Ismaco Engg. & Finance Ltd. vs M/S. Piyush Sewing Machine ...
1996 Latest Caselaw 580 Del

JUDGMENT

Lokeshwar Prasad, J.

1. The petitioner, named above, has filed the present petition under Section 20 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') with the prayer to direct the respondents to file the Arbitration Agreement dated the 13th February, 1990 and to appoint an arbitrator directing him to enter upon reference and adjudicate all disputes/differences/claims of the petitioner in terms of the said Agreement and thereafter to make his award and file the same in the court.

1.2. It is alleged that the petitioner company is engaged inter alia in the business of financing through schemes of hire purchase and that the petitioners sister concern known as Singer India Limited (hereinafter referred to as 'SIL') is engaged inter alia in the business of manufacturing and selling Sewing Machines under the brand names of 'Singer' 'Merrit' etc. The petitioner company has been giving on hire purchase basis the Sewing Machines manufactured by its sister concern SIL to the authorised dealers appointed by SIL. It is further alleged that respondent No. 1 was appointed as dealer by SIL in the year 1979. On 13.2.1990 the petitioner entered into an agreement of hire purchase with respondent No. 1 at New Delhi whereunder the petitioner agreed to hire to respondent No. 1 company, Sewing Machines belonging to the petitioner on terms and conditions contained in the said Agreement (Exhibit P-3). As per the case of the petitioner, respondent No. 1 is a partnership concern and respondents 2 to 6 are the partners of respondent No. 1 and respondent No. 7 is the guarantor under the above said agreement (Exhibit P-3) who inter alia has guaranteed the fulfillment by respondents 1 to 6 of their obligations under the said Agreement.

1.3. It is further the case of the petitioner that the petitioner agreed to let on hire Sewing Machines, belonging to the petitioner company on terms and conditions contained in the said Agreement. The details of the Sewing Machines let out on hire petitioner to the respondents pursuant to the said agreement are also set out in Annexure A to the said Agreement.

1.4. Under the terms of the said agreement, the respondents were liable to pay as and by way of hire charges an initial amount of Rs. 40,213.48 and the balance amount of Rs. 4,48,278/- in twelve monthly instalments (the first eleven instalments being for a sum of Rs. 37,357/- each and the 12th and final instalment being for a sum of Rs. 37,351/- only.

1.5. It is averred that towards the initial hire amount of Rs. 40,213.48 respondent No. 1 issued in favour of the petitioner a cheque bearing No. 969552 dated 27.1.1990 drawn on 'Rajkot Nagrik Sahkari Bank Ltd.' and for the 12 months instalments, the respondent No. 1 also issued 12 post dated cheques drawn on the above said Bank. The above mentioned cheques including the cheque for the initial hire amount, on presentation, were dishonoured. It is alleged that despite repeated requests made to the respondents, the respondents till the date of the filing of the petition have paid only a sum of Rs. 80,005/- and an amount of Rs. 4,15,685.48 is due and payable to the petitioner by the respondents by way of outstanding hire charges under the terms of the said Agreement and the respondent as per the case of the petitioner, are jointly and severely liable to pay the said amount together with interest @ 24% per annum.

1.6. The petitioner also addressed a registered notice dated the 18th May, 1991 calling upon the respondent to pay the aforesaid amount. The respondents were also called upon to deliver the Sewing Machines forming the subject matter of the said Agreement. However, the respondent replied to the said notice by a letter dated the 15th June, 1991 through their Advocate Shri Sarojkumar N. Acharya inter alia requesting for a copy of the said Agreement which the petitioner supplied without prejudice to its rights.

1.7. The said Agreement contained an arbitration clause (Clause 14), Vide letter dated 3.5.1991 the petitioner requested Shri V. P. Shriyan, the sole arbitrator under the said agreement, to enter upon the reference and arbitrate the disputes and differences which had arisen between the parties. However, said Shri V. P. Shriyan the named arbitrator, refused to act as an arbitrator on the ground of ill health.

1.8. It is alleged that this Court has territorial jurisdiction to entertain the present petition as the order for letting out on hire the Sewing Machines was placed at New Delhi and thereafter the said agreement was entered into between the parties at New Delhi and all the amounts under the said agreement were due and payable at the registered office of the petitioner company at New Delhi. It is alleged that the entire cause of action which forms the subject matter of the present petition has arisen at New Delhi i.e., within the jurisdiction of this court. It has been prayed that the respondents be directed to file the arbitration agreement dated 13.2.1990 and an arbitrator be appointed directing him to enter upon the reference and adjudicate all disputes, differences and claims between the parties under the said agreement.

2. Notice of the petition was issued to the respondent. Since direct service was not possible on the respondents, the respondents were served by publication of notice in the daily. 'The Indian Express' (Ahmedabad Edition) dated the 23rd April, 1995. As the respondents did not care to appear despite the publication of the notice in the newspaper they were directed to be proceeded ex parte in the present proceedings by the learned predecessor of this court vide order dated 14.11.1995.

3. The petitioner has adduced the evidence in support of its case by means of affidavit and has filed the affidavit of Ms. Vimmy Trehan by way of evidence. Ms. Vimmy Trehan in her affidavit has fully supported the case of the petitioner and has proved the material documents including the hire purchase agreement dated the 13th February, 1990 (Exhibit P-3), the dishonored cheques collectively marked and exhibited as Exhibit P-4 copy of letter dated 18.5.1991 (Exhibit P-5), letter dated 15.6.1991 (Exhibit P-6), letter dated 28-8-1991 (Exhibit P-9). From the ex parte evidence adduced by the petitioner by means of affidavit which has gone on record unrebutted and unchallenged which I see no reason to dis-believe, the case of the petitioner, in my opinion stands amply proved. I, consequently direct that the arbitration agreement (Exhibit P-3), be filed in the court and since Shri V. P. Shriyan, the named arbitrator, has refused, to act as an arbitration on the ground of ill health, I appoint Mr. Justice (Retd.) S. C. Jain, a former Judge of this court as sole arbitrator for decision. The arbitrator shall fix his own fees, to be initially paid by the petitioner. No order as to costs. The order is ex parte.