M/S Trans Asia Auto And General ... vs Dharmendar Kumar And Ors.
2001 Latest Caselaw 1276 Del

ORDER

V.S. Aggarwal, J.

1. M/s Trans Asia Auto and General Finance Ltd. (herein after described as the petitioner) has filed the present suit invoking Section 20 of the Arbitration Act, 1940 for filing of the arbitration agreement and for making a reference of the disputes to the named arbitrator.

2. The relevant facts are that the petitioner in due course of its business hired a motor vehicle bearing chassis NO. 344.073-771861, registered No. HRW No. 4774 to respondent No.1. A hire purchase agreement dated 7th October, 1991 was executed. Respondents No. 2 and 3 stood as guarantors. On basis of the terms and conditions mentioned in the agreement the hire purchase agreement was executed for a total sum of Rs. 1,88,200/- payable in 36 Installments. One of the terms of the hire purchase agreement was that all disputes shall be referred to the sole arbitration of Shri G.S. Sistani, Advocate and in the event his being not available or incapacitate to Shri Shashi Vansh Bahadur, Advocate.

3. Respondent No.1 after taking the vehicle is alleged to have failed to pay the monthly Installments and had only paid Rs. 94,200/- leaving a balance of Rs. 94,000/- besides that it is asserted that petitioner is entitled to recover a sum of Rs. 57,663/- towards the compensation charges for late payment. Respondent No.1 failed to pay the balance amount despite service of the notice. The terms and conditions of the hire purchase agreement provided that petitioner is the owner of the vehicle and respondent No.1 is holding the said vehicle only as a hirer, trustee and bailee. He has no right, title or interest in the vehicle. The petitioner claims that it is entitled to the damages for wrongful withholding of the vehicle and additional amount of Rs. 72,800/- is claimed. In addition to that it is asserted that petitioner is entitled to the return of the vehicle in the same condition otherwise Rs.1,50,000/- is payable, damages of Rs. 1,00,000/- to the vehicle, damages for breach of the agreement i.e. Rs. 50,000/-. On the basis of these broad facts the present petition has been filed.

4. In the written statement filed respondents No.1 and 2 have contested the same. It is alleged by way of preliminary objection that the petitioner has wrongly valued the suit only to invoke the jurisdiction of this Court by erroneously making the value of the present suit to be more than Rs. 5 lacs. It is alleged that the total value of the disputed amount does not exceed Rs. 94,000/- and, therefore, the suit should have been filed in the lost grade competent to try the same.

5. On merits it has been asserted that the petitioner had formed a bogus company with oblique motive to defraud the public at large in the name of financing loans. In the course of their business they obtained the signatures of the borrower on blank papers and documents. The total cost of the vehicle has been shown out Rs. 1,88,200/-. It was payable in 36 Installments. It does not give absolute and arbitrary power to the petitioner to put the amount of late payment as he wishes. It is even denied that there was any such arbitration agreement between the parties.

6. First question that comes up for consideration is as to whether the claim of the petitioner had been so exaggerated to bring the petitioner with in the peculiar jurisdiction of this Court. It was urged that even as per the assertions of the petitioner on basis of the agreement purported to have been set up the petitioner is not entitled to amount of more than Rs. 5 lacs, therefore, this Court should return the plaint. On the contrary learned counsel for the plaintiff vehemently urged that it is the plaint which determines the value for purposes of jurisdiction.

7. Under Section 15 of the Code of Civil Procedure every suit has to be instituted in the Court of lowest grade competent to try it. In case the Court does not have the pecuniary jurisdiction Order VII Rule 10 of the Code of Civil Procedure provides the procedure. That subject to the provisions of Rule 10(A) the plaint at any stage of the suit can be returned to the Court to which it should have been presented.

8. The fact that it is the plaint which determines the value for purposes of jurisdiction is not the subject matter of serious controversy. In the case of Radha Charan Das Vs. Mohini Behariji Maharaj and Others it was held that the Court fees payable and valuation for purposes of jurisdiction must be determined on basis of allegations made and the reliefs claimed in the suit. The defense in the written statement has no relevance. Similar was the findings recorded by the Himachal Pradesh High Court in the case of Bipan Kumar Vs. Sham Sunder . It was held that under Section 15 merely prescribes a rule of procedure. It does not deprive the Court of a higher grade of jurisdiction to entertain the suit. The Court went on to hold that a Court of higher grade could entertain the suit and even pass the judgment and the decree. Indeed to that extent there cannot be much controversy. But if it appears that the jurisdictional has been so calculated to invoke the jurisdiction of a higher Court, indeed the Court will not put its stamp of approval. In fact it would encourage a practise which should be deprecated. Once it comes to the notice of the Court that it has been so done the plaint in accordance with law can well be returned.

9. One cannot ignore in this regard the findings of the Supreme Court in the case of Smt. Nandita Bose Vs. Ratanlal Nahata . The Supreme Court was concerned about the abuse of the process of law and int his regard concluded that if a suit is over valued or grossly under valued the Court will not permit the same to be done. In paragraph 4 of the judgment page 709 the Supreme Court held:-

"4. Under Section 15 of the code every plaint should be instituted in the Court of the lowest grade competent to try it and if the value of the suit was Rs. 42,000/- only it had to be filed in the City Civil Court of Calcutta and not on the original side of the High Court. The principles which regulate the pecuniary jurisdiction of civil courts are well settled. Ordinarily, the valuation of a suit depends upon the reliefs claimed therein and the plaintiff's valuation in his plaint determines the court in which it can be presented. It is also true that the plaintiff cannot invoked the jurisdiction of a court by either grossly over valuing or grossly under valuing a suit. The court always has the jurisdiction to prevent the abuse of the process of law; Under Rule 10 of Order 7 of the Code the plaint can be returned at any stage of the suit for presentation to the Court in which the suit should have been instituted."

10. Armed with these findings necessarily one has to see whether the present suit has grossly valued for the purposes of jurisdiction or not. Exhibit PW1/10 the agreement purported to have been executed between the parties. It is this document on basis of which claim has been laid by the petitioner. It provides that a total sum of Rs. 1,88,200/- has been given as loan. It was payable in 36 Installments. The other terms and conditions which were forming part of the agreement further provided that the respondent would indemnify the owners against the loss by reason of damage or destruction of the vehicle. It would pay the compensation at the rate of 3% per mensum on the amount of hire purchase in arrears. It would pay the cost for collecting or attempting to collect the hire purchase payment or any additional taxes fees. Further more clause VI (a) of the agreement provided:-

"Clause VI(a) All disputes, difference, and/or claims, arising out of this HIRE PURCHASE AGREEMENT, inclusive of payment of hire amount or other dues payable by the hirer/hirers and guarantor/guarantors to the owners shall be settled arbitration, in accordance with the provision f the INDIAN ARBITRATION ACT 1940, or any statutory amendments thereof and shall be referred to the sole arbitration f Shri G.S. SISTANI, ADVOCATE DELHI on in case of his death, refusal, neglect, incapability to act as an arbitrator to the sole arbitration of Shri Shashi Vansh Bahadur, Advocate, Delhi. The reference to the Arbitrator shall be within the CLAUSES, TERMS AND CONDITIONS of this Agreement. The award given by the Arbitrator shall be final and binding on all the parties concerned."

11. In other words the disputes in which can be referred to the arbitrator could only be differences and disputes arising out of this hire purchase agreement inclusive of non-payment of hire amount or other dues payable by guarantors or hirer.

12. The dues that can be claimed have already been enumerated above. In this regard the petitioner claims that Rs. 94,000/- was due as hire money and Rs. 57,663/- as compensation charges. Recovery for damages for wrongful retention was also claimed accounting of Rs. 72,880/-. Regarding the other amounts for return of the vehicle in the same condition, the damages caused and damages for breach of the agreement namely Rs. 1,50,000, 1,00,000/- and Rs. 50,000/- respectively, indeed there was no agreement to recover the same and in that view of the matter the same could not be part of the hire purchase agreement. This conclusion gets further fortification from the fact that even in the notice that was served by the petitioner before filing of the suit the later amounts had not been claimed. The necessary finding, therefore, has to be that the petitioner had undoubtedly exaggerated the amount so as to bring the same within the jurisdiction of this Court. This Court in that view of the matter will not have the pecuniary jurisdiction because it should have been filed before the appropriate Court.

13. For these reasons under Order VII Rule 10 of the Code of Civil Procedure the plaint is directed to be returned with necessary endorsements and if the petitioner is so advised he may file the suit before the appropriate court having the pecuniary jurisdiction.