Alliance Paints & Varnish Works ... vs Municipal Corporation Of Delhi ...
2001 Latest Caselaw 1144 Del

ORDER

V.S. Aggarwal, J.

1. M/s. Alliance Paints and Varnish Works (hereinafter described as the applicant) has field the present suit under Section 20 of the Indian Arbitration Act, 1940 seeking the Delhi Electric Supply Undertaking to file the original arbitration agreement and for referring the disputes between the parties to the arbitrator in accordance with the provisions of Arbitration Act, 1940 and clause 25 of the said agreement.

2. The facts alleged are that applicant is engaged in the manufacture and sale of alloy still castings. The petitioner had been sanctioned load of 700 (H) m + 2 KW(CP+ 8 KW (Ltg). The sanctioned load was enhanced from 9th June, 1988. The applicant is thus as bulk supply consumer of industrial power and respondent no.2 has been inspecting the area of the sub-station. The meter and metering cubicles had been installed within the premises i.e. the sub station. Respondent no.2 has been taking the reading from time to time. The same wee duly recorded in the consumer reading card.

3. On 22nd July, 1988 at about 3.00 PM it is asserted that certain employees of respondent no.2 came to the factory of the applicant on the pretext of inspection of the equipment installed in the factory of the applicant. The sub station was found locked. It was opened by the officials of respondent no.2. The inspection was effected. The applicant was informed that some of the seals affixed on the metering cubicles were fictitious. Thereafter the applicant company received a communication from the Commercial Officer that the applicant has consumed a specified unit from April, 1987 to march 1988 and that it is only entitled to use the specified units which were less. In case there is contravention his supply is liable to be disconnected. It was followed by an exorbitant provisional supplementary bill amounting to Rs. 26,32,430/-. The petitioner contended that the supplementary bill was illegal and field a civil writ petition no. 2698/88. The said writ petition was disposed of on 22nd September, 1989. In addition to that it is claimed that case was registered against the applicant with respect to offences punishable under Section 39 of the Indian Electricity Act, 120B of the Indian Panel Code read with Section 5(2) and Section 5(1)(d) of the Prevention of Corruption Act. The report of the CBI inspection exonerated the applicant with the result that the learned Special Judge, Delhi on 26th October, 1989 closed the case. Applicant claims that there is an arbitration agreement between the parties to refer the disputes arising between the parties for arbitration and hence the present petition.

4. In the written statement field on behalf of the respondents it has been asserted that there is no bona fide dispute between the parties. The cause of action involved is of criminal nature and even if the cause of action falls within the arbitration clause such a cause of action should not be submitted to arbitrator keeping in view the nature of the crime. It is reiterated that the applicant had been indulging in fraudulent extraction of energy.

5. On 1st December, 1995 this court had framed the following issues:-

1. Whether the plaintiff is an incorporated company and the petition has been signed, verified and instituted by an authorised person on behalf of the plaintiff company?

2. Whether the plaintiff has been committing theft of electricity? If so, to what effect?

3. Whether the matter cannot be referred to the arbitrator on account of the plaintiff's committing a fraud and theft of electricity?

4. Whether the disputes raised by the plaintiff are liable to be referred to the arbitration?

5. Relief.

6. Issue No.1: This issue had not been pressed on behalf of the respondent and thus is decided in favor of the applicant.

7. Issued nos. 2 and 3: The question as to if the applicant had committed theft of electricity or not indeed cannot be decided in the present application. This can only be gone into by the appropriate court as to if the applicant had committed theft of electricity or not. The result would be that this issue does not require any adjudication.

8. Issue No. 4: Section 20 of the Arbitration Act runs as under:-

Application to file in Court arbitration agreement-(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.

(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or if otherwise, between the applicant as plaintiff and the other parties as defendants.

(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the tie specified in the notice why the agreement should not be filed.

(4) Where no sufficient cause is shown, the Court shall order the agreement to be field, and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the court.

(5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable.

9. Bare reading of Section 20 of the Arbitration Act, 1940 clearly show that this had been enacted with the object that in certain cases there can be intervention of the court where there is no suit pending for referring the matters for arbitration. The necessary ingredients would be that there should be an arbitration agreement contemplated under the Arbitration Act, 1940 between the parties, disputes should arise between the parties. Any of the party can apply to the court having jurisdiction for referring the matter for arbitration after the agreement is filed. Sub-section (4) of Section 20 reproduced above clearly reveals that it is not mandatory that wherever there is an arbitration agreement reference must be made. it clearly prescribes that where no sufficient cause is shown the court shall order agreement to be filed or, in other words, if sufficient cause is shown the court may not refer the disputes for arbitration. There is o disputes between the parties that clause 25 of the agreement between the parties indicated that if the differences whatever will arise can be referred to arbitration. But as referred to above, if there are sufficient cause that is shown the court may not refer the dispute to arbitration. The expression sufficient cause as occurring under sub-section (4) to Section 20 came up for consideration before the Supreme Court in the case of Abdul Kadir Shamsuddin Bubere vs. Madhav Prabhakar Oak & Anr. . The Supreme Court held that discretion is left with the court to consider as to whether the arbitration agreement should be directed to be field and reference made to the arbitrator or not. In paragraph 12 Supreme Court provided the following guide-lines:

"The words of this sub-section leave a wide discretion in the court to consider whether an order for filing the agreement should be made and a reference made accordingly. it is neither necessary nor desirable to lay down in general terms what would be sufficient cause which would entitle a court to refuse to order the agreement to be field and thus refuse to make an order of reference. The court will have to decide on the facts of each case whether sufficient cause has been made out for not ordering the agreement to be field and not making the order of reference."

10. Similar opinion was expressed in the decision of Sushanta Kumar Nayak vs. Dilip Kumar Mohanty & ors. . Though the facts were not identical as in the present case but still it was held that it is not possible exhaustively to lay down as to what would be sufficient cause to entitle the court not to make a reference under Section 20(4). The precise findings are:

"But it is not possible to lay down exhaustively as to what would be a sufficient cause which would entitle a court not to make a reference under sub-sec(4) of S. 20 and all that can be said is that sub-sec (4) confers a wide discretion on the court not to make a reference to an arbitrator. Of course, the discretion in question has to be exercised judicially and not arbitrarily."

11. The conclusion are thus obvious. The legislature in its wisdom did not prescribe as to what would be sufficient cause which may permit the court not to make reference despite there being an agreement. Necessarily the facts and circumstances of each case have to be considered. It will not be possible to have a straight jacket formula.

12. In the present case in hand admittedly, the applicant/petitioner had earlier challenged the dispute by filing a writ petition no. 2698/88. The writ petition was disposed of with the following order:-

"Since, a disputed question of fact is involve, it is not necessary for us to go into the facts of case. However, in all fairness we direct that the letter date 25th November, 1988 and the supplementary bill annexed thereto (Annexure "F") will be treated as a notice to the petitioner. We further direct the respondents to serve on the petitioner the grounds on which demand of Rs. 26,32,430.02 ps has been raised. After receipt of such grounds the petitioner will be at liberty to give a reply thereto. Such a reply will be given within four weeks from the date of the receipt of grounds. Thereafter, the matter will be considered by the respondents and if necessary after hearing the petitioner necessary order will be passed. The order which will be passed shall not be enforceable for four weeks from the date of the order and in the meantime there will be no disconnection of the electricity connection on account of non-payment of the aforesaid sum. The petitioner will, however, go on paying the amount of the current electricity bills. The petitioner will also be at liberty to file a suit if he is aggrieved by the order to be passed by the respondents after giving hearing.

The writ petition is disposed of accordingly.

13. It is abundantly clear that this court was in the first instance approached by the applicant rather than filing an application under Section 20 of the Arbitration Act, 1940. This court even directed that the applicant at best afterwards can file a civil suit if he is aggrieved by the order passed by the respondents. The applicant indeed is aggrieved by the order and instead of filing a civil suit he has chosen to file the present petition under Section 20 of the Arbitration Act. Therefore, the petitioner himself apparently was not keen for an arbitration and he had preferred to file the civil writ petition and despite the order of the court has not cared to file the civil suit.

14. Same is the conclusion further from the fact that after the decision of the writ petition a notice was issued raising the bill and prescribing the grounds. The petitioner had sent the reply. The matter was heard by the Grievance Committee and despite that it was concluded that the applicant had indulged in manipulations of the meter and fraudulent extraction of energy. In other words, another forum had been tried and even at that time no such dispute for making the reference to the arbitration was raised. It is too late in the day therefore for the applicant to raise the dispute and thus the court finds that there are sufficient grounds for not making the reference to arbitration under Section 20 of the Arbitration Act, 1940. Keeping in view of these facts it is unnecessary to got into the controversy as to whether such a dispute could or could not be referred to. Issue is decided the applicant.

15. Relief: For the reasons given above, the suit as such is dismissed.