M/S. J.N. Textiles vs M/S. Bon Chance & Anr.
2000 Latest Caselaw 352 Del

ORDER

Vikramajit Sen, J.

1. These are Objections filed by the Respondent/Objector for the setting aside of the Award dated 9.3.1995 published by Shri Mahender Pal Goel, Sole Arbitrator. The Objector has contended that there was no Arbitration Agreement subsisting between the parties. The clause relied upon by the Petitioner can be found printed on its Bills. It states that "any dispute regarding this bill shall be referred to the Arbitration of Delhi Hindustani Mercantile Association or their appointed Judge Tribunal and the decision shall be binding upon both parties". The Respondent/Objector has further contended that the Award deserves to be set aside since it emanates from a unilateral Reference, since the Respondent/Objector had not consented to the Arbitration. Both these points are no longer res integra. Three Learned Single Judges have come to the same opinion on this subject; it is well-settled. In Tikkanlal Sewaram Vs. Jiwandas Desraj, 1980 Rajdhani Law Reporter 681, S.B. Wad, J. had held that where the arbitration clause is contained on the bills of sale the Reference to Arbitration, of Delhi Hindustani Mercantile Association or its nominee as in the present case, was proper. The learned Judge has relied on the decision of the Division Bench of this Court in P.C. Agarwal Vs. K.N. Khosla, AIR 1975 Delhi 64. A similar arguments were raised in the case titled as M/s. Luda Ram Ved Prakash Vs. M/s. Maharani of India, AIR 1989 Delhi 169. The learned Judges held as follows:

"5. It is, indeed, not in dispute that the goods have been sold to the objector-firm vide the bills which contained the clause regarding the goods having been sold in accordance with the rules and regulations of Delhi Hindustani Mercantile Association, Delhi. The mere fact that objectors are not members of the said Association would not mean that if they had purchased the goods according to the aforesaid condition they would not be bound by the rules and regulations of the said Association. It is not disputed that the rules and regulations of the said Association contain the arbitration clause and also the mode how the reference to the arbitrator is to be made. The law does not require that an arbitration agreement must be signed by the parties before the same could not be considered binding. The only requirement of S. 2 of the Arbitration Act is that the arbitration agreement must be in writing. However, this point stands now settled by this Court in various judgments given from time to time. Reference may be made to Chaudhary Hukam Chand & Sons Vs. Sagar Silk and Sarees, , Chhajjumal Samer Chand Vs. Firm Sohan Lal Kanhaiya Lal, ILR (1971) 2 Delhi 416, and Krishan Chander Ramesh Chander & Brothers Vs. Sohan Lal, All these are single Bench judgments. However, in Sohan Lal Vs. Krishan Chander Ramesh Chander & Brothers, , a Division Bench of this court also held that if goods are sold subject to the rules and regulations of Delhi Hindustani Mercantile Association the arbitration clause appearing in the said rules and regulations would be deemed to be binding on the parties even though the purchaser is not member of the said Association and such a clause appearing in the bills on the basis of which the goods are sold even though bills are not signed by the purchaser would bring about the arbitration agreement between the seller and the purchaser. Counsel for the objectors tried to distinguish this judgment by arguing that in the said case at least some of the bills were signed by the purchaser. The ratio of law laid down in the judgment is not based on this fact alone because out of 84 bills in the said case only very few of them had been signed, but the arbitration agreement was held to be arrived at between the parties in respect of the bills including the bills which did not bear signature of the purchaser. So, mere fact that objectors had not signed the bills would not mean no arbitration agreement had come into existence between the parties when the facts show indisputably that the goods were sold on the basis of the bills which contained a printed clause that they are being sold subject to the rules and regulations of the said Association.

9. Then, it has been argued by the learned counsel for the objections that reference to Arbitrator was unilateral and thus, the whole of the proceedings before the Arbitrator were vitiated. There is no merit in this contention in view of the ratio laid down by a Division Bench of this Court in P.C. Aggarwal Vs. K.B. Khosla, . In the cited case also, there were the Rules of Delhi stock Exchange Association subject to which the contracts had been made and the said Rules provided the whole machinery as to how the disputes are to be referred to arbitration. Taking resort to the said provisions, the Arbitrator was appointed and it was held by the Division Bench that a separate reference to the arbitration is necessary only where there is a bare agreement between the parties that disputes between them shell be decided by resort to arbitration and Sec. 2(a) of the Arbitration Act is comprehensive enough to cover both a bare arbitration agreement and an agreement that dispute shall be decided by resort to arbitration with a reference of the dispute between the parties to arbitration. It was held that consent of the parties to the reference is distinct from a mere agreement to refer disputes. The consent can be given in advance in a written agreement or submission or a written comprehensive arbitration agreement in advance before the arising of the future dispute and that the nature of reference had become consensual in the law of arbitration. So, making reference to the Rules and Regulations of the Association, it was found that as parties have agreed to be bound by the said Rules and Regulations, the appointment of arbitrator and reference of disputes to the said arbitrator in accordance with the said Rule and Regulations could not be considered to be a unilateral reference. This judgment was followed in M/s. Tikkan Lal Sewa Ram Vs. M/s. Seth Jiwan Dass Des Raj, by S.B. Wad, J., where also the goods have been sold on the basis of Beejhaks containing an agreement to be bound by Rules and Regulations of Delhi Hindustani Mercantile Association. The only point raised in this case was that the reference to arbitration was unilateral and thus was void. It was held following the ratio laid down by this Court in the case of P.C. Aggarwal (supra) that such a reference is not unilateral when it is made in accordance with the Rules and Regulations of the Association and no fresh agreement for reference was needed in such like cases. I, following the aforesaid judgments, hold that a reference to the arbitration was not unilateral".

2. Yet an another decision of a learned Single Judge on this very point is to be found in Madan Mohan Rajgarhia Vs. M/s. Mahendra R. Shah & Anr., , Usha Mehra, J. held that the arbitration clause printed on the bill would be applicable even to a non-member. She had relied on the precedents reported as M/s. Krishan Chander Ramesh Chander and Bros. Vs. Sohan Lal, as well as Banwari Lal Kotiya Vs. P.C. Aggarwal, . The learned Judge observed as follows:

"Being even a non-member, he would be covered by the arbitration clause because he accepted that in the event of further dispute between him and defendant those be referred to arbitration and parties would be governed by the Rules, bye-laws and Regulations of the Exchange. Having accepted the printed clauses of the agreement i.e. the arbitration clause which formed part of the contract, the contract is to be governed by the rules, bye-laws and regulations of the stock Exchange, Bombay. Therefore, even if the plaintiff is a non-member he will still be governed by these regulations, rules & bye-laws".

3. The third contention of the learned counsel for the Respondent/objector is that the Reference was premature. The argument is that Respond that in the legal notice dated 8.11.1994 issued, on behalf of Petitioner by its Advocate, the Respondent/Objector had been called upon to pay a sum of Rs.11,63,175,80 within fifteen days of the receipt of its notice. It has been strenuously argued that this notice was received on 28.11.1994. These oral arguments are contrary to the pleadings before me inasmuch as in para D of the application it has been averred that the legal notice dated 8.11.1994 was served on 20.11.1994. The argument of the learned counsel for the Respondent/Objector proceeds that time for payment would have run out only on 13.12.1994 and hence the commencement of arbitration prior to this date would be premature. There is no substance in this argument for the reason that the period postulated by the legal notice expired on 5.12.1994. Even if the appropriate date was 13.12.1994, there is no statutory or legal stipulation that arbitration proceedings cannot be commenced. This argument have been appreciated if some payment had been tendered on or before 13.12.1994. This is not the case.

4. Learned counsel for the Respondent/Objector had also taken great pains to submit that sufficient opportunity had not been given to the Respondent/Objector to contest the proceedings before the Arbitrator. He has relied on a letter dated 30.12.1994 addressed to the Delhi Hindustani Mercantile Association bringing to their attention that it had received a notice dated 15.12.1994 on 29.12.1994 for hearing scheduled for that very date. I have perused the proceedings of the Arbitrator. The first hearing is prior to 15.12.1994 since the first order records the issuance of notice for that date. Much emphasis was laid by learned counsel for the Objector on the absence of the date of the first hearing. It was contended that this is sufficient reason to set aside the Award since it discloses the manipulation of dates and of the records. This argument is wholly misconceived. The Arbitrator is not a trained lawyer or Judge and, therefore, quite possibly, ignored the dating of his first order. This would not vitiate the proceedings. On 15.12.1994 notice to the Respondent was issued for 29.12.1994 on which date notice was again issued for 12.1.1995. On this date a representative of the Respondent/Objector had appeared. While recording the statement of the special Attorney of the plaintiff, the Arbitrator had adjourned the proceedings to 19.1.1995. On 19.1.1995 summons were again sent to the Respondent through registered A.D. post as well as under postal certificate for the next date of hearing. On that date, that is 2.2.1995 as there was no appearance on behalf of Respondents they were proceeded ex-parte. However, the Award was not published on that very date itself and there was subsequent hearings on 16.2.1995 and 23.2.1995. The Award was published on 9.3.1995 manifestly without any undue haste. The argument that sufficient opportunity had not been given to the Respondent/Objector is therefore, wholly misconceived and is rejected.

5. Learned counsel for the Respondent/Objector had thereafter raised arguments touching upon the production of only six bills and that the claim was based on books of accounts and that the bills had not been signed by the Objector. All these objections pertain to factual findings of the Arbitrator which, by a catena of judgments, is not open to challenge under Section 33 of the Arbitration Act, 1940. This Court is not sitting as a Court of Appeal. Reference may be directed towards Union of India Vs. Rallia Ram, , Coimbatore District Podu Thozillar Sangam Vs. Balasubramania Foundary & Ors, , M/s. Sudarsan Trading Co. Vs. Government of Kerala & Anr., (1989) 2 SCC 30, Hind Builders Vs. Union of India, , Jawahar Lal Wadhwa & Anr. Vs. Haripada Chakroberty, , Hindustan Construction Co. Ltd. Vs. Governor of Orissa & Ors., , Trustees of the Port of Madras Vs. Engineering Constructions Corporation Ltd., , Army Welfare Housing Organisation Vs. Gautam Construction & Fisheries Ltd., 1989 (5) Scale 296.

6. For the aforementioned reasons the Objections are dismissed with costs of Rs.5,000/-.

S.1150A/95

7. This is a petition under Sections 14 and 17 of the Arbitration Act for making the Award dated 9.3.1995, for a sum of Rs.11,65,575.80, Rule of the Court. The Respondent had filed Objections to the Award which have been dismissed.

8. I have perused the Award. It does not suffer from any illegality, apparent on the face of it. I see no cause to remit the award or to set it aside. The Award dated 9.3.1995 is made Rule of the Court.

9. The decree-sheet be drawn up accordingly.