Instalment Supply Limited vs Ram Narain Sharma
1997 Latest Caselaw 567 Del

JUDGMENT

C.M. Nayar, J.

1. The present petition is filed under Section 20 of the Indian Arbitration Act, 1940 for filing the Arbitration Agreement dated 26th February, 1993 in Court and for an order for reference to the disputes between the parties to the named arbitrator therein Shri Ramesh Chand, Advocate.

2. The Petitioner is a Company incorporated under the Indian Companies Act, 1956 and has its registered office at 46, Janpath, New Delhi. It carries on the business of hire purchase of motor vehicles. It is further stated that Shri Krishen Bans Bahadur is the Managing Director of the petitioner company and is duly authorised to sign and verify the plaint and to file the present petition. The petitioner, it is stated, on 26th February, 1993 on receipt of proposal from respondent No. 1 as hirer and respondent No. 2 as guarantor for hiring a Tata Diesel Bus Model LP/52 bearing chasis No. 344050 430956, Engine No. 692 D23 448013 and bearing registration No. MP-06B0065 executed a Hire Purchase Agreement. By this agreement respondent No. 1 agreed to take the said vehicle on hire from the petitioner-Company and respondent No. 2 agreed to stand guarantee for respondent No. 1 on the terms and conditions contained in the said agreement. The liability of the guarantor is alleged to be co-extensive with that of respondent No. 1 to the petitioner-Company. The agreement stipulated that respondent No. 1 agreed to pay 35 monthly instalments of Rs. 11,000/- each falling due on the 15th day of each month beginning from 15th April, 1993. Therefore, the said respondent was given preliminary possession of the vehicle. The agreement is filed with the petition and is exhibited as PW 2/1. The relevant clauses of the agreement are referred to in para 4 of the petition.

3. The broad facts are that respondent No. 1 paid only a sum of Rs. 33,000/- towards hire money as against a sum of Rs. 3,24,500/- payable by him under the above said agreement upto the date on which the agreement was terminated by the petitioner by notice dated 2nd September, 1995. A balance of Rs. 2,91,500/- was due and payable towards hire money and additional finance charges of Rs. 1,25,777/- on delayed payment in terms of the said agreement uptil September 1995 was also payable. The petitioner overall claimed a sum of Rs. 4,31,875/-. The averments are made in paragraph 5 of the petitioner which may be reproduce as follows :

"5. The Respondent No. 1, however, have paid only a sum Rs. 33,000.00 (Rupees Thirty Three Thousand only) towards hire money as against a sum of Rs. 3,24,500.00 (Rupees Three lakhs Twenty Four Thousand Five Hundred only) payable by him under the said agreement upto the date on which the agreement was terminated by the petitioner by notice dated 2-9-1995 bearing a balance of Rs. 2,91,500 (Rupees Two Lakhs Ninety One Thousand Five Hundred only) due and payable towards hiremoney Additional Finance Charges of Rs. 1,25,777.00 (Rupees One Lakh Twenty Five Thousand Seven Hundred Seventy Seven only) on delayed payment in terms of the said agreement uptill September 1995 are also payable by the respondents. A further sum of Rs. 14,598.00 (Rupees Fourteen Thousand Five Hundred Ninety Eight only) calculated upto September 1995 towards insurance premium and incidental expenses is also payable by the respondent. In all a sum of Rs. 4,31,875.00 (Rupees Four Lakhs Thirty One Thousand Eight Hundred Seventy Five only) is therefore payable by the respondents upto September 1995 which has not been paid."

4. The petitioner consequently issued notice dated 2nd September, 1995 and on failure of respondent No. 1 to pay the money and to return the vehicle to the petitioner asked for settlement of the disputes by way of arbitration as admittedly the disputes had arisen between the parties. The arbitration clause as referred to in the agreement reads as follows :

"III. All questions and matters in difference between the parties hereto or their representatives touching the construction hereof or any act or thing in regard to the rights, duties and obligations or their enforcement or performance including the failure to pay a claim under the several hereinbefore recited clauses and/ or arising out of or relating to the agreement or to the subject matter hereof shall, in accordance with the Indian Arbitration Act of 1940 or any statutory modification thereof be referred to the sole arbitration of any one of the following :

(1) Shri Ramesh Chand Advocate Delhi, (2) Shri Virender Narain, Advocate Delhi, (3) Shri D. K. Sharma, Advocate Delhi, (4) Shri K. L. Bhandwal, Advocate Delhi or his nominee, at the option of the party raising the question or matter in difference. The said party shall give ten day's notice of his intention to make the reference to the other party or parties addressed to his or their usual place of business or residence or to his or their last notified address and the notice shall be deemed to have been served when it would have been delivered ordinarily. On the expiry of the said period of 10 days the party giving the notice may make a reference to the arbitrator and it will not be necessary to make a joint submission or reference to the arbitrator. The party raising the question or matter shall deposit Rs. 1,000/- as arbitration fee with the arbitrator. The costs shall be in the discretion of the arbitrator. The Award shall be find and binding on all the parties concerned. The provisions of Act X of 1940 or any statutory modification thereof shall apply to the arbitration and submission shall not be determined by the death of the Hirer/s or the Guarantor/s or the winding up of the owners. It has been expressly explained by the owners to the Hirers and the Guarantor/s that either of the aforementioned arbitrators is usually appointed an arbitrator in the hire purchase cases accepted by the owners, but in spite of his information supplied to them, the said Hirer/ s and Guarantor/s have willingly agreed to the nomination of the said arbitrator. The names of the four persons have in consequence, been filled in before the execution of this agreement and no party shall be entitled to raise any objection against the appointment of the arbitrator on the ground of the arbitrator being a person usually or invariably begin appointed an arbitrator in cases accepted by the owners or on the ground that the arbitrator is connected in any manner with the owners.

IN WITNESS whereof the parties hereto have set their hands the day and year first hereinbefore written."

5. Notice of the petition was issued to the respondents and interim order of seizure of the vehicle was passed by this court on 22nd November, 1995. The respondents are duly served and as they did not put in appearance they were directed to be proceeded ex parte and the petitioner was directed to file affidavit by way of evidence. The said affidavit has since been filed and the averments made in the petition are reiterated.

6. In view of the above facts this petition is allowed and the disputes which have arisen between the parties as referred to in paragraph 9(a) of the petition are hereby referred to the arbitration of Shri Ramesh Chand, Advocate in the manner, as provided in Clause III of the agreement. The arbitrator shall render his award within the statutory period.

7. The petition is allowed in the above terms. There will be no order as to costs.