Delhi District Court
Delhi Transport Corporation vs M/S. Auto India on 21 March, 2012
1
IN THE COURT OF SH. SANJEEV AGGARWAL
LD. ADJ03 (CENTRAL) / DELHI
Suit No. 90/08
DELHI TRANSPORT CORPORATION,
THROUGH ITS PRINCIPAL OFFICER AND
SECRETARY, D.T.C. BOARD, I.P. ESTATE,
RING ROAD, NEW DELHI. ....PLAINTIFF
VERSUS
1. M/S. AUTO INDIA, A PARTNERSHIP FIRM
REGISTERED UNDER THE PARTNERSHIP
ACT, HAVING ITS OFFICE AT 123/414,
MOTOR MARKET, PARTAP GANJ, KANPUR,
U.P.
2. SH. NEB RAJ BHATIA, PARTNER
M/S. AUTO INDIA, 123/414, MOTOR
MARKET, PARTAP GANJ, KANPUR, U.P.
3. SH. MAHESH KUMAR BHATIA, PARTNER
M/S. AUTO INDIA, 123/414, MOTOR
MARKET, PARTAP GANJ, KANPUR, U.P.
4. SH. SATISH KUMAR BHATIA, PARTNER
M/S. AUTO INDIA (NOW DECEASED) &
WHOSE LRs ARE AS FOLLOWS :
(A). MRS. SUSHMA BHATIA
W/O. LATE SH. SATISH KUMAR BHATIA
(B). SH. SUMESH BHATIA
S/O. LATE SH. SATISH KUMAR BHATIA
(C). MASTER SHAILESH BHATIA
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 1/28
2
S/O. LATE SH. SATISH KUMAR BHATIA
THROUGH HIS MOTHER AND NEXT
FRIEND MRS. SUSHMA BHATIA.
ALL R/O. 117/N/10, KAKA DEV,
KANPUR, UTTAR PRADESH. ....DEFENDANTS
Date of Institution of the suit : 16.05.1995
Date on which order was reserved : 28.02.2012
Date of decision : 21.03.2012
J U D G M E NT
1. Vide this judgment, I shall dispose of issue no. 3, which
was treated as a preliminary issue, which was framed,
vide order of this court dated 11.09.2009 :
"Whether this court has no
jurisdiction in view of the
Arbitration Agreement?OPR
2. Brief facts, which are necessary for the adjudication of
the aforesaid preliminary issue, are that the plaintiff,
which is a body corporate created under The Road
Transport Corporation Act, 1950, read with the Delhi
Transport Laws (Amendment Act) 1971, had filed a suit
for recovery of rs. 5,87,883/ against the defendants, on
the allegations that the defendant no. 1 is a
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 2/28
3
manufacturer of spring assembly and spring leaves
used in buses and heavy vehicles. That the defendant
no. 1 is a partnership firm having its office at Kanpur,
U.P. and the defendant no. 1 is being sued through
partners, who have also been made parties in the
present proceedings.
3. It is further stated that the defendant firm is on Rate
Contract with the Association of State Road Transport
Undertakings and accordingly is under a contractual
obligation to fulfill the terms, conditions and supply
material, as per specifications prescribed. Normally, all
the States Transport Undertakings including the
plaintiff corporation being Member of the said
organization place their orders with the Rate Contract
holders of the Association of State Road Transport
Undertakings, who recommends specification for
various parts of heavy motor vehicles. The
specifications as well as the Rate Contract is approved
by the Standing Committee of The Association of State
Road Transport Undertakings.
4. It is stated that the plaintiff corporation placed orders
on the defendant firm. The terms of delivery for the
said materials were against 100% advance payment
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 3/28
4
including 5.75% Excise Duty and 10% Sales Tax and the
material supplied by the defendant firm was to be as
per the specifications stipulated by The Association of
State Road Transport Undertakings.
5. It is further stated that after the receipt of the material
supplied, the plaintiff corporation puts the said material
to various tests and scrutiny to ensure that the material
supplied conforms with the specifications given by the
plaintiff corporation as well as The Association of State
Road Transport Undertakings. These tests in the
instant case include hardness test, load test, etc.
6. It is stated that out of various supplies made against its
order no. 27609 dated 18.05.1992 to the plaintiff
corporation on account of defects which were duly
intimated to the defendant firm. The details of the
rejected material have been given and enumerated in
the para no. 6 of the plaint.
7. It is further stated that the aforesaid material as
mentioned in the para no. 6 of the plaint due to less
hardness as per desired specification as well as being
less in weight. The defendant firm was in receipt of the
entire payment towards the cost of the material along
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 4/28
5
with the excise duty and sales tax specified in the
invoices.
8. It is further stated that aforesaid material was rejected
asa the same did not coform to the prescribed
specifications, certain leaves were less in hardness and
weight and the others were rejected due to bushes fitted
in the leaves having a bore excessive to that specified. It
is further stated that the defendant firm was first asked
to replace the material. Having failed to do so, the
plaintiff corporation was constrained to cancel the
order pertaining to the said material and demanded the
refund of Rs. 1,45,139/. This stands modified /
amended as the plaintiff corporation has factually paid
to the defendant firm an amount of Rs. 1,48,431.31
towards the cost of the rejected material including all
levies.
9. It is further stated that the plaintiff corporation carried
out joint inspection with the defendant's
representative, Sh. B. B. Tripathi on 05.10.1993. The
said authorized representative was satisfied with the
inspection and accepted the rejection of the material.
That the said Sh. B. B. Tripathi further assured to inform
the mode of settlement of the claim within a week.
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 5/28
6
Despite repeated requests of the plaintiff corporation to
the defendant firm calling upon them to take the
delivery of the rejected material and refund the amount
on account of the rejection of the material, the
defendant firm failed and neglected to fulfill the
commitment made to the plaintiff corporation. Neither
the rejected material was replaed at the first instance
nor the refund of Rs. 3,83,276/ was refunded by the
defendant firm to the plaintiff corporate.
10.It is further stated that the plaintiff corporation was
constrained to report the matter to The Association of
State Road Transport Undertakings. Despite several
letters written by The Association of State Road
Transport Undertakings to the defendant firm, the
aforesaid amount was not refunded by the defendant
firm to the plaintiff.
11.In these circumstances, it is prayed that the plaintiff
has been constrained to file the present suit for the
recovery of Rs. 5,87,883/ against defendant along with
pendentelite and future interest. Costs of the suit are
also prayed.
12.The summons of the suit were sent to all the
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 6/28
7
defendants. From the persusal of the order sheet dated
20.01.1998 and 03.08.1998, it appears that a common
written statement was preferred on behalf of
defendants 1 to 3 through their power of attorney
holder. From one of the order sheets (date not legible)
of the year 1998, it appears that it was informed on the
said date that defendant no. 4 had died, consequently
the application for bringing the LRs of deceased
defendant no. 4 was directed to be filed by the plaintiff,
which process continued until all the LRs of defendant
no. 4 were directed to be served by way of publication,
vide order dated 03.04.2006. Thereafter, the application
for bringing the said LRs u/o. 22 Rule 4 CPC was
allowed and since none appeared on behalf of the LRs
of deceased defendant no. 4, they were proceeded
exparte vide order dated 20.02.2007 and prior to that
defendants no. 1 to 3 were also proceeded exparte on
03.06.2006.
13.Before that, written statement was filed by the
defendants no. 1 to 3 through their power of attorney
holder Sh. S. L. Arora. In which, it is stated that the
present suit was not maintainable against the
defendants as the partnership firm had already been
dissolved on 20.08.1996 and the partnership firm had
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 7/28
8
submitted its last balance sheet on 20.08.1996 to various
authorities. It is submitted that the present suit was
liable to be dismissed on the ground that as per the
"General Conditions of the Rate Contract" between
the defendant firm and the "Association of the State
Road Transport Undertakings", all the disputes were to
be referred to the Sole Arbitration of the Chairman of
the Standing Committee. The committee of claims of
Association of the State Road Transport Undertakings
had taken a decision of 5th January, 1996 and the same
was informed to the defendant's firm vide Association
letter dated 22.1.1996. The committee had directed the
defendant to replace the rejected material and
defendant has agreed to do so.
14.On merits, it is admitted that the defendant had
entered into a contract with the Association of the State
Road Transport Undertakings in brief ASRTU for the
supply of spring assembly and spring leaves during the
period 01.10.1991 to 30.09.1992 to the various members
of ASRTU. It is also agreed that pursuant to the
contract, the plaintiff placed an order bearing purchase
no. 27609 dated 18.05.1992 for the supply of various
items amounting to Rs. 22,13,447.09. The defendant
firm had supplied all the materials vide their challan
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 8/28
9
no. 2182 dated 18.06.1992, challan no. 2184 dated
18.06.1992, challan no. 2232 dated 28.11.1992.
15.It is further stated that the plaintiff did not make the
payment of the goods amounting to Rs. 2,16,435.81
inspite of defendant's reminder vide its letter dated
24.12.1992.
16.It is further stated that the defendant received a letter
dated 05.01.1993 from the plaintiff, wherein they
informed the defendant's that 72 numbers front spring
assembly were rejected due to less hardness of leaves
against specified hardness. The defendants in their
reply wrote letter dated 13/14.1.93 and 18.1.93 stated
that they were ready and willing to replace the material
free of cost. The defendant vide their invoice no. 2248
dated 15.01.1993 and 2249 dated 25.01.1993 delivered
goods worth Rs. 2,03,037.85 and also wrote letters dated
27.01.1993 and 01.02.1993, wherein it was stated that
goods worth Rs. 2,03,037.85 were delivered in lieu of the
rejected goods and requested the plaintiff to hand over
the rejected goods to the duly authorized representative
of the defendant firm.
17.Thereafter, the defendant wrote various letters to the
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 9/28
10
plaintiffs showing their willingness to replace the
rejected goods. Thereafter, the plaintiffs reported the
matter to the "Standing Committee of Claims of
Association of the State Road Transport Undertakings".
The defendants informed about their intention to
replace the rejected goods at the meeting held on
August 1995 and the committee had taken the decision
of 05.01.1996 to direct the defendant to replace the
rejected material. Thereafter, the defendant wrote
various letters dated 27.01.1996 for confirmation of the
rejected materials but the plaintiff did not sent any
letter in reply to this. The defendant informed the
Standing Committee of ASRTU about this position. In
these circumstances, it is stated that the suit filed by the
plaintiff is liable to be dismissed as same is without any
cause of action.
18.Thereafter, an application u/o. 9 Rule 7 CPC was
moved on behalf of defendant no. 3 Sh. Mahesh Kumar
Bhatia for setting aside said order dated 03.06.2006,
which application was allowed vide order dated
28.01.2011. Before that, another application u/o. 7 Rule
11 CPC r/w Section 5 of The Arbitration and
Conciliation Act was moved on behalf of defendant no.
3 Sh. Mahesh Kumar Bhatia, on the ground that this
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 10/28
11
court had no jurisdiction to try and entertain the
present suit u/s 5 of the Arbitration and Conciliation
Act, 1996 and u/o. 7 Rule 11 CPC, as there was an
arbitration clause between the parties and both the
parties were bound by the said arbitration clause. After
calling reply to the said application, the application
filed by the defendant no. 3 Sh. Mahesh Kumar Bhatia
was dismissed by Ld. Predecessor of this court vide
detailed order dated 21.05.2009.
19.After that on 11.09.2009, following issues were framed
in the present suit :
ISSUES
1. Whether the plaintiff is
entitled to a decree for a sum of
Rs. 5,87,883/ together with
interest @ 21.5% pendentelite
and future? OPP
2. Whether the suit is not
maintainable keeping in view the
death of the partners? OPD
3. Whether this court has no
jurisdiction in view of the
Arbitration Agreement? OPR
4. Relief.
CS NO. 90/08 D.T.C. Vs. M/s. Auto India 11/28
12
20. The defendant no. 3 not satisfied with the said order of
21.05.2009 of the Ld. Predecessor of this court, preferred
Civil Revision Petition before the Hon'ble High Court of
Delhi, which was allowed by the Hon'ble High Court by
making the following observation :
" After addressing arguments
at length, counsel for the
petitioner states that during the
pendency of the present
petition, apart from other
issues, the following issue was
framed by the Ld. ADJ, vide
order dated 11th September,
2009 :
"3. Whether this court has no
jurisdiction in view of the
Arbitration Agreement?OPR
Counsel for the petitioner
states that as a specific issue has
been framed by the trial court as
recorded above, he be given
leave to approach the trial court
with a request to treat the same
as a preliminary issue and
address arguments, the same
being purely legal in nature.
Counsel for the respondent
states that in case such a request is made by the petitioner before the trial court, she shall have no CS NO. 90/08 D.T.C. Vs. M/s. Auto India 12/28 13 objection to the same being treated as a preliminary issue.
In view of the aforesaid submission made by the parties, the present petition is disposed of with leave granted to the petitioner to approach the Learned ADJ with a request for treating issue no. 3 as a preliminary issue and for deciding the said issue before proceedings further in that case. The Ld. ADJ shall consider the said request and pass appropriate orders in accordance law."
21. In view of the aforesaid directions of the Hon'ble High court of Delhi, this court was directed by the Hon'ble High Court to treat the issue no. 3 as a preliminary issue and to decide the said issue before proceedings further in the present case and to pass an appropriate order in accordance with law.
22.Now, the only issue, which has to be decided by this court is, Whether this court has no jurisdiction in view of the alleged Arbitration Agreement executed between the parties, which is the plea raised by defendants no. 1 to 3, most specifcally by defendant no. 3, who has been CS NO. 90/08 D.T.C. Vs. M/s. Auto India 13/28 14 appearing and contesting this case.
23.The defendant has filed various documents on the record including the Annexure 1, which contans General Conditions of the Rate Contract applicable to the Association of The State Road Transport Undertakings and the members of the said association.
24.The plaintiff in para no. 3 of the plaint has stated as under : "3. The defendant firm is on Rate Contract with the Association of State Road Transport Undertakings and accordingly is under a contractual obligation to fulfill the terms, conditions and supply material, as per specifications prescribed.
Normally, all the States Transport Undertakings including the plaintiff corporation being Member of the said organization place their orders with the Rate Contract holders of the Association of State Road Transport Undertakings, who recommends specification for various parts of heavy motor CS NO. 90/08 D.T.C. Vs. M/s. Auto India 14/28 15 vehicles. The specifications as well as the Rate Contract is approved by the Standing Committee of The Association of State Road Transport Undertakings."
25.The defendant no. 2 has filed the General conditions of the Rate Contract of the Association of the State Road Transport Undertakings, which have not been disputed by the plaintiff, as not applicable to them and it is not the case of the plaintiff that conditoins mentioned in the said General Conditions were not the one applicable to the plaintiff at the relevant point of time. The plaintiff while examining PW1 has also proved the purchase order dated 18.05.1992, Ex.PW1/1 by virtue of which the Order for supply of spring assembly and spring leaves was placed upon the defendant firm. Or the second page of the said purchase order, the terms and conditions of the said purchase order have been mentioned i.e. the terms and conditions of the agreement executed between the plaintiff and defendant no. 1 firm. The clause 11 of said purchase order is relevant, which is reproduced as under : "11. ORDERS AGAINST A.S.R.T.U. R/C. : All other terms CS NO. 90/08 D.T.C. Vs. M/s. Auto India 15/28 16 & conditions as per the ASRTU Rates Contract number and date ......................................... valid upto.................."
26.In view of the said clause 11 of the terms and conditions of the purchase agreement, which is the original bargain or agreement of the parties by virtue of which the order for supply of spring assembly and spring leaves was placed upon defendant no.1 firm. It is clear that the plaintiff and defendant no. 1 firm agreed to be bound by all the terms and conditions as prescribed by the Association of the State Road Transport Undertakings. Admittedly, the plaintiff i.e. DTC is one of the member of the said association, which fact has been admitted by the plaintiff in para no. 5 and para no. 8 of the plaint. The association is nothing but a compendium name of the members constituting it. Therefore, the DTC being a member of the said association was represented by the said association on its behalf with regard to the General conditions of the Rate Contract. Therefore, any dispute between the supplier and the undertakings, which was on the Rate Contract with the Association of the State Road Transport Undertakings and any member of the said association would be considered as the dispute CS NO. 90/08 D.T.C. Vs. M/s. Auto India 16/28 17 between the supplier and association of said State Road Transport Undertakings. Therefore, said General Conditions of the Rate Contract of the Standing Committee filed on the record would be applicable to the plaintiff as well to the defendant no. 1 firm.
27. Further the plaintiff has also stated in para no. 5 and para no. 8 of the plaint as under : "5. That the material supplied by the defendant firm ought to be as per the specifications stipulated by The Association of State Road Transport Undertakings. After the receipt of the material supplied, the plaintiff corporation puts the said material to various tests and scrutiny to ensure that the material supplied conforms with the specifications given by the plaintiff corporation as well as The Association of State Road Transport Undertakings. These tests in the instant case include hardness test, load test,, etc., etc."
"8. That the plaintiff corporation was constrained to report the matter to The Association of State Road Transport Undertakings. Despite, several letters written CS NO. 90/08 D.T.C. Vs. M/s. Auto India 17/28 18 by The Association of State Road Transport Undertakings to the defendant firm, the aforesaid amount was not refunded by the defendant firm to the plaintiff."
28.In view of the aforesaid admissions made by the plaintiff in his plaint, it is apparent that defendant was on Rate Contract with the Association of the State Road Transport Undertakings and was accordinly under the contractual obligation to fulfill the terms and conditions and to supply the material as per the specifications prescribed by the General Conditions of the Rate Contract of the Association of the State Road Transport Undertakings. It is also admitted case of the plaintiff that the plaintiff corporation was also the member of the said organization and being such a member, it used to place their orders with the Rate Contract Holder of the said association, which recommended specifications for supply of spare parts for heavy motor vehicles. The specifications as well as the Rate Contract was approved by the Standing Committee of the Association of the State Road Transport Undertakings. In view of the said admissions made by the plaintiff in the plaint, it appears that the CS NO. 90/08 D.T.C. Vs. M/s. Auto India 18/28 19 plaintiff was also bound by the General Conditions of Rate Contract specified by the Association of the State Road Transport Undertakings.
29.The Para no. 5 of the General Conditions is reproduced as under : "5. If any stores are rejected by the Undertakings due to their not confirming to the prescribed specifications or the approved samples, or for any other valid reason the supplier will be informed accordingly by the Undertakings by registered letter within 15 days of the delivery of the stores and the supplier will allowed 30 days from the receipt of this communication to replace the rejected stores. If the stores, are not replaced within this time, the Undertakings shall return the rejected stores without any further intimation to the supplier freight to pay and through bank and if advance payment has been made against documents and for value of actual advance payment plus packing, forwarding, insurance and freight at the time of returning the goods. The supplier will be bound the document sent through bank in CS NO. 90/08 D.T.C. Vs. M/s. Auto India 19/28 20 such case and the failure to do so shall constitute breach of contract as will make the supplier liable for all costs and consequences and further remedial measures as may be taken by the Undertakings. If the rejected stores are not replaced by the supplier within the stipulated time the undertakings will be entitled to charge interest at 12% (Twelve Percent) on the net value of the rejected stores and further charge ground rent for storage within the period of stipulated above, the Undertakings shall be free to purchase the stores from elsewhere, unless already purchased under clause 4 above and the terms of risk purchase contained in clause 2 shall apply to all such purchases, should the supplier fail to lift the rejected stores within 45 days of the intimation of their rejection communicated in writing the Undertakings shall have the right to sell the rejected stores by public auction with notice thereof given to supplier and the sale proceeds after adjusting all dues, expenses and cost including cost involved in the auction shall be credited to the supplier and adjusted against advances, if any, made CS NO. 90/08 D.T.C. Vs. M/s. Auto India 20/28 21 to him on the supplier."
30. And in Para no. 13 of the said General Conditions of the Rate Contract, there is an Arbitration Clause, which reads as under : "13. Arbitration Clause :
Any dispute arising between the supplier and the the Association of the State Road Transport Undertakings or connected with all matter covered by those conditions and or the rate contract shall be referred to the sole Arbitration of the Chairman of the Standing Committee (S&C) whose decision shall be final and binding on the parties. The provisions of the Arbitration Act shall apply to the adjudication of all such disputes.
Notwithstanding pendency of any dispute the supplier shall subject to the Undertakings concerned wanting him to do so continue to make the supplies as ordered. This clause shall not be applicable to any dispute as may arise between the supplier and Undertakings on or connected with the Rate CS NO. 90/08 D.T.C. Vs. M/s. Auto India 21/28 22 Contract, unless expressly agreed by them."
31.From the perusal of the clause no. 5 and 13, it is apparent that the present dispute with regard to which the present suit was filed by the plaintiff was with regard to the quality of the spring assembly and spring leaves, which was found to be defective as per the plea of the plaintiff corporation since they did not confirm to the prescribed specifications stipulated by the Association of the State Road Transport Undertakings.
As mentioned above, said materials were rejected by the plaintiff corporation. Therefore, a dispute for which the present suit has been filed by the plaintiff corporation clearly falls under the clause 5 of the General Conditions of the Rate Contract of the aforesaid association of the State Road Transport Undertakings.
32.The Counsel for defendant no. 3 has argued that the association had already started arbitration in view of the letter dated 22.01.1996 and 27.06.1994. The said argument of Ld. Counsel for defendant no. 3 does not appear to be having much force, as the correspondence relied upon by Ld. Counsel for defendant no. 3, only indicates that the Standing Committee had made CS NO. 90/08 D.T.C. Vs. M/s. Auto India 22/28 23 certain endeavours for settlement of the claims pertaining to the plaintiff and the defendant no. 1 firm but the said endeavours or attempts made by the Standing Committee of the Association of the State Road Transport Undertakings cannot be said or can be regarded as the arbitration proceedings. From the said correspondence, there is nothing to gather that any adjudication was undertaken by the Standing Committee to resolve the pending dispute between the parties, as per the Arbitration Act prevailing at that particular period of time. However, clause no. 8 of the General Conditions of the Rate Contract clearly specifies that in any case, all the disputes arising between the supplier and the Association of the State Road Transport Undertakings shall be referred to the Sole Arbitration of the Chairman of the Standing Committee, whose decision shall be final and binding upon the parties.
33.The words of the clause 13 are plain and simple and there is no ambiguity with regard to the same. It has been held in Judgment AIR 2007 Supreme Court 2157, Punjab State & Ors. Vs. Dina Nath in para no. 5 and 8 as under : CS NO. 90/08 D.T.C. Vs. M/s. Auto India 23/28 24 "5. Having heard the learned counsel for the parties and after going thrugh the impugned order of the High Court as well as the orders of the appellate court and the trial court and the materials on record and considering the clauses in the Work Order, we are of the view that the High Court was fully justified in setting aside the order of the appellate court and restoring the order of Additional Subordinate Judge by which the dispute was referred to arbitration for decision. Before proceeding further, we may, however take note of some of the relevant clauses in the Work Order which reads as under :
"Clause 13 of the Work Order :
"If the contractor does not carry out the work as per the registered specifications, the department will have the option to employ labour or any other agency to bring the work to the departmental specification and recover the cost therefrom. "Clause 4 : Any dispute arising between the department and the contractor / society shall be referred to the Superintending Engineer, Anandpur Sahib, Hydel Construct Circle No. 1, Chandigarh for orders and his decision will be final and CS NO. 90/08 D.T.C. Vs. M/s. Auto India 24/28 25 acceptable / binding on both parties."
8. A bare perusal of the definition of arbitration agreement would clearly show that an arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if any dispute arises between them in respect of the subject matter of the contract, such dispute shall be referred to arbitration. In that case such agreement would certainly spell out an arbitration agreement.
[See Rukmani Bai Gupta V. Collector of Jabalpur, AIR 1981 SC 4791]. However, from the definition of the arbitration agreement, it is also clear that the agreement must be in writing and to interpret the agreement as an 'arbitration agreement', one has to ascertain the intention of the parties and also treatment of the decision as final. If the parties had desired and intended that a dispute must be referred to arbitration for decision and they would undertake to abide by that decision, there cannot be any difficulty to hold that the intention of the parties to have CS NO. 90/08 D.T.C. Vs. M/s. Auto India 25/28 26 an arbitration agreement; that is to say, an arbitration agreement immediately comes into existence."
34.I am of the considered opinion that above judgment is squarely applicable to the facts and circumstances of the present case. It is clear that the arbitration agreement is not required to be in any particular form, what is required to be ascertained is whether the parties have agreed that if any dispute arises between them in respect of the subject matter of the Contract, such dispute shall be referred to the arbitration. In the present case, clause 13 of the General Conditions of the Rate Contract elaborated above, clearly envisages that in case of any dispute arising between the supplier and the Association of the State Road Transport Undertakings or connected with all matters covered by those conditions and or the rate contract shall be referred to the sole Arbitration of the Chairman of the Standing Committee.
35.It is clear that both the parties had agreed in view of the terms and conditions of the purchase order Ex.PW1/1 and the General Conditions of the Rate Contract satisfied by the Association of State Road Transport CS NO. 90/08 D.T.C. Vs. M/s. Auto India 26/28 27 Undertakings, which is applicable to both the plaintiff and defendant no. 1 firm for the reasons discussed above, that in case of any dispute arising between them in respect of any subject matter of the Contract, which was with regard to the clause 5 of the aforesaid General Conditions of the Rate Contract enumerated above with regard to the specifications of the articles supplied by defendant no. 1, which were not found to be of the necessary specifications as per the plaintiff corporation, the said dispute had to be compulsarily referred to the arbitration.
36.The reason being, at the time of execution of the agreement / contract both the parties between themselves had chosen their own forum, thereby they had chosen the forum of arbitration to resolve any dispute which may arise between them, which may be subject matter of the contract at the time of the execution of contract, thereby displacing the jurisdiction of this court to resolve their dispute, that is to say that both the parties had agreed themselves freely at the time of execution of the agreement / purchase order that all their disputes shall be referred and decided by the arbitration with respect to the terms of the Contract being executed between them. Thereby CS NO. 90/08 D.T.C. Vs. M/s. Auto India 27/28 28 both the parties had ousted the jurisdiction of the court to decide the disputes arising between them in the agreement entered between them, regarding the supply of spring assembly and spring leaves. Since in these circumstances, there was a clear cut arbitration agreement between the parties, this court has no jurisdiction to decide the present lis between the parties, as raised by the plaintiff. Consequently, this preliminary issue no. 3 is decided in favour of the defendants and against the plaintiff. Consequently, the present suit is not maintainable before this court and same is dismissed with liberty to the plaintiff to invoke the arbitration clause mentioned above as per the agreement / contract executed between the parties, no order as to costs. Decree sheet be prepared.
37.File be consigned to the record room.
ANNOUNCED IN THE OPEN (Sanjeev Aggarwal) COURT ON 21.03.2012 ADJ(Central03)/Delhi CS NO. 90/08 D.T.C. Vs. M/s. Auto India 28/28