Delhi High Court
Haryana Breweries Ltd. vs Haryana Beer Agencies And Ors. on 3 April, 1995
Equivalent citations: 1995IIAD(DELHI)147, 1995(2)ARBLR44(DELHI), 58(1995)DLT682, 1995(33)DRJ327, (1995)111PLR24
Author: N.G. Nandi
Bench: N.G. Nandi
JUDGMENT N.G. Nandi, J.
(1) By this petition under Section 20 of the Indian Arbitration Act, the plaintiff prays for reference of the disputes between the parties, enumerated in para 13 to the sole Arbitration of the Managing Director of Haryana Breweries Limited and also the Arbitrator to be directed to file the original award together with original records of the proceedings for the purpose of making the award rule of the Court.
(2) That in the petition/plaint it is the say of the plaintiff that the it is a Government Undertaking engaged in the manufacture of beer with brand names of Rosy Pelican Beer, Black Partridge, Boxer, Bordie Pilsner etc. etc.. Defendant No.1 is a partnership firm and defendants 2 and 3 being partners therein entered into an agreement with the plaintiff on or about 30.6.1978 whereby defendants were appointed as stockist for the sale of various brands of beer of the plaintiff. That on or about 6.10.1982, defendants informed the plaintiff that 500 dozens of Black Partridge and 250 dozens of Rosy Pelican bottles of beer have become flat. Consequently, the plaintiff got the goods inspected by Senior Brewery Master and the same were found to be flat. Thereafter vide letter dated 16.10.1982 the plaintiff called upon the defendants to forward the said quantity of beer to their factory for reprocessing and returning the same to the defendants after getting the necessary permission from Excise and Taxation Commissioner, Faridabad; that the plaintiff gave consent letter for replacing the said flat beer as required by the Excise Department; that the age of the beer is 2 to 4 months after which it becomes flat. The same can be used only after reprocessing; that the plaintiff is always ready and willing to replace the said beer to the defendants after reprocessing the same; that the payment of excise duty on those flat beer is the subject matter of appeal filed by the defendants against the decision of the Excise authorities; that the plaintiff called upon the defendants to clear the liability of Rs.1,22,637.55 as against them. The plaintiff by a legal notice called upon the defendants to pay off the aforesaid amount which did not include a sum of Rs.99,000.00 which was the subject matter of appeal filed by the defendants in connection with the flat beer; that Clause 15 of the agreement dated 30.6.1978 contains an arbitration clause between the parties and pursuant to the said clause all disputes and differences arising out of or in any way touching or concerning the agreement are required to be referred to the sole arbitration of the Managing Director of the plaintiff company for adjudication; that 18% interest is payable under the terms and conditions of the contract if the amount remained unpaid within the stipulated period of 30 days; that disputes enumerated in para 13 of the plaint have arisen between the parties which fall within the ambit of Clause 15 of the agreement; that the cause of action for these proceedings has arisen within the jurisdiction of this Court as the plaintiff has its Marketing Division and Head Office at New Delhi and all the correspondence and payments were made at New Delhi; that the defendants were to place orders with Marketing Division of the company at Delhi. On these averments, the plaintiff prays for the relief aforestated more specifically enumerated in para 13 of the plaint.
(3) The defendants in their written statement have contended that this petition is not maintainable; that there is no agreement between parties and, therefore, the suit is not maintainable; that the plaintiff is relying on the draft agreement which was never finalised; that on or about 30.6.1978, the plaintiff company got the signatures of the defendants on a draft agreement; that the terms and conditions required to be incorporated as suggested by the defendants were never incorporated by the plaintiff and the agreement was never finalised. That the defendant company were dealing with the plaintiff since 1974 as the defendants had the wholesale license for erstwhile Gurgaon District without any agreement. In 1978 the plaintiff company wanted the defendants to be stockist for them and got their signatures on the draft agreement. The defendants were buying the products of the plaintiff and selling them as license vendor of the Excise Department of the Haryana State in the District of Gurgaon; that the plaintiff company is dishonestly making use of the draft agreement; that this Court has no territorial jurisdiction to try and decide the suit because the draft agreement was got signed somewhere in 1978 for only three years at Murthal, District Sonepat (Haryana) and also because the plaintiff has got its registered office at Murthal, District Sonepat (Haryana) and the office of the defendants and their place of business is at Faridabad (Haryana); that the business transactions between the parties took place only at Murthal and Faridabad and no where; that neither of defendants work for gain or carry on business within the local limits of this Court; that the dispute purported to be referred to the arbitration is a particular claim of 16.10.1982 as such the same is barred by time. Needless to say the claim is independent of the balance of a running account between the parties. On these averments, the defendants pray for dismissal of the suit (petition). Following issues are framed on 22.9.1994: 1. Whether this Court has no jurisdiction to try this petition ? 2. Whether in view of the objections taken in the written statement, disputes could be referred for arbitration ? 3. Whether the disputes to be referred under Section 20 of the Arbitration Act are barred by the limitation ? 4. Relief.
My findings are: 1.In the affirmative. 2. Does not arise in view of finding on issue No.1. 3. Does not arise for consideration by the Court. 4. As per final order.
(4) It is submitted by Mr. Sunil Goyal, counsel for the plaintiff that the marketing division of the plaintiff is at New Delhi and the orders have been placed by the defendants at New Delhi and that would attract the territorial jurisdiction of this Court; that the limitation has to be decided by the arbitrator; that the word 'exclusive', 'only' and 'alone' would conclusively decide the territorial jurisdiction of this Court; that the right accrued to the plaintiff on 18.8.1990 and the petition has been filed on 19.2.1991; that Article 137 of the Limitation Act gives three years time to file the petition; that the beer had become flat i.e. not usable.
(5) The first limb of the argument by the defendants is the want of territorial jurisdiction to this Court, second is the duration of agreement dated 30.6. 1978, and the third limb is that the agreement dated 30.6.1978 is not the concluded contract but draft agreement only.
(6) I would first consider the question of territorial jurisdiction as it would go to the root. It may be seen that the marketing division of the plaintiff company is at New Delhi and the defendants have placed orders at New Delhi. That Clause 9 (b) of the agreement dated 30.6.1978 specially provides that all orders for the said products shall be placed by the stockist with the Marketing Division/Sales Office of the company and no such order shall constitute any contract or be deemed to be binding on the company unless and until unconditionally accepted by the company in writing ...............Thus it will be seen that under the agreement all purchase orders were required to be placed with the Marketing Division/Sales Office of the plaintiff company which is at New Delhi. Clause 14 of the agreement provides that the respective rights, privileges, duties and obligations of the parties under this Agreement shall be governed and determined by the laws of the State of Haryana and the Republic of India and shall be subject to the jurisdiction of the Courts at Sonepat (Haryana). Thus under Clause 14 the civil court at Sonepat (Haryana) has been conferred with the jurisdiction.
(7) It has been laid down by the Supreme Court in the case of A.B.C. Laminart Pvt. Ltd. and another v. A.P. Agencies, Salem , that "where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear unambiguous and explicit and not vague it is not hit by Sections 23 and 28 of the Contract Act". I am in respectful agreement with the proposition of law that when more than one court is having jurisdiction to try the suit, if the parties to the contract agreed to vest jurisdiction in one such court, would be valid and not against public policy.
(8) In the instant case, according to Clause 14 of the agreement court at Sonepat has been vested with the territorial jurisdiction. The invoice produced on the record by the defendants is at page 7 of part-III file suggests that all proceedings and actions are subject to court jurisdiction at Sonepat. This invoice by the plaintiff gives the address of the plaintiff that of Murthal (Sonepat). The goods have been supplied at Faridabad (Haryana) which would show that the defendants have been working at Faridabad. It is not the say of the plaintiff that the contract has been executed at New Delhi. It is nowhere averred in the petition that the contract has been executed at Delhi though it may not be relevant for the purpose of deciding the question of jurisdiction under Section 2(c) of the Arbitration Act.
(9) Counsel for the plaintiff then relied on the decision of the Supreme Court in the case of Pandurang Dattatraya Khandekar v. Bar Council of Maharashtra Bombay & others and contended that no form of agreement is required. I am in respectful agreement with the proposition enunciated by the Supreme Court in this decision that could hardly put any dispute with the same. In the instant case, there is no form of agreement which is very much reduced in writing containing all the terms and conditions. In my opinion, this decision is not relevant to the issue in question.
(10) Reliance is also placed on the decision of the Supreme Court in the case of Union of India v. A.L. Rallia Ram . While considering the provisions of Section 2(a) of the Arbitration Act, it has been held that though the agreement should be in writing, signing of the formal document is not necessary and the agreement should conform to requirements of Section 175(3) Government of India Act. In the instant case, there is no question of not signing any formal agreement and that the agreement is reduced into writing and signed by the parties. This decision would also be of no relevance to the issue involved.
(11) In the decision in the case of Arun Khosla v. Union Bank of India , it has been held by the Single Judge of this Court that the territorial jurisdiction of this Court has to be determined on the basis of claims made. Allegations of wrongful termination of contract, while considering the provisions contained in Section 2(c) of the Arbitration Act, it has been held that territorial jurisdiction of the Court has to be determined on the basis of claims made; and the petition alleging wrongful termination of contract seeking revocation of authority, would be maintainable only at the place where contract was performed and not where it was signed or revoked nor where the appointing authority is stationed. In the instant case, the contract of supplying the beer has been performed at Faridabad, as suggested vide invoice dated 29.9.1982 at page 7 of part-III file, referred to above, Clause 14 of the agreement provides for the territorial jurisdiction of the courts at Sonepat. The invoice also refers to the disputes entertainable by the courts at Sonepat. It is suggested from the invoice itself that the goods were delivered from Sonepat and received by the defendants at Faridabad. Now simply because the correspondence has been addressed with the Marketing Division of the plaintiff company at New Delhi and simply because Clause 9b of the agreement provides for placing of the orders with the Marketing Division of the plaintiff company at New Delhi that would not, in my opinion, confer territorial jurisdiction to the courts where the Marketing Division is situated. Under the circumstances, it will be seen that this court will have no territorial jurisdiction to try and entertain the suit since the contract is not performed within the territorial jurisdiction of this Court. For these reasons, issue No.1 is answered in the affirmative.
(12) The perusal of the agreement dated 30.6.1978 at pages 1 to 14 in part-III of the file does not indicate in any manner that the same was only a draft agreement. It is pertinent to note that on all the pages the plaintiff and the defendants both have put their signatures and at the bottom the plaintiff and defendants and their attesting witnesses have put their signaturtes. Perusal of the same further suggests that it embodies all the terms and conditions which are normally found in such type of agreement. There is nothing which would justify a finding that this is a draft agreement and not a concluded contract between the parties appointing defendant as the stockist except the bear word of defendant in this regard. The contention of the defendants on this score is noted only for being rejected.
(13) The next contention by the defendants is that the dispute relates to the transaction of 6.10.1982. Clause 1 (b) of the agreement suggests that this agreement shall be deemed to have come into force with effect from 30.6.1978 and shall remain in force for a period of three years there from, unless cancelled or terminated and shall be renewable for a further period of three years from the date of expiry of such agreement. Admittedly there is neither termination nor cancellation nor extension/renewal after the date of expiry of the agreement. It appears even after the period of three years i.e. 30.6.1981 the parties have acted under the contract and the defendants have placed orders to the plaintiff and the plaintiff supplied the goods accordingly treating the agreement dated 30.6.1978 subsisting especially in view of Ex.D 3 and Ex.P7. In Ex.P7 dated 25.8.1990 the defendant has stated that he is the stockist not only for.....Gurgaon..... but also for other areas. It is not stated therein that he purchased beer on 30.9.1982 dehors the agreement dated 30.6.1978. The conduct suggests that even after the period of three years from 30.6.1978 the contract was treated as subsisting. So, there is no question of the supply of beer which becomes flat beyond or dehorse the agreement dated 30.6.1978.
(14) In view of my findings as above with regard to territorial jurisdiction of this Court, the findings on other issues/questions would pale into insignificance. However, if it is found that this Court has territorial jurisdiction to try and entertain the suit under Section 2(c) of the Arbitration Act in that event my finding on issue No.3 with regard to limitation is that the same does not arise for consideration by the Court as the same could be decided by the arbitrator subject to the reference of disputes under Section 20 of the Arbitration Act. Whereas issue No.2 is answered as does not arise for consideration in view of finding on issue No.1.
(15) In the result, the petition/plaint is liable to be returned to the plaintiff under Order Vii Rule 10 of the Code of Civil Procedure for presentation to the proper court.
(16) Under Rule 10-A of Order Vii Code of Civil Procedure, the plaintiff is directed to state as to which is the proper court where the petition/plaint would be presented by him on return.
(17) Ordered accordingly.