Aravali Leasing Ltd. vs Unicol Bottlers Ltd.
1998 Latest Caselaw 293 Del

ORDER

K.S.Gupta, J.

1. This order will govern the disposal of OMPs. No.58/95, 59/95, 60/95, 61/95 & 62/95.

2. OMP 58/95 under Section 8(2) of the Indian Arbitration Act, 1940 (hereinafter referred to as the "Act") was filed, inter-alia, alleging that under a lease agreement dated 8th March, 1991, respondent No.1 agreed to take on lease the items noted in Schedule A annexed to the lease agreement on the terms and conditions contained therein from the petitioner. Respondent No.1 undertook to pay amount equivalent to 10.60% per annum of the cost as lease rental in advance on quarterly basis from the start of the first year till the end of the third year. The first lease rental instalment was due on 15th March, 1991 while the subsequent instalments were to become due after every three months. Respondent No.2 stood as a guarantor for respondent No.1 and signed the aforesaid lease agreement in that capacity. Since the respondents defaulted in making payments of the lease rentals, petitioner sent notice dated 1st October, 1993 by registered AD calling upon the respondents to pay a total sum of Rs,12,34,754/- as on 30th September, 1993 besides default interest @ 30% per annum in terms of the lease agreement. Lease agreement was also terminated. It is alleged that as per clause 21 of the aforesaid lease agreement disputes/claims arising out of the agreement were to be settled in accordance with the provisions of the Act and/or any statutory amendments thereto. Disputes/claims were to be referred to the sole arbitration of Sh. Umesh Khaitan and in case of his death refusal, neglect, or incapability to act as arbitrator, to Sh. Anil Sharma. Invoking the said arbitration clause by the letter dated 26th December, 1994, the disputes were referred by the petitioner to Sh. Umesh Khaitan and he also entered upon the reference. By a fax dated 7th February, 1975, respondent No.1 objected to the appointment of Sh. Umesh Khaitan as arbitrator and Sh. Anil Sharma as alternate arbitrator in terms of said clause 21. In view of the objection taken by respondent No.1, by the letter dated 15th March, 1995 Sh. Umesh Khaitan intimated his unwillingness to act as arbitrator. By the letter dated 3rd April, 1995 Sh. Anil Sharma too expressed his inability to act as arbitrator. It is further alleged that the petitioner thereafter served notice under Section 8(1)(b) of the Act dated 17th April, 1995 by registered AD calling upon the respondents to concur in the appointment of an arbitrator. Names suggested were that of Justice H.L.Anand(Retd.) and Justice Avadh Behari Rohatgi (Retd.). Said notice was served on the respondents on 22nd April, 1995. However, the respondents did not concur in the appointment of either of the two names suggested within 15 days' of the receipt of the notice. It was prayed that an arbitrator be appointed to adjudicate upon the disputes/claims between the parties.

3. In OMPs - 59/65, 60/95, 61/95 & 62/95 wherein separate lease agreements have been executed between the parties, the averments made are similar to those made in OMP No. 58/95.

4. Identical replies have been filed in all the five OMPs by the respondents. Execution of the lease agreements in question and taking on lease the machines as detailed in schedule A annexed to the lease agreements on the terms and conditions contained in agreements, are not disputed. However, it is stated that Ranjan Kumar Poddar who filed the petitions, is not authorised to institute or sign or verify them. It is denied that the respondents defaulted in making payments of the lease rentals as alleged by the petitioner, Receipt of the notice dated 1st October, 1993 is denied. It is further stated that the lease agreements do not constitute any guarantee of respondent No.2. It is denied that the notice dated 17th April, 1995 was served on the respondents or that the arbitration agreement shows that it was intended that the vacancy should not be supplied. Therefore, the time limit of 15 days' envisaged by Section 8(1)(b) never began to run against the respondents. It is stated that the provisions of Section 8(2) of the Act have no application to the facts of the case and the petitions thus deserve to be dismissed.

5. During the course of arguments the objections taken by Sh. Sandeep Sethi appearing for the respondents were about Ranjan Kumar Poddar's being not competent to institute, sign and verify the petitions; petitioner's notice dated 17th April, 1995 having not been served on the respondents; and the parties intention not to supply the vacancy under the lease agreement in question if the named arbitrator (s) refused or neglected to act as arbitrator. I propose to deal with these objections one by one.

6. Affidavit of aforesaid Ranjan Kumar Poddar has been filed alongwith all the five petitions. In para No.1 of the affidavit it is stated that he is the managing director of the petitioner-company and is competent to depose about the facts. In the replies respondents have not denied that Ranjan kumar Poddar is not the managing director of the petitioner-company as alleged. Under Order VI Rule 14 CPC a pleading is required to be signed by the party and his pleader, if any, Order XXIX Rule 1 CPC provides that in a suit by or against a corporation the secretary or any director or other principal officer of the corporation who is able to depose to the facts of the case may sign and verify on behalf of the corporation. Reading Order VI Rule 14 together with Order XXIX Rule 1 CPC it is evident that even in the absence of any formal letter of authority or power of attorney having been executed, the person referred to in Rule 1 of Order XXIX can be virtue of the office which he holds, sign and verify the pleadings on behalf of a party. Aforesaid Ranjan Kumar Poddar being managing director of the petitioner-company was thus competent to institute, sign and verify the petitions.

7. Coming to the objection about non-service of the notice dated 17th April, 1995, photostat copies of that notice together with the ADs are placed on the files. As is manifest from these photostat copies said notice was got sent by the petitioner-company through Khanna, Malhotra & Associates to the respondents by registered ADs and both the ADs bear the signatures of the recipient together with date (s) as 22.4.95. It is not the case of the respondents that notices were sent on wrong addresses. Under Section 114(f) of the Indian Evidence Act there arises presumption in regard to the aforesaid notice having been delivered to the respondents, in favour of the petitioner. That apart, filing of the petition(s) itself amount to notice under Section 8 of the Act on the respondents by the petitioner-company. Therefore, the objection taken to the said effect is repelled being without any merit.

8. Turning to the last objection referred to above, copies of the lease agreements in question are placed on records. They are completely silent on the point of supply of vacancy of the arbitrator. If the agreements are silent as regards-supplying the vacancy, the law presumes that the party intended to supply the vacancy. I am fortified in mine view by a decision in Prabhat General Agencies etc. Vs. UOI & Anr, etc. which was quoted with approval in a later decision in State of West Bengal Vs. National Builders by the Apex Court. Further , the language of the lease agreements in question do not show that the parties intended not to supply the vacancy in these cases. On Sh. Umesh Khaitan & Anil Sharma's refusing to act as arbitrator/alternate arbitrator the arbitration clause ceases to operate entitling the Court to appoint another arbitrator (see ; State of West Bengal Vs. National Builders ).

9. For the foregoing discussion, OMPs 58/95, 59/95, 60/95, 61/95 & 62/95 are accepted. Justice G.C.Jain, Retd. Judge of this Court is appointed as arbitrator in these cases to adjudicate upon the disputes/claims as noted in the petitions of the petitioner-company. It would be open to the respondents to prefer claim or counter-claim before the arbitrator. Arbitrator will fix his own fee and make and publish the award(s) within four months of his entering upon the reference. No order as to costs.

10. Let a copy of this order be placed on the files of OMPs No. 59/95, 60/95, 61/95, & 62/95.