The Motor & General Finance Ltd. vs S. Nirpal Singh And Anr.
2002 Latest Caselaw 88 Del

JUDGMENT

D.K. Jain, J.

1. By this petition under Section 20 of the Arbitration Act, 1940, the petitioner seeks a direction for filing of the hire purchase agreement dated 8 April 1991, containing the arbitration clause and for reference of the disputes, which are stated to have arisen between the parties, to the sole arbitration of Shri Inderjeet Gulati, Advocate.

2. Background facts, giving rise to the present petition, in brief, are: that the petitioner is engaged in the business of hire purchase of motor vehicles. In April 1991, respondent No. 1 as hirer and respondent No. 2 as the guarantor, approached the petitioner for hiring of a Tata diesel truck model 1991. Accepting the proposal, the petitioner and the respondents entered into a hire purchase agreement on 8 April 1991 whereby respondent No. 1 agreed to pay 35 Installments of hire money (20 hire Installments of Rs. 10,300/- each and 15 hire Installments of Rs. 10,200/- each) falling due on the 7th day of each month, beginning from 7 June 1991. Respondent No. 1 was accordingly given delivery/possession of the said vehicle.

3. Respondent No. 1, however, paid only a sum of Rs. 1,01,300/- towards hire money as against the sum of Rs. 3,38,600/- and Rs. 20,600/- towards compensation expenses as against Rs. 1,11,592/-, which are payable as on 1 February 1994 as per the hire purchase agreement, thus leaving a balance of Rs. 2,37,300/- payable as hire money and Rs. 90,992/- as incidental expenses, making a total of Rs. 3,28,292, due to the petitioner from the respondents.

4. Having failed to realise the said amount the petitioner company sent a registered notice, dated 25 January 1994, to the respondents, terminating the hire of the said vehicle and called upon the respondents to pay a sum of Rs. 3,40,379/- being the total of the hire money, interest on overdue Installments and incidental expenses, calculated up to 25 January 1994 and to return the said vehicle to the petitioner. The respondents were warned that if they fail to pay the said amount forthwith the petitioner will take appropriate steps to enforce its rights against the respondents under the said agreement by way of arbitration or otherwise. However, there was no response from the respondents. Hence the present petition.

5. The respondents remained un-represented despite service. Accordingly, they were proceeded against ex parte and the petitioner was required to prove their case by adducing evidence by way of affidavit. The requisite affidavit has been filed by Shri Mool Chand Gupta, Accountant of the petitioner company. Along with the affidavit, the aforenoted hire purchase agreement, Ex. PW-2/1 has also been filed.

6. I have heard learned counsel for the petitioner.

7. The hire purchase agreement dated 8 April 1991, entered into between the petitioner and the respondents, stands proved. The agreement also reflects the amounts due to the petitioner on various dates. Obviously, the respondents are in default in not paying the hire Installments in terms of the said agreement. They failed to pay these Installments despite service of notice dated 25 January 1994. Therefore, the disputes have arisen between the parties in terms of the hire purchase agreement.

8. Hire purchase agreement contains an arbitration clause, which reads as under:

"Clause VI-(a). All disputes, differences, and/or claims, arising out of this hire purchase agreement, inclusive of non-payment of hire amount or other dues payable by the hirer/hirers and guarantor/guarantors to the owners shall be settled by arbitration, in accordance with the provisions of the Indian Arbitration Act, 1940, or any statutory amendments thereof and shall be referred to the sole arbitration of Shri Inderjeet Gulati, Advocate, Delhi or in case of his death, refusal, neglect, incapability to act as an arbitrator to the sole arbitration of Shri D.L. Bhargava, 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.

9. As noted above, since the disputes and differences have arisen between the parties out of the said hire purchase agreement,it has to be resolved by the sole arbitration of Shri Inderjeet Gulati, Advocate.

10. The next question that arises for consideration is whether the arbitration proceedings before the Arbitrator, being appointed, would be governed by the Arbitration Act, 1940 or the Arbitration and Conciliation Act, 1996, as the old Act stands repealed.

11. In my view the issue is no longer res integra. A similar arbitration clause came up for consideration before the Supreme Court in Rani Constructions Private Limited (CA 61/99), dealt with in Thyssen Stahlunion GMBH v. Steel Authority of India Limited , and the Court held that the parties to the agreement were clear in their minds that it would be the old Act or any statutory modification or re-enactment of that Act which would govern the arbitration and, therefore, in that situation the provisions of the arbitration law existing at the time of appointment of the arbitrator would apply.

12. Consequently, the petition is allowed and the disputes between the parties are referred to the sole arbitration of Shri Inderjeet Gulati, Advocate for adjudication. The arbitration proceedings before the learned Arbitrator shall be governed by the 1996 Act.

13. The petition stands disposed of in the above terms.