Motor & General Finance Ltd. vs T.J. Josheph And Another
1997 Latest Caselaw 442 Del

JUDGMENT

Lokeshwar Prasad, J.

1. The Motor & General Finance Ltd. (hereinafter referred to as 'the Petitioner') has filed the present petition under Section 20 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act'), averring that the petitioner is a company, incorporated under the Indian Companies Act, 1913, having its Registered Office at 17-B, Asaf Road, New Delhi and Shri A. K. Ahluwalia is the General Attorney of the petitioner who is duly authorised to sign and verify the pleadings and to institute the present proceedings on behalf of the petitioner-Company.

2. It is averred that the petitioner inter alia carries on the business of the hire purchase of motor vehicles. It is further stated that on or about 31-5-1985, respondent No. 1 as hirer and respondent No. 2 as a guarantor made a proposal to the petitioner for hiring a Tata Diesel Truck, Model 1982, bearing Engine No. 695-D 02-7-39503, Chassis No. 348-002-7-37338 and Registration No. KEE-6759. The petitioner-company accepted the above said proposal and the petitioner and respondent No. 1 and respondent No. 2 entered into a hire purchase agreement dated the 31st May, 1985 whereby the respondent No. 1 agreed to take the above mentioned vehicle on hire from the petitioner and respondent No. 2 agreed to stand as a guarantor for respondent No. 1 on terms and conditions contained in the above said agreement. The liability of respondent No. 2 (the guarantor) in terms of the said agreement is co-extensive with that of respondent No. 1 to the petitioner-Company.

3. It is further averred that in terms of the hire purchase agreement respondent No. 1 inter alia agreed to pay 36 instalments of hire money (35 hire instalments each of Rs. 4,500 and last hire instalment of Rs. 2,500 only), falling due on the first day of each month beginning from 1-7-1985. It is alleged that respondent No. 1 was accordingly given the delivery/possession of the above said vehicle.

4. It is alleged that respondent No. 1 paid only a sum of Rs. 6,000/- towards hire money as against a sum of Rs. 1,60,000/-, thereby heaving a balance of Rs. 1,54,000/- payable as hire money and a sum of Rs. 87,985/- as incidental expenses, making a total of Rs. 2,41,985/-. The petitioner-Company, it is alleged got served a registered notice dated the 4th October, 1988 on the respondents, terminating the hire purchase agreement of the said vehicle and calling upon the respondents to pay a total sum of Rs. 2,41,985/- to the petitioner being the total hire money, interest on overdue instalments, incidental expenses calculated upto 1-8-1988 and return of the above said vehicle to the petitioner.

5. It is alleged that in terms of the above said hire purchase agreement, all the respondents are jointly and/or severally bound to pay a sum of Rs. 2,41,985/- calculated upto 1-8-1988 and also to return the said vehicle in the same order and in the same condition in which it was hired out (fair wear and tear alone excepted) and in the event of their failing to do so to pay the estimated market value of the above said vehicle amounting to Rs. 1,25,000/- as also further hire money till such time the vehicle is returned to the petitioner.

6. It is stated that according to Clause VI of the above said hire purchase agreement, all disputes, differences and/or claims arising out of the above said Hire Purchase Agreement are to be settled by arbitration in accordance with the provisions of the Arbitration Act, 1940 and are to be referred to the sole arbitration of Shri Inderjit Gulati, Advocate, Delhi and failing him to Shri Vikramjit Sen, Advocate, Delhi. It is prayed that the above said hire purchase agreement, containing the said arbitration clause be ordered to be filed in the court and an order for reference of disputes between the parties be made to the Sole Arbitrator Mr. Inderjit Gulati, Advocate, Chamber No. 23, Tehsil Building, Tis Hazari Courts, Delhi. The petitioner has also prayed for the cost of these proceedings.

7. As the respondent did not appear despite service, they were directed to be proceeded ex parte in the present proceedings by the learned Predecessor of this Court vide order dated 25th July, 1996.

8. The petitioner, in support of its case, has filed affidavits of Mr. A. K. Ahluwalia, General Attorney and Mr. M. C. Gupta, Accountant of the petitioner-company by way of evidence. Both the above mentioned persons, whose affidavits by way of evidence have been filed by the petitioner in support of its case, have supported the case of the petitioner-company and have also proved and exhibited the relevant/material documents.

9. On the basis of the facts, disclosed by said Mr. A. K. Ahluwalia and Mr. M. C. Gupta in their affidavits, filed by way of evidence, which have gone on record unrebutted and unchallenged, which I see no reason to disbelieve and other material on record, it is established that the petitioner is a company, duly incorporated under the provisions of the Companies Act, carrying on the business of hire purchase of Motor Vehicles and Mr. A. K. Ahluwalia, General Attorney of the petitioner-Company is duly authorised to sign and verify the pleadings and to institute the present proceedings on behalf of the petitioner-Company. It is further established that on or about 31-5-1985, respondent No. 1 as hirer and respondent No. 2 as guarantor made a proposal to the petitioner-Company for hiring the Truck in question belonging to the petitioner-Company. It is also established that the above said proposal was accepted by the petitioner-Company and the petitioner-Company and respondents Nos. 1 and 2 entered into a 'Hire Purchase Agreement' dated 31-5-1985 whereby respondent No. 1 agreed to take the said vehicle on hire from the petitioner and respondent No. 2 agreed to stand as a guarantor for respondent No. 1. The liability of respondent No. 2, in terms of the said agreement, is co-extensive with that of respondent No. 1 to the petitioner-Company. It is also established that in terms of the said hire purchase agreement, respondent No. 1 had agreed by 36 instalments of hire money (35 instalments each of Rs. 4,500/- and last hire instalment of Rs. 2,500/- only), each falling due on first day of each month, beginning from 1-7-1985. It is also established that respondent No. 1 was accordingly given delivery/possession of the above said vehicle. It is further established that respondent No. 1, however, paid only a sum of Rs. 6,000/- towards hire money, leaving a balance of Rs. 1,54,000/- payable as hire money and a sum of Rs. 87,985/- on account of incidental expenses, making a total of Rs. 2,41,985/-. It is also established that the petitioner-company issued registered notice dated 4th October, 1988, terminating the hire of the said vehicle and calling upon the respondents to pay a total sum of Rs. 2,41,985/-. In terms of the above said hire purchase agreement both the respondents are jointly and severally liable to pay a sum of Rs. 2,41,985/- calculated upto 1-8-1988 and to return the said vehicle in the same order and condition in which it was lured out and in the event of their failing to do so to pay the estimated market value of the said vehicle as also the hire money till such time the vehicle is returned to the petitioner. From the unrebutted testimony of both the above-mentioned witnesses, it is further established that the above said hire purchase agreement contained an arbitration clause according to which all disputes, differences and/or claims arising out of the said hire purchase agreement are to be settled by arbitration in accordance of the provisions of Arbitration Act, 1940 and, are to be referred to the sole arbitration of Mr. Inderjit Gulati, Advocate, Delhi and failing him to Mr. Vikramjit Sen, Advocate, Delhi.

10. In view of the above discussion, the petition of the petitioner-Company is allowed. It is directed that hire purchase agreement date the 31st May, 1985, containing the arbitration clause, be filed in the court and that the disputes, differences and/or claims mentioned in the petition are referred to the sole arbitration of Mr. Inderjit Gulati, Advocate, Delhi for decision in accordance with the provisions of the Arbitration Act, 1940 and the rules framed thereunder. In the facts provisions of the Arbitration Act, 1940 and the rules framed thereunder. In the facts and circumstances of the case no order as to costs.

11. Petition allowed.