Inox Air Products Ltd. vs Rathi Ispat Ltd.
2007 Latest Caselaw 585 Del

JUDGMENT

T.S. Thakur, J.

1. This appeal arises out of an order dated 29.9.2006 passed by a Single Judge of this Court in Original Civil Suit No. 1766/2006 whereby the plaint in a suit for injunction filed by the plaintiff/appellant has been returned to it for presentation before the competent Court. The controversy arises in the following backdrop.

2. The plaintiff/appellant herein manufactures and sells industrial equipment used for the manufacture of industrial gases. In terms of two separate agreements, one executed on 17.12.2003 and the other on 16.5.2005 two different Plants and Equipment manufactured by the plaintiff were leased by it to the respondent who has established a mini steel plant at Ghaziabad in the State of Uttar Pradesh. The agreements set out the terms and conditions subject to which the equipment had to be put to use by the lessee and the rentals payable to the appellant/Lesser for the same. Among other terms the agreements stipulated that in the event of any dispute arising between the parties, the same shall be referred for arbitration to three Arbitrators one each to be nominated by the Lesser and the lessee and the third to be nominated by the two Arbitrators so appointed.

3. The lease agreements mentioned above were accompanied by two separate 'Operations and Maintenance Agreements' executed between the parties under which the 'Plants and Equipment' leased by the appellant had to be run and maintained by it for the benefit of the respondent/lessee. These agreements also contain arbitration clauses like the ones found in the lease agreements, which read as under:

All disputes, differences, claims whatsoever between the parties arising under or relating to this Lease Agreement shall be referred to arbitration of three arbitrators, one to be nominated by the Lesser, one to be nominated by the LESSEE and the third to be nominated by the two arbitrators so appointed by the Lesser and the LESSEE. The decision of the Arbitrators shall be final and binding on both the parties. The venue of arbitration proceedings will be New Delhi and conducted in accordance with the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof.

4. Disputes having arisen between the parties, the plaintiff/appellant appears to have cancelled the agreements and demanded the return of the equipment lying with the respondent. The respondent, in turn, raised certain disputes as to billing and also consequential claims against the appellant. Since the disputes could not be resolved amicably, the plaintiff/appellant filed Suit No. 1766/2006 on the original side of this Court for the following reliefs:

A. A decree for permanent injunction in favor of the plaintiff and against the defendant thereby restraining the defendant, its employees, agents, representative or any person acting on its behalf from running or in any manner using the three Cryogenic Air Separation plants of the capacity of 2 X 200 6 Cum/hr and 600 Cum/hr along with compressors, storage vessels and other equipments of the plaintiff details whereof are given in Schedule I attached to Plant and Equipment Lease Agreements dated 17.12.2003 and dated 16.05.2005 and installed in the premises of defendant at Ispat Nagar, Ghaziabad (U.P) either themselves or by engaging some third agency or in any manner causing any damage to the said Plants and equipment, belonging to and exclusively owned by the plaintiff.

B. A decree for mandatory injunction in favor of the plaintiff and against the defendant thereby directing the defendant, its employees, agents, representatives or any person acting on its behalf to allow access and entry to the engineers/representatives of plaintiff into the premises of the defendant at Ispat Nagar, Ghaziabad (U.P) for ensuring security upkeep and maintenance of the equipment of the plaintiff installed in the premises of the defendant and in cooperating in dismantling and removal of 3 Cryogenic Air Separation Plants of the capacity of 2 X 200 Cum/hr and 600 Cum/hr along with compressors, storage vessels and other equipments of the plaintiff, details whereof are given in Schedule I attached to Plant and Equipment Lease Agreements dated 17.12.2003 and 16.05.2005 and installed in the premises of the defendant at Ispat Nagar, Ghaziabad.

C. Cost of the proceedings be also awarded to the plaintiff as against the defendant.

D. Such other further orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case in favor of the plaintiff and against the defendant.

5. The defendant/respondent herein appeared on caveat before the learned Single Judge and raised a preliminary objection as to the territorial jurisdiction of the Court to entertain the suit. That objection found favor with the learned Single Judge who by the order impugned in this appeal held that it had no jurisdiction to entertain the suit and directed the plaint to be returned to the plaintiff/appellant for being presented to the competent Court. The present appeal filed by the plaintiff assails the correctness of that view. When the appeal initially came up before us on 29.11.2006, learned Counsel for the parties submitted that the parties were not averse to referring all disputes between them in relation to their claims and counter claims to an agreed Arbitrator in terms of the arbitration clauses found in the agreements executed between them which as noticed earlier are in similar terms. The case was, therefore, adjourned to enable the parties to come up with a formal statement for a reference to an Arbitrator agreeable to both the sides. When the matter came up before us today, learned Counsel for the parties submitted that the parties were agreeable to refer all disputes, claims, counter claims against each other arising out of 'Plant and Equipment Lease Agreements' dated 17.12.2003 and 16.5.2005 and 'Plant and Equipment Operation and Maintenance Agreements' dated 17.12.2003 and 16.5.2005 to the sole arbitration of Justice V.N. Khare, former Chief Justice of India. In the light of that submission we see no reason why a reference cannot be made to the agreed sole arbitrator for adjudication of the disputes between the parties. We accordingly appoint Justice V.N. Khare, former Chief Justice of India as sole arbitrator to adjudicate upon the following disputes:

(i). All disputes, claims, counter claims raised by the parties against each other in relation to and arising out of Plant and Equipment Lease Agreements dated 17.12.2003 and 16.5.2005 and Plant and Equipment Operation and Maintenance Agreements dated 17.12.2003 and 16.5.2005.

(ii). All issues/controversies involved in the suit for injunction filed by the plaintiff/appellant out of which this appeal arises as also those arising out of Suit No. 1744/2006 for declaration, injunction filed by the respondents against the appellant and pending in the Court of Civil Judge, Senior Division, Ghaziabad (U.P).

6. The Arbitrator shall be entitled to make a common award in regard to all the above disputes. He shall also be free to fix his fee which shall be paid by the parties in equal proportion. The question regarding the territorial jurisdiction of the Courts in Delhi to entertain suits or other proceedings in relation to the agreements or the arbitration under them is left open. The parties shall be free to seek such interim and final directions as may be available to them in law from the sole Arbitrator.

7. The suit filed by the plaintiff and the present appeal shall stand disposed of in terms of the above directions. As a consequence of this order Suit No. 1744/2006 pending in the Court of Civil Judge, Senior Division, Ghaziabad (U.P.) shall be deemed to have been disposed of in terms of this order. The parties shall be free to place a copy of this order before the said court for passing a formal order to that effect.

8. Mr. Mehta, learned Senior counsel appearing for the respondent submits that since Justice V.N. Khare former Chief Justice of India has not so far consented to act as the sole Arbitrator, there is need for making a provision regarding the course of action to be followed in the event of his Lordship declining to take up the assignment. We make it clear that in the event of Justice Khare declining to accept the assignment or continue as sole Arbitrator, the matter shall revert back to this Court for appropriate orders. It shall then be open for this Court to decide all questions arising for consideration including whether the arbitration should be by three arbitrators as originally envisaged or by a sole arbitrator as now agreed by the parties.

9. No costs.

10. Order dusty.