Vinod Kumar Chopra vs Sunshine Travel India Private ...
2001 Latest Caselaw 276 Del

JUDGMENT

A.K. Sikri, J.

1. Brief facts which are material to the context for deciding this appeal may be recapitulated first. The respondents herein filed suit for mandatory and permanent injunction against the defendants/appellants herein. The prayer in the Suit was to command the appellants to adhere to the restrictive covenants agreed to and undertaken by them in Clause 6 and 7 of the agreement dated July 15, 1997 and to do all necessary acts, deeds and things to ensure compliance of these clauses. By agreement dated July 15, 1997 the appellant No. 1 had inter alia agreed as under :

Clause 6 :

"He shall however continue to be a Director of the said company, if so desired by the Vendee, after such approval is obtained from IATA, subject to the consent of the Vendee and/or the said company and on such terms and conditions as may be agreed upon ultimately between the said company and Shri Vinod Chopra. Shri Vinod Chopra further covenants that he shall not own, acquire or possess any share or interest of any kind whatsoever in any, other travel agency located or situated in or operating from the following countries, territories, states or area : Delhi, Punjab, Haryana, U.P., Chandigarh, Himachal Pradesh, Rajasthan, J&K, Gujarat, Maharashtra, Madhya Pradesh, Bihar, West Bengal, Andhra Pradesh, Karnataka, Goa, Tamilnadu, State of Nepal, directly or indirectly or through his relatives for at least a period of two years from the time he ceases to be a Director of or to have any relationship with the said Company."

2. It was alleged in the plaint that in violation of the aforesaid agreement, Inter Air Wings Private Limited of which appellant No. 1 was the Managing Director had applied for membership of Travel Agents Association. Moreover, appellant No. 2 who is the wife of appellant No. 1 had applied to Citi Bank for over-draft/term loan facility of Rs. 10 lakhs for business purposes and therein also appellant No. 1 had been shown as a Director. It was also alleged in the plaint that some regular customers of the respondent herein had been solicited as they were now purchasing air tickets, etc. from the said Inter Air Wings Private Limited. Employees of the respondent had also been allowed to joint the aforesaid Limited Company of the appellants. The appellants herein appeared in the aforesaid Suit and filed IA No. 1921 of 1996 under Section 8 of the Arbitration and Conciliation Act, 1996 for stay of the Suit on the ground that agreement dated July 15, 1991 entered into between the parties contained arbitration agreement as per Clause 20 thereof, which reads as under :

"That in case of any dispute between the parties arises out of, relates to or concerns this agreement the same shall be referred to the arbitration of justice H. L. Anand resident of C-4/7, S.D.A. New Delhi in accordance with Arbitration Act, 1940 whose decision shall be final and binding."

3. The respondents opposed this application. Arguments were heard and by impugned Order dated 1st October, 1997 learned Single Judge was pleased to dismiss the application of the appellants. Feeling aggrieved appellants have preferred the present appeal.

4. A perusal of the impugned Order reveals that the application is dismissed mainly on the ground that mandatory injunction and permanent injunction claimed by the plaintiffs are not ordinary reliefs which are governed by the provisions of Specific Relief Act (hereinafter referred to as the Act, for short). Section 38 of the Act deals with grant of perpetual injunction. As per Section 39 the Court has discretion to grant or not to grant injunction of and also to compel performance of the requisite acts and Section 32 of the Act deals with injunction to enforce negative agreements. According to the learned Single Judge since these are not ordinary reliefs and are governed by Statute namely, the Specific Relief Act and it is within the discretion of the Court to grant or not to grant such a relief, these could be granted only by the Court and not by the arbitrator.

5. Learned counsel for the appellant submitted that the aforesaid view adopted by the learned Single Judge in dismissing the stay application was based on the judgment of this Court in the case of PNB Finance Limited vs. Shital Prasad Jain . This judgment stands overruled by the latest judgment of the Apex Court in the case of Olympus Superstructures Private Limited vs. Meena Vijay Khetan . In the said case Court noticed difference of opinion among the High Courts and ultimately disapproved the view taken by this Court in PNB case (supra) and upheld the contrary view taken by the Punjab, Bombay and Calcutta High Courts. The relevant portion of the said judgment reads as under :

Para 34 : In our opinion, the view taken by the Punjab, Bombay and Calcutta High Courts is the correct one and the view taken by the Delhi High Court is not correct. We are of the view that the right to specific performance of an agreement of sale deals with contractual rights and it is certainly open to the parties to agree with a view to shorten litigation in regular courts to refer the issues relating to specific performance to arbitration. There is no prohibition in the Specific Relief Act, 1963 that issues relating to specific performance of contract relating to immovable property cannot be referred to arbitration. Nor is there such a prohibition contained in the Arbitration and Conciliation Act, 1996 as contrasted with Section 15 of the English Arbitration Act, 1950 or Section 48(5)(b) of the English Arbitration Act, 1996 which contained a prohibition relating to specific performance of contracts concerning immovable property.

Para 35 : It is stated in Halsbury's Laws of England, 4th Edn., (Arbitration, Vol. 2, para 503) as follows :

"503. Nature of the dispute or difference - The dispute or difference which the parties to an arbitration agreement agree to refer must consist of a justifiable issue friable civilly. A fair test of this is whether the difference can be compromised lawfully by way of accord and satisfaction (Cf. Bac Abr Arbitrament and Award A)".

6. Reference is made there to certain disputes like criminal offences of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as divorce, which cannot be referred to arbitration. It has, however, been held that if in respect of facts relating to a criminal matter, say, physical injury, if there is a right to damages for personal injury, then such a dispute can be referred to arbitration (Keir vs. Leeman, 1846 9 QB 371 = 15 LJQB 360). Similarly, it has been held that a husband and a wife may refer to arbitration the terms on which they shall separate, because they can make a valid agreement between themselves on that matter (Soilleux vs. Herbst, 1801 2 Bos & P. 444; Wilson vs. Wilson, 1848 1 HL Case 538 and Cahill vs. Cahill, 1883 8 AC 420). Para 36 : Further, as pointed out in the Calcutta case [Apo 498 of 1997 and Apo 449 of (401) dated 27.1.1998 (Cal)] merely because there is need for exercise of discretion in case of specific performance, it cannot be said that only the Civil Court can exercise such a discretion. In the above case, Ms. Ruma Pal, J. observed :

"... merely because the sections of the Specific Relief Act confer discretion on Courts to grant specific performance of a contract does not mean that parties cannot agree that the discretion will be exercised by a forum of their choice. If the converse were true, then whenever a relief is dependent upon the exercise of discretion of a Court by statute e.g., the grant of interest or costs, parties could be precluded from referring the dispute to arbitration."

7. We agree with this reasoning. We hold on Point 3 that disputes relating to specific performance of a contract can be referred to arbitration and Section 34(2)(b)(i) is not attracted. We overrule the view of the Delhi High Court. "Point 3 is decided in favor of the respondents."

8. There is merit in the contention of learned counsel for the appellants. It was also a case under the provisions of the Act and the Apex Court has categorically ruled that merely because the sections of the Act confer discretion on Courts to grant relief does not mean that parties cannot agree that the discretion will be exercised by a forum of their choice namely, the arbitration and such a matter can be referred to the arbitration. The arbitration clause in the instant case is as wide as the arbitration clause in the aforesaid case decided by the Supreme Court. This judgment constitutes a binding precedent under Article 14 of the Constitution. We further observe that in the application filed by the appellant under Section 8 of the Arbitration and Conciliation Act, the appellants in para 4 of the said application had enumerated numerous disputes which had arisen between the parties and it is in the fitness of things that all these disputes are decided by the arbitrator. The present appeal is accordingly, allowed. The impugned Order dated 1st October, 1997 passed by learned Single Judge in IA 1921 of 1996 in Suit No. 200 of 1996 is hereby set aside IA 1921 of 1996 is allowed. Further proceedings in the Suit are hereby stayed. Parties may seek reference of arbitration in accordance with.

9. Suit stayed.