M/S. Atwal & Associates vs M/S. Vectra Investments Pvt. Ltd.
2008 Latest Caselaw 1140 Del

*                 HIGH COURT OF DELHI AT NEW DELHI

+                          FAO(OS)No.327/2007

       M/S. ATWAL & ASSOCIATES               ..... Appellant
                       Through Ms.Radhika Chandrasekhar, Adv.

                  versus

       M/S. VECTRA INVESTMENTS PVT LTD          ..... Respondent

Through Mr.Amit Bansal, Adv.

CORAM:

HON'BLE THE CHIEF JUSTICE HON'BLE DR. JUSTICE S.MURALIDHAR

1. Whether reporters of the local papers be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in the Digest ?

%                           JUDGMENT
                            25.07.2008

1. This appeal is filed by the defendants against the order

dated 10th May, 2007 passed by the learned single Judge in

CS(OS) No.626/2005 and IA No.5744/2006 and IA No.207/2007.

2. The order passed in IA No.207/2007 is not subject matter

of the appeal.

3. IA No.5744/2006 has been filed by the defendants under

Section 8 of the Arbitration and Conciliation Act, 1996. The

learned single Judge has noted that the arbitration clause under

the hire-purchase agreement dated 4th July, 2000 was restricted

to disputes arising out of this agreement between the parties and

would, therefore, not govern the disputes which are outside the

purview of the same. It has been further noted that the plaintiff

has made a claim in the present suit for an amount of

Rs.34,69,593/- towards an amount given as loan; an amount of

Rs.76,13,726/- on account of sale of dumpers; and a running

lease account of Rs.16,05,272/-. It has been noted that these

three claims do not arise out of the agreement dated 4th July,

2000. The Apex Court in Sukanya Holdings (P) Ltd. v. Jayesh

H. Pandya and another {(2003) 5 SCC 531} has pointed out

that there is no provision in the Arbitration and Conciliation Act,

1996 when the subject-matter of the suit includes subject-matter

of the arbitration agreement as well as other disputes, requiring

the matter to be referred to arbitration. There is also no

provision for splitting the causes or parties and referring the

subject-matter of the suit to the arbitrators. That apart, it is

further seen that the agreement dated 4th July, 2000 stood

exhausted inasmuch as by letter dated 25th May, 2001, the

defendants offered to purchase the vehicles of the plaintiff which

were the subject-matter of the agreement. This offer was

accepted by the plaintiff and consequently, the amount which

was due and payable by the defendants came to be secured by

way of demand promissory notes and the deed of guarantee.

Thus it is clear that the suit claim is beyond the arbitration clause

contained in the agreement dated 4th July, 2000.

4. The suit being CS(OS) No.626/2005 has been instituted by

the plaintiff under Order XXXVII of the Code of Civil Procedure

seeking a decree for recovery of Rs.1,26,88,591/- against the

defendants with pendente lite and future interest. As the

defendants successfully avoided service of the summons, the

plaintiff moved an application seeking service by the substituted

modes of publication of the citation in the daily newspaper and

affixation of the summons at their last known address and on the

notice board of this Court, which was directed by this Court by

order dated 29th October, 2005. The defendants were duly

served and they put in their appearance on 19th April, 2006. The

application filed by the defendants under Order XXXVII Rule 3 of

the Code of Civil Procedure for condonation of delay in filing the

memorandum of appearance was allowed by the order dated 9th

January, 2007. The plaintiff thereupon served the summons for

judgment on the defendants on 3rd April, 2007. However, the

defendants failed to take any steps in accordance with law within

the statutory period of limitation. In these circumstances the

matter was proceeded ex parte and decree came to be passed

for a sum of Rs.1,26,88,591/- with interest @ 10% per annum

with effect from the date of filing of the suit i.e. 4th April, 2005.

5. The suit claim was on account of three separate

transactions. The first was a hire-purchase agreement dated 4th

July, 2000 whereunder the defendants took on hire-purchase

basis two dumpers for a period of 12 months. The defendant

No.2 had given his personal guarantee in respect of the two

vehicles and the defendants had agreed to pay a sum of

Rs.45,000/- per month for each dumper as hire charges and the

defendants had the rights to purchase the vehicle during the

period of one year. By a letter dated 25th May, 2001, the

defendants offered to purchase the two vehicles of the plaintiff at

a price of Rs.24,62,500/- each. In the event of default, the

defendants were liable to pay interest @ 24% per annum. That

offer of the defendants was accepted by the plaintiff by letter

dated 30th May, 2001. The two vehicles were duly handed over

by the plaintiff to the defendants on hire-purchase agreement.

The defendants failed to adhere to repayment schedule and

defaulted in the payment. The second transaction is of the year

2001. The defendants approached the plaintiff for short term

loans. The plaintiff provided three loans to the defendants. The

defendants executed three demand promissory notes and

defendant No.2 also executed his personal guarantee to secure

the loans. The defendants had agreed to pay interest @ 18% per

annum on the loan amount. The defendants also issued post

dated cheques to secure the loan. There is no dispute that the

defendants defaulted in making payment. The third transaction

is of lease of certain vehicles by the plaintiff company to the

defendants and for these leases the defendants were liable to

pay rental on the basis of rate per trip multiplied by the number

of trips. It is brought on record that the defendants confirmed the

balance dues in the three accounts as on 31st March, 2002 and

signed their accounts. Again, the balance was confirmed by the

defendants as on 31st March, 2003 and also as on 31st March,

2005. The evidence of the plaintiff has gone unrebutted and

uncontroverted and the plaintiff has been able to prove that it is

entitled to such claim.

6. Counsel appearing for the appellants/defendants is unable

to show any cogent reason for not filing the reply and seeking

leave to defend.

7. In our opinion, there is absolutely no substance in the

appeal. The appeal is dismissed.

                                    CHIEF JUSTICE


                                    S.MURALIDHAR
JULY 25, 2008                          (JUDGE)
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