Delhi District Court
M/S Luxor Exports vs M/S Dhawan Textiles on 30 March, 2007
1
IN THE COURT OF MS. SHALINDER KAUR, ADJ, DELHI.
SUIT NO. 222/04
IN THE MATTER OF :
1. M/s LUXOR EXPORTS
17, Okhla Industrial Estate, Phase III
New Delhi -10020, Through its partner
Sh. D.K. Jain
2. Sh. D.K Jain,
Partner M/s Luxor Exports,
17, Okhla Industrial Estate, Phase III
New Delhi -110 020. ....PETITIONER.
VS.
1. M/S DHAWAN TEXTILES
480, Katra Ashrafi,
Chandni Chowk, Delhi-110 006.
2. Smt. Payal Kapoor,
Partner M?s Luxor Exports,
17, Okhla Industrial Estate, Phase III
New Delhi -110 020.
Through its partner
Sh. D.K Jain.
3. Sh. Vinod Kumar Sharma
Sold Arbitrator,
Delhi Hindustani Mercantile Association (Regd.)
1210/16, Chandni Chowk, Delhi-110 006.
Through its Honarary Secretary ....RESPONDENTS.
2
OBJECTIONS UNDER SECTION 34 OF THE
ARBITRATION AND CONCILIATION ACT 1996
ON BEHALF OF OBJECTOR/ PETITIONER
NO.1 AND 2.
JUDGMENT:-
1. Petitioners M/S Luxor Exports through its partner Sh.
D.K Jain have filed objections under section 34 of the Arbitration and Conciliation Act, 1996 against the award dated 26.01.2004 passed by the sole arbitrator i.e Respondent no. 3 Sh. Vinod Kumar Sharma.
2. It was contended on behalf of the petitioners that they are not the member of Delhi Hindustani Mercantile Association and therefore the rules and regulations of the said Association are not binding upon them. That there is no valid and subsisting arbitration agreement between the parties for adjudication through arbitrator. It was contended that the petitioners had placed an order for supply of goods on certain terms and conditions but did not agree to the terms and conditions printed on the invoices issued by Respondent no. 1. The petitioners had further agreed and confirmed the order for supply of goods on the basis of the approval of the goods that is only after confirmation of the samples send by them to the buyers of the goods. The petitioners had requested the respondent to put into 3 writing the said terms and conditions agreed between the parties but the respondent no. 1 had stated that there is no need for any writing as the parties are not out of the relations or are in any disagreement.
3. It was contended that it was agreed between the parties that unless and until the goods are finally approved by the buyer of the petitioner, the goods were not final in terms of the purchase invoices. The petitioner had sent various letters, reminders and messages to the Respondent no. 1 for the non- approval of the goods sent by the respondent to the buyers of the petitioner. The respondent no. 1 had failed to lift back the goods and the same were of no use of the petitioner since they were rejected by the buyer of petitioner.
4. It was contended that the petitioners had specifically told the respondent vide correspondence dated 24.02.1996, 01.03.1996 and 03.04.1996 that the goods were not according to the specification of the samples and order placed between the parties. That, the Ld. Arbitrator did not appreciate the said facts and passed the impugned award.
5. It was further contended that claim raised by the respondent is time barred. The respondent had filed the 4 reference petition in May, 1996 and delayed it for obtaining the requisite permission for extension of time to pass the award from the Court, the permission was obtained in November, 1997 from the Court. The respondent further delayed the proceedings for getting the reference revived till November 1998. Then the respondent again moved an application seeking permission to withdraw the reference petition due to technical defect. After filing the fresh petition, again the proceedings were delayed.
6. It was contended that Respondent no. 1 had moved an application under order 23 Rule 1 read with section 151 CPC for grant of permission to withdraw the reference petition and to file fresh petition after removal of technical defects. The said application was allowed by Ld. Arbitrator vide orders dated 29.01.1999 with liberty to file fresh petition. Thereafter, the respondent filed a fresh petition on 03.02.1999. It was assigned to the sole arbitrator in the month of September, 1999. Thus, the petition filed by respondent no. 1 on 03.02.1999 is barred by limitation as the bills for which the Respondent is claiming the payment are for the period w.e.f. 08.02.1996 to 20.02.1996 and the arbitration proceedings were started in the month of September 1999.
7. It was further contended that law is well settled that the 5 second petition filed by the respondent was not maintainable as the firm of the respondent was not registered at the time of filing first claim petition. Subsequent, claim was raised after removing the defect and getting the said partnership firm registered which is not permitted under law. In support of the said contentions the following judgment has been cited on behalf of the petitioner. U.P State Sugar Corp. Vs. Jain Construction Co. & Another reported in AIR 2004 (SC) 4335.
8. It was contended that there was no agreement between the parties with respect to the payment of interest. Thus, the Ld. Arbitrator has inadvertently awarded the interest in favour of the respondent. It was thus contended that the award passed by the Ld. Arbitrator is bad in law.
9. Per contra, on behalf of the Respondent it was contended that the jurisdiction of the Civil Court to entertain the objections filed under section 34 of Arbitration and Conciliation Act is limited. It cannot sit as court of appeal over the award passed by the arbitrator. It was contended that the arbitration clause has been printed on the invoices which have been signed by the petitioner. Thus , a valid arbitration agreement existed between the parties. In support of the said contention the following judgments have been cited on behalf of the 6 respondent.
(i) Prasar Bharti Vs. Drishti India Ltd. -- 116 (2005) DLT 64.
(ii) Nutan K.V Crimpers & Others Vs. Tilak Raj Kapoor and Another - 1999 (AR3) GJX 035/DEL.
(iii) J.N Textiles Vs. Bon Chance and Another -- 2000 (AR4) GJX 0069 Delhi.
(iv) R.K Textiles, Mumbai Vs. Sulabh Textiles Pvt. Ltd.
-- Mumbai 2002 (AR3) GJX 0326 Bombay.
(v) Bharat Steel Tubes Vs. State of Bihar -- 1993 (AR2) GJX 0612 Delhi.
10. It was further contended that the petitioner has raised false claim that the goods send by the Respondent no. 1 were not approved by the buyer of the petitioner. The goods which have been rejected by the buyer vide fax message dated 28.02.1996 are with respect to some other goods but not with respect to the goods send by the respondent no. 1 to the petitioner under the three invoices. It was contended that in the fax message dated 28.02.1996, there is mention of some rose print skirt pieces and dresses whereas the respondent no.1 had sent certain bails of Satin cloth which is different from rose print cloth. Thus, it cannot be said that the buyer of the petitioner had 7 rejected the goods of the respondent sold under three invoices.
11. It was argued that the said goods were sent from 08.02.1996 till 14.02.1996 but the fax message is dated 28.02.1996. Thus, it is not possible that within such a short duration that the petitioners could have processed, stitched and send the goods to the buyer who had already canceled the order of the respondent.
12. It was further contended that the claim has been filed within the period of limitation. The fresh claim petition was filed on 03.02.1999 whereas the first invoice is dated 08.02.1996. That the respondent was granted liberty, to withdraw the previous claim petition and to file fresh claim by the Ld. Arbitrator. The fresh claim petition filed was filed within the period of limitation.
13. The Respondent no. 1 had filed the first claim before the Ld. arbitrator which was withdrawn to seek permission from the court for extension of time. The Ld. Additional District Judge, Delhi vide order dated 29.11.1997, extended the time by four months for the arbitrator to pronounce and sign the award. The claim before Ld. Arbitrator was revived on 10.11.1998. Thereafter, the respondent no. 1 moved an application dated 8 17.11.1998 under order 23 Rule 1 read with section 151 CPC seeking permission to withdraw the reference with permission to file fresh reference, as the respondent firm was not registered at the time of presenting the first claim petition. Vide order dated 29.01.1999 the said permission was granted with permission to file a fresh claim. On 03.02.1999 the respondent filed a fresh claim.
14. It was contended on behalf of the petitioner that the Delhi Hindustani Mercantile Association gave permission to Respondent no. 1 on 07.07.1999, therefore, the claim is time barred. Admittedly the fresh claim has been filed by the respondent no. 1 on 03.02.1999 and the last bill for which the dispute has been raised by the respondent is dated 14.02.1996. As the claim petition has been registered by Association on 03.02.1999 thus, the claim of the respondent is within the period of limitation. It is immaterial that the Association had appointed an Arbitrator to conduct the proceedings on 30.09.1999.
15. It was contended on behalf of the petitioners that the respondent firm was not registered when it had instituted its claim for the first time. As respondent no. 1 is partnership firm it was mandatory that it should have been registered before instituting the first claim petition. The said firm had been 9 registered on 14.01.1997. Therefore, the subsequent registration after filing the first claim petition will not cure the defect and the award passed by the Ld. Arbitrator is void.
16. In the judgment U.P State Sugar Corpn. Vs. Jain Construction Ltd. (Supra) the respondent therein had filed a petition under section 20 Arbitration and Conciliation Act 1940 which was dismissed by the Ld. Civil Judge, Dehradun as the partnership firm was not registered. However, the Respondent had moved an application for amendment praying that the fact regarding the registration of the firm inadvertently could not be averred in the plaint. It was held by the Hon'ble Supreme court that, "In the event it is found by the High Court that the Ld. Civil Judge was wrong in rejecting the application for amendment of the plaint and in fact the respondent firm was registered under the Indian Partnership Act, the question of throwing out the said suit on that ground would not arise. There cannot, however, be any doubt whatsoever that the firm must be registered at the time of institution of the suit and not later on".
17. However, in the present case the respondent no. 1 had withdrawn the previous claim petition and was granted a liberty to file a fresh petition on the same cause of action. Accordingly, the fresh claim petition did not suffer from the defect of non 10 registration of the partnership firm. Thus, the facts of the judgment cited on behalf of the petitioner are distinguishable from the facts of the present case. Accordingly, there is no force in the contention raised on behalf of the petitioners that the respondent partnership firm was previously unregistered and the subsequent registration could not have cured the defect. The respondent had filed a fresh claim petition and at that time the respondent partnership firm was duly registered.
18. It was also contended on behalf of petitioner that the rules and regulations of the Hindustani Mercantile Association are not biding upon the petitioners as they were not the members of the said Association. Thus, they did not sign the arbitration agreement for which an arbitration could have been invoked.
19. In catena of judgments, it has held that when the goods are sold by one party to another vide invoices which contain the clause that the same have been sold in accordance with the rules and regulations of Delhi Hindustani Mercantile Association, merely because one of the party was not the member of the said association or that bills were not signed by the said party would not mean that no arbitration agreement had been entered into between the parties.
1120. The disputed bills are Ex. DW2/8, Ex. DW2/9 and Ex.DW2/10. These invoices have not been denied by the petitioners. The signature on the said bills have also not bee denied. These, bills contain specific clause that all the disputes in respect of the bills, the decision of the arbitrator will be final and binding upon the parties. Thus, a valid arbitration agreement existed between the parties which could not be repudiated by the petitioners at any stage.
21. It was also contended on behalf of the petitioners that the Respondents did not supply the goods according to sample approved by the buyers of the petitioners. The petitioners had written various letters to the respondents about the said defects and asked for replacement of the goods. It was also contended that the goods were purchased subject to the approval of the sample by the buyers. A notice was also issued to the Respondent that the buyers has rejected the samples, therefore, the respondent should lift back the goods. But, the respondent did not reply the written communications and requests sent by the petitioners. Thus, the goods have been defective in nature which had already been intimated to the petitioners. The petitioners has no liability to make the payment of the defective goods.
1222. The law is well settled that the jurisdiction of the Civil Court under section 34 of the Arbitration and Conciliation Act is limited. It cannot sit as court of appeal ever the decisions passed by the Ld. Arbitrator. It is an admitted case of parties that the respondents had supplied goods to the petitioner under three invoices i.e Ex. DW2/8, Ex.DW2/9 and Ex. DW2/10. The petitioners are relying upon a fax message dated 28.02.1996, ExDW1/P1 to show that the goods were defective, therefore, the buyers of the petitioners had canceled their order. The petitioners have also relied upon the letters. EX.DW2/2, Ex.DW2/3 and Ex. DW2/4 to show that they had communicated to the respondent about the defects in goods and rejection of the goods. The respondent have denied having received these letters. They have further relied upon notice dated 02.12.1999 Ex.DW1/D1.
23. On the other hand, the petitioners have been relying upon the oral agreement arrived between the parties that the goods were to be purchased subject to approval by their buyer. However the petitioners have failed to prove the said oral agreement. More over, vide the three invoices bails of Tafta and Satin cloth have been sold to the petitioners. These invoices are dated 08.02.1996, 10.02.1996 and 14.02.1996. The first letter Ex. DW2/2 relied upon by the petitioners is dated 24.02.1996.
13In the said letter it has been stated that the goods send under 3 invoices are not approved as the supply is not against their order. However, the fax message Ex. DW1/P1 vide which the order of the petitioners has been canceled by its buyer is dated 28.02.1996. Thus, the petitioners have failed to show on 24.02.1996, how it came to their knowledge that their buyer has rejected the goods.
24. Furthermore, the name of the buyer who has rejected the goods has also not been mentioned. In the letter dated 03.04.1996 the petitioners have approved a bill for supply of Tafta to the petitioners for which they have agreed to release payment immediately, on the condition that if the respondent shall pick up the remaining goods sold to them. The said bill is Ex. DW2/8. This shows that only two bills are under dispute as according to the petitioners the goods under these bills were defective. However, in the fax message Ex.DW1/P1 the buyer of the petitioner has canceled their order for 2000 pieces of Rose Print Skirt and 1000 Pieces Dresses due to bad quality of fabrics. In the notice Ex.DW1/P1, it has been mentioned that the petitioners had purchased some samples of grey cloth fabric. Thus, according to the petitioners grey cloth was to be purchased from the respondents, the sample of which was to be approved. The petitioners have failed to clarify that how Pink 14 Rose Skirts could be manufactured from the Satin Grey Cloth. Thus, they have failed to show any link between the Fax message dated 28.02.1996 and the three invoices. Moreover, the petitioners have also failed to prove that why they purchased the bales of cloth from the respondent in case the samples of the cloth were yet under approval from its buyer. Accordingly, there is no illegality in the award passed by the Ld. Arbitrator and the same is not bad in law. Petition is dismissed. No order as to cost. File be consigned to Record Room.
ANNOUNCED IN THE OPEN COURT TODAY ON 30.03.2007.
(SHALINDER KAUR) ADDL. DISTT. & SESSIONS JUDGE, DELHI.
1530.03.2007.
Present: None.
Vide order announced of even date on separate sheets, the petition is dismissed. No order as to cost. File be consigned to Record Room.
ADJ/Delhi/30.03.2007.