M/S Madan Lal Khanna And Company vs M/S Hans Apparels
2008 Latest Caselaw 2127 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          FAO No. 150/2007

                                Date of Decision : December 02, 2008

M/s Madan Lal Khanna and Company               .......Appellant
                               Through Mr. Manoj Ahuja, Advocate

                                   Versus

M/s Hans Apparels                                     .......Respondent.
                                      Through None.


CORAM :
    HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA

1.    Whether Reporters of local papers may be allowed to see the
      judgment? No

2.    To be referred to the Reporter or not ?    No

3.    Whether the judgment should be reported in the Digest ?      No



SUDERSHAN KUMAR MISRA, J., (Oral)

1.             There is no appearance on behalf of the respondents

despite service.       The appellant had brought a claim before the

Arbitrator against the respondent for recovery of dues payable against

two bills namely, bill No. 751 dated 25.3.2003 pertaining to Challan

No. 11682 and Bill No. 865 dated 20.5.2003 pertaining to Challan

No. 11827. The Arbitrator allowed these claims. The respondent filed

objections to the Award under Section 34 of the Arbitration Act before

the Trial Court. The trial court allowed the objections and set aside the

Award after concluding that there is no arbitration agreement between

the parties.      Aggrieved by that order, the appellant has approached

this court.

2.             Before the trial court two main objections were taken by

the respondent. The first was with regard to the service of notice of

FAO No.150/2007                                              Page 1 of 4
 proceedings before the Arbitrator, on the respondent. He claimed that

no notice had been served on him.         The second objection was that

there was no arbitration agreement between the parties. As regards

the first objection, the learned trial court held that this objection had

no force and that in fact notices were sent by the Arbitrator at the

correct address and that the respondent was duly served. However,

with regard to his second objection, the Trial Court agreed with the

respondent.       The Trial Court has dealt with this objection in para 7

onwards in the impugned decision. Learned counsel submits that the

trial court has failed to appreciate the submission of the counsel and

also overlooked the documents on the record of the Arbitrator while

dealing with this aspect of the matter.    He submits that the Trial Court

has erroneously noted the submission of counsel for the appellant to

the effect that the terms and conditions are printed at the back of the

bill that contained the Arbitration Clause whereas, the fact is that the

relevant arbitration clause is on the face of the bill itself and that it is

prominently printed on the top of the bill. There, the following words

are used:-

             "As regarding the bill be decided by the arbitrator or
             Delhi Hindustani Marcantile Association, Chandni
             Chowk, Delhi."


3.           At the same time, on the face of the Challan also, the

following is prominently printed:-

             "ARBITRATION AGREEMENT
                   In case of any dispute regarding this bill, the
             same shall be referred total sale arbitration of Delhi
             Hindustani Marcantile Association, Chandni Chowk,
             Delhi and whose decision shall be final and binding on
             the both parties."




FAO No.150/2007                                                 Page 2 of 4
 4.           Despite the obvious mistakes in the wording of this clause,

the intent of the clause is clear which is to refer all disputes arising

with regard to the bills/challans to arbitration. This endorsement

clearly constitutes an arbitration agreement. In addition, learned Trial

Court has also concluded that no bill pertaining to the appellant or its

carbon copy has been produced before the learned Arbitrator to

conclude that an arbitration agreement exists between the parties.

This conclusion is also erroneous for the reason that the award of the

arbitrator itself notes that the original bill book and challan book were

produced before him and that they have been returned.                                      In this

context, the Arbitrator has noted as follows:-

             "The petitioner in support of his case appeared on
             20.4.2006 and produced the bill book and challan book
             of his firm. The respondent has been delivered the
             goods and on the basis of these challans, the bills are
             prepared. On bills and challans the arbitration of
             disputes         by       DELHI     HINDUSTANI               MERCHANTILE
             ASSOCIATION (REGD.) CHANDNI CHOWK, DELHI-110006
             is printed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
             . . . . . . . . . . . . . . . . . Copies of bills and challans have
             been filed along with the petition, the originals of which
             have been seen and returned. Thus, it is clear that
             there is a valid arbitration agreement between the
             petitioner and the respondent."



5.           It is therefore, obvious that the conclusion of the learned

trial court to the effect that no arbitration agreement exists between

the parties is erroneous as also the finding that copies of the bills

evidencing any such arbitration agreement has not been produced

before the Arbitrator.

6.           Perusal of the record from the learned Arbitrator which has

been requisitioned by this Court shows that a photocopy of Challan

No. 11682 forms part of the said record.                     It contains the arbitration


FAO No.150/2007                                                                      Page 3 of 4
 agreement. The record also contains a photocopy of Challan No. 11827

which also contains the same arbitration agreement. However, copies

of the corresponding Bill Nos. 751 & 865 that were taken on record by

the Arbitrator are carbon copies on plain paper and consequently, the

printed portion of the original bill does not appear on this copy.

Normally the original, printed bill containing all the particulars would

have been handed over to the respondent and not the carbon copy,

which has been retained by the appellant. At the same time, I find that

the appellant has also placed a sample copy of the bill before the

Arbitrator. This contains the arbitration clause on the top.          This

material is sufficient for concluding that even on the bills in question,

there was an arbitration clause. Even otherwise, in view of the fact

that the challans and their corresponding bills form part of the same

transaction, the clear and unambiguous arbitration agreement on the

face of each challan is by itself sufficient to conclude that the

transaction is subject to an agreement to refer any dispute in that

connection to arbitration. It is obvious that these documents escaped

the attention of the learned Additional District judge and the finding

returned by learned District Judge to the effect that there is no

arbitration agreement between the parties, cannot be sustained.

7.           In view of the above, the appeal is allowed and the

impugned order dated 28th February, 2007 passed by the learned

Additional District Judge is set aside and the Award dated 12 th

September, 2006 passed by the Arbitrator is restored.



                                          Sudershan Kumar Misra, J.

December 02, 2008 rs/sl