by
the said President can be chosen by two arbitrators.
The arbitration will be held in accordance with the
provisions of the Indian Arbitration Act 1940 and/or
any then subsisting statutory modifications thereof."
Respondent No.1/Plaintiff submitted that as there was denial to the
acceptance and/or receipt of these Conditions including arbitration
clause, the submission that there exists no arbitration agreement
between parties, rightly accepted by the learned Judge and thereby
rejected those Applications is, in my view, unacceptable, specially
when there is nothing on record to show and/or justify and/or any
objection taken immediately after receipt of the acceptance of order
dated 23 August 1989 including the terms and conditions having
arbitration clause. Admittedly, it is a commercial contract between
the parties. The regular practice and/or usage and such terms and
conditions in the market while dealing with such goods is not new
and/or foreign to any of the parties. The dispute, if any, touching the
quotation/contract including the terms required to be referred to the
Arbitrator as prescribed under the Indian Chamber of Commerce
Coimbatore Rules, Regulations and/or Conditions. The arbitration
required to be held in accordance with the provisions of the Indian
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Arbitration Act 1940 and/or any other subsisting statutory
modification thereof.
4 The learned Judge, in my view, overlooked the basic
principle specially in view of the present facts and circumstances when
there was no objection raised at earliest point of time about the
written documents and the non-receipt of the General Conditions in
question. The basic burden lies upon the Plaintiff to prove otherwise.
At ad interim stage, the Court, in my view, failed to consider the
following observations and the principles so announced by the
Supreme Court.
5 The Apex Court in Food Corporation of India and anr v.
Yadav Engineer and Contractor,1 has observed referring to Section 9
of Code of Civil Procedure (CPC) and Arbitration Act in the following
words :-
"4 ...................... No two contracting parties
are under any legal obligation to provide for an
arbitration agreement. If the parties enter into an
arbitration agreement implying that they would
like that the disputes covered by the agreement
will be resolved by a forum of their choice, the
approach of the Court must be that parties to the
1 AIR 1982 SUPREME COURT 1302
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contract are held to their bargain. If in breach or
derogation of a solemn contract a party to an
arbitration agreement approaches the Court and if
the other side expeditiously approaches the Court
invoking the Court's jurisdiction to stay the
proceedings so that by this negative process the
Court forces the parties to abide by the bargain,
ordinarily the Court's approach should be and has
been to enforce agreements rather than to find
loopholes therein. More often it is found that
solemn contracts are entered into on the clearest
understanding that any dispute arising out of the
contract and covered by the contract shall be
referred to arbitration. It may be that one or the
other party may not have entered into the contract
in the absence of an arbitration agreement.
Therefore, when in breach of an arbitration
agreement a party to the agreement rushes to the
Court, unless a clear case to the contrary is made
out the approach of the Court should be to hold
parties to their bargain provided necessary
conditions for invoking S. 34 are satisfied."
6 Therefore, in view of above clear position of law and in the
present facts and circumstances, I see there is no reason for the
learned Judge to reject such Applications for the reason so recorded.
7 The learned Judge, in my view, therefore, is wrong while
rejecting those Applications mainly on the ground that the agreement
was not signed by the Plaintiff and Defendants and, therefore,
overlooked the arbitration clause in the agreement. It is further
observed that this can be decided by recording evidence by both the
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parties. The learned Judge is wrong in holding that the relief so
prayed cannot be granted by the Arbitral Tribunal. The injunction so
sought in prayer clause (bb), even if, is a matter of discussion for the
Arbitral Tribunal to grant relief, but considering the facts and
circumstances, now practically in view of lapse of more than 20 years,
the mandatory injunction so sought need to be tested and can be
tested even by the learned Arbitrator. Prayers (a) and (b), if we take
note of and there was delay and the reason for the damages was delay
in supply of machinery and, therefore, unless the same is considered
by the learned Arbitral Tribunal, the grant of protection as prayed in
prayer (bb) required to be tested even by the learned Arbitrator.
8 The learned counsel appearing for the Appellant, on
instructions, makes statement that they have no objection, if they
make submission before the learned Arbitral Tribunal with regard to
prayer (bb). Let the learned Arbitral Tribunal to consider the same in
accordance with law.
9 The scope, purpose and object of arbitration proceedings
in view of above decisions and the pronouncements made by Hon'ble
Supreme Court from time to time and in the present facts, case is
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made out by the Appellant to interfere with the order . Order
accordingly.
10 Even considering the submissions so raised by the learned
counsel appearing for the Plaintiffs that let trial be proceeded
expeditiously and there is no point now referring to the Arbitral
Tribunal is also unacceptable. I am inclined to observe that
considering the contract between the parties, apart from the terms
and conditions and the fact of having provisions to settle such
disputes, through the agreed Tribunals, would assist the Plaintiffs to
get the dispute resolved at earliest rather than resorting to the Civil
Court jurisdiction as done in the present case. The tenure of the
order, even if accepted, during the trial and/or after leading evidence
by and between the parties, if Court comes to conclusion that there
exists arbitration clause, the proceedings again required to be
transferred and/or stayed, as it would be for the Arbitrator to decide
the claim so raised by the Plaintiff in the Suit. There will be further
delay if the course as adopted and/or insisted by the learned counsel
appearing for the Plaintiff and/or by the Plaintiffs. This observation
is only because the learned counsel appearing for Respondent No.1
also opposing the present Appeal on the ground of delay and insisted
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to contest the matter before the Civil Court. Both the parties by
consent can proceed accordingly, but once the Application is filed
under Section 34 of Arbitration Act and submission is made and as a
case is made out, the Court cannot overlook the provisions so referred
above, merely because Respondent No.2 (Agent) failed to challenge
the order by filing separate Appeal from order, though he was party to
the order passed by the learned Judge in Revisions dated 13
September 2013. Once the common order goes, in view of above, the
submission even if any would not be sufficient to grant relief so
prayed by the Appellant in the Application as well as in the Appeal
from Order. In view of order dated 13 September 2013, the
submission that there was no separate Application filed for
condonation of delay in filing the present Appeal is of no assistance to
reject the Appeal as this Court granted liberty to the Applicant to file
appropriate Appeal from order on 13 September 2013 itself. There
was no issue with regard to the delay and now in the present Appeal,
in view of above admitted position, there is no delay in filing the
Appeal itself.
11 Considering the pendency of the dispute between the
parties, I am inclined to observe that having once allowed the
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Application filed by the Appellant under Section 34 of the Act of 1940,
the effect will be of staying the Suit and the Arbitral Tribunal will
decide the main dispute between the parties. It is therefore desirable
that the Arbitral Tribunal to adjudicate and resolve the dispute
preferably within a year. Both the parties to cooperative for early
disposal. The parties to take steps accordingly.
12 In the result, the following order :
O R D E R
(i) The Appeal from Order is allowed. The
impugned order is quashed and set aside.
(ii) The Applications at Exhibits 20 and 31 are
allowed.
(iii) The Arbitration proceeding is expedited. To be
disposed of within one year.
(iv) Both the parties to cooperate for early disposal of
even before arbitral tribunal.
(v) No costs.
13 The learned counsel appearing for Respondent/Plaintiff
seeks stay of this order. As the request is to stay its own proceedings,
the learned counsel appearing for the Appellant submitted that the
Suit should not be proceeded further in view of this order passed by
this Court.
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14 The order passed by this Court is accordingly stayed for
four weeks, but the Suit of Appellant will not be proceeded till further
order.
15 In view of disposal of Appeal from Order, Civil Application
No. 1332 of 2013 is also disposed of accordingly. No costs.
(ANOOP V. MOHTA, J.)
