Yamaha Motor India P. Ltd. vs Seema Bhatia
2012 Latest Caselaw 2555 Del

$~R-81
*   IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                Date of Decision: April 19, 2012

+                       RFA(OS) 71/2008

       YAMAHA MOTOR INDIA P. LTD.           ..... Appellant
           Represented by: Mr.Rajat Joneja, Advocate.

                              versus

       SEEMA BHATIA                          ....Respondent
           Represented by: Mr.J.P.Sengh, Senior Advocate
                          instructed by Mr.Sumeet Batra
                          and Ms.Ankita Gupta, Advocates.


        CORAM:
        HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
        HON'BLE MR. JUSTICE SIDDHARTH MRIDUL


PRADEEP NANDRAJOG, J. (Oral)

1. In the decision reported as 106(2003) DLT 708 (DB) „Jindal Aromatic vs. South Coast Spices Exports Pvt. Ltd.‟, on the subject of novation and accord and satisfaction, in para 23 it was opined as under:-

"The legal position which emerges from the aforesaid judgment is that an accord discharges the performance of obligations under the contract. A dispute pertaining to satisfaction furnishes a fresh and independent cause of action, until and unless it is provided that the performance of the satisfaction was a condition precedent for discharge under the contract. If promise is received in satisfaction, it is a good satisfaction, but if the performance and not the promise is intended to operate in satisfaction, then there will be no satisfaction without performance. Wherever there is an accord, obligations under the original contract would be discharged until and unless it is specifically

provided that the performance of the satisfaction would discharge the obligations under the contract."

2. Aforesaid principle of law was culled out with reference to a dispute, as in the instant case, to the maintainability of a claim before an arbitrator and the party so wanting relying upon an arbitration clause between the parties in a contract, in relation to which there was a dispute between the parties; and to settle the dispute the parties had drawn up a subsequent written memorandum recording the terms of the settlement i.e. the accord. Later on, in relation to the terms of the settlement, there being a dispute, question arising whether the arbitration clause in the original contract subsists. If it did, the necessary corollary would be that the civil suit is not maintainable. It was in the said context that the Division Bench observed that it all depends upon the language of the accord. If the promise under the accord was received in satisfaction, it was a good satisfaction and any dispute relating to the satisfaction could not be litigated under the previous contract. But if the performance relating to the satisfaction was intended to be the satisfaction of the obligations under the original contract, a dispute pertaining to the performance relating to the satisfaction would be a dispute under the original contract.

3. In the instant case, the jural relationship between the parties was admittedly the result of a Dealer Sales Agreement executed on November 01, 1996 having a clause that disputes between the parties shall be settled in accordance with the Rules of Indian Council of Arbitration. Disputes having arisen between the parties, they made an attempt to resolve the same by negotiations and on December

08, 2000, recorded an agreement on the subject of the dispute.

4. The written memorandum dated December 08, 2000 does not encompass, either by reference or by fresh incorporation, an arbitration clause and on the contrary expressly records: „SUBJECT TO EXCLUSIVE JURISDICTION OF DELHI COURTS.‟

5. In paragraph 11 of the impugned decision, the learned Single Judge has reproduced the 10 clauses under part „B‟ of the settlement and noting the same has concluded that the said document was not a mechanism to resolve the disputes pertaining to the Dealer Sale Agreement dated November 01, 1996, but was a new accord embodying a satisfaction of the dispute under the original Dealer Sale Agreement. It envisaged that a dispute pertaining to the performance of the satisfaction give a birth to a fresh cause of action, not under the Dealer Sale Agreement, but under the Settlement Agreement dated December 08, 2000.

6. The result is that the suit filed by the respondent to injunct the appellant from proceeding ahead to refer the dispute to arbitration has succeeded.

7. Learned counsel for the appellant does not dispute the correctness of the legal position explained by the Division Bench of this Court in para 23 of the decision in Jindal Aromatic‟s case (supra), but would urge that the learned Single Judge has misconstrued the effect of the Settlement Agreement dated December 08, 2000.

8. We do not agree with the submissions urged for the reason the 10 clauses under part „B‟ of the Agreement dated December 08, 2000 after embodying the settlement in part „A‟; of the respondent accepting liability of the amount

recorded in 2 clauses in part „A‟ sets out the recovery plan in part „B‟ and while so doing, makes a complete departure from the original agreement and requires the performance of the obligation under the accord to be discharged in the manner stipulated. Far from embodying an arbitration clause, the agreement specifically lists the same being: SUBJECT TO EXCLUSIVE JURISDICTION OF DELHI COURTS. Learned counsel for the appellant has no explanation to render as to why this clause was inserted, if it was the intention of the parties to have the dispute referred to an Arbitrator by preserving the arbitration clause in the Dealer Sales Agreement. The agreement is a complete accord and discharges obligations under the original contract. Dispute pertaining to satisfaction furnishes a fresh and independent cause.

9. Concurring with the view by the learned Single Judge, we dismiss the appeal, but in the fact and circumstances of the case, leave the parties to bear their own costs.

(PRADEEP NANDRAJOG) JUDGE

(SIDDHARTH MRIDUL) JUDGE APRIL 19, 2012 KA