Delhi High Court
D.D. Leasing Limited vs Morgan Tectronics Ltd. And Ors. on 18 April, 2006
Author: Anil Kumar
Bench: Anil Kumar
JUDGMENT Anil Kumar, J.
1. This is a petition under Section 11(6) of Arbitration and Conciliation Act, 1996 by the petitioner for appointment of an arbitrator in terms of arbitration agreement between the parties.
2. The petitioner contended that the petitioner company is engaged in the business of leasing finances and has a registered office at Milan Cinema Building, Karampura, New Delhi. The petition is filed by Shri R.P. Sabhlok, authorized representative of the company, who has been authorized vide resolution dated 31st October, 2000, a copy of which has been produced by the petitioner.
3. The petitioner asserted that it received a proposal from the respondents for giving on lease one Solar Cell Tester SPI-SUN Pulsed, Solar Simulater Model 240A and 2 Nos. Data Acquisition System costing Rs. 7,61,500/- for a period of 36 months. The petitioner company agreed to give on lease the said equipment and an agreement bearing No. DDL/MCH/LS/317/95 was executed on 1st March, 1995. Under the agreement, respondent No. 2 and respondent No. 3 also stood guarantor for respondent No. 1. The petitioner produced a copy of agreement dated 1st March, 1995.
3. The petitioner pleaded that in terms of agreement, respondent No. 1 was to pay monthly lease Installment of Rs. 21,000/- per month for 36 months starting from the date of delivery of equipment and in case of default of payment, the respondent No. 1 was also liable to pay late charges as 3% compounded per month on the due amount till its payment.
4. It was agreed between the parties that no right in the equipment shall pass to the lessee and the petitioner shall remain owner of the equipment till the expiry of the agreement. The respondent No. 1, lessee, had also undertaken not to sell, assign, sublet, pledge, hypothecate or otherwise encumber or suffer a lien upon or against the equipment or remove the same from the factory/site where originally it was put to use with the consent of the petitioner in writing.
5. The petitioner's grievance is that the respondent No. 1 did not pay the amount as had been agreed and some of the cheques which were given by the respondent also were dishonoured. The petitioner produced the cheques which were given by the respondent No. 1 and which were dishonoured on presentation for various reasons.
6. On failure of the respondent No. 1 to make the payment, the petitioner issued a notice dated 25th April, 1995. On failure of the respondent to make the payments, the proceedings under Section 138 of Negotiable Instruments Act have also been initiated against the respondents. The petitioner has produced the copy of the notice and the postal receipt and under postal certificate.
7. The petitioner again sent another notice dated 3rd October, 2000 demanding an amount of Rs. 9,87,289/- which was payable to the petitioner till 31st October, 2000 and also produced the copy of the notice, postal receipts and AD cards. The respondent No. 1 company had also executed a demand promissory note along with guarantors in favor of petitioner for a total amount of Rs. 7,59,6000/- and the petitioner was also granted right to negotiate the said promissory note. The agreement executed between the parties had an arbitration clause which is as under:-
ARBITRATION:
A. All disputes, differences and/or claims arising out of this Agreement shall be settled by arbitration in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory amendments thereof and shall be referred to the sole arbitration of Shri Subhash Mehta, 50-E, Kamla Nagar, Delhi on in case of his death, refusal, neglect, incapability to act as Arbitrator to the sole arbitration of Shri Tilak Raj, H-5, Kirti Nagar, New Delhi. The reference to the Arbitrator shall be within the CLAUSES, TERMS AND CONDITIONS of this Agreement. The award given by the Arbitrator shall be final and binding on both the parties.
B. It has been expressly explained by the Lesser to the Lessee that either of the aforementioned arbitrators are duly appointed by the Lesser in the Lease Agreement accepted by them and inspite of the information supplied to them the said Lessee has willingly agreed to the nomination of the said Arbitrator/s and he shall not raise any objection against the appointment of any one of the Arbitrator/s on the ground that the Arbitrator/s are connected in any manner with Lesser.
C. Any party desirous of making a reference to the Arbitrator shall given fifteen days Registered Acknowledgment due notice of his intention to do so, to the other party at his usual place of business or residence or the place of their last notified address and the notice shall be deemed to have been served when in would ordinarily have been served when it would ordinarily have been delivered by post. The notice sent by the Arbitrator to the parties by Registered post at the address mentioned in the Lease Agreement will be considered sufficient service on the PARTIES whether such notice is received by them or not, or is refused or is returned undelivered.
8. While demanding the amounts due to the petitioner from the respondent by notice dated 3rd October, 2000 petitioner had also invoked the arbitration agreement between the parties and sought appointment of named arbitrator for adjudication of disputes between the parties.
9. On failure of the respondent to agree to appointment of the named arbitrator, the petitioner preferred the present petition under Section 11(6) of Arbitration and Conciliation Act and also raised the statement of claims amounting to Rs. 10,20,538/-.
10. The petition is contested by the respondent contending that the factory premises of the respondent No. 1 has been sealed by Sales Tax Department for the recovery of dues and the respondents are not at all in position to return back the amount whatsoever due and payable to the petitioner. While admitting in a way that the amounts are due to the petitioner, the respondents also challenged the genuineness of the amounts claimed by the petitioner, specially the rate of interest charged contending that it is too excessive. The respondents also challenged the maintainability of the petition on account of pendency of criminal proceedings under Section 138 of Negotiable Instruments Act on account of dishonouring of the cheques handed over by the respondents to the petitioner. The respondents also challenged the appointment of Mr. Subhash Mehta as a sole arbitrator by the petitioner on the ground that he is closely associated with the petitioner and the respondents have apprehension that they will not get justice from the named arbitrator, Mr. Subhash Mehta.
11. I have perused the petitioner and the reply and have also heard the learned Counsels for the parties. The learned Counsel for the respondent has admitted that there is an arbitration agreement between the parties. The agreement is signed by Shri P.V. Khullar and Shri Prakash Chand Manchanda also who are the guarantors. The inevitable inference, in the circumstances, is that there is a valid and subsisting arbitration agreement between the parties. The petitioner has raised the disputes relating to non-payment of recovery of lease Installments from August 1997 to February 1998 and interest as per the terms agreed between the parties and has also sought recovery of further penalty in terms of late payment on the amount not paid. The respondents though have taken a half-hearted plea that the signatures were obtained on certain documents by playing fraud upon them by the petitioner, however, nothing has been substantiated by the respondents. The respondents have admitted in para 9 of the reply that notice dated 3rd October, 2000 was received by them, however, no cogent reason has given for not appointing the arbitrator or agreeing to the sole arbitration of Mr. Subhash Mehta.
12. During the course of the arguments, the learned Counsels of the parties agreed that an independent person, preferably a retired Additional District Judge, be appointed as an arbitrator.
13. Under the arbitration agreement, Mr. Subhash Mehta was to be appointed as a sole arbitrator. The petitioner gave a notice and sought appointment of Mr. Subhash Mehta as a sole arbitrator to which the respondents did not agree nor they took any steps to have any other person appointed as an arbitrator. In any case, now since the parties have agreed for appointment of an independent person as an arbitrator, there does not seem to be any impediment in appointing an independent person as an arbitrator for adjudication of disputes between the parties.
14. Consequently, considering the facts and circumstances, I appoint Shri B.L. Garg, retired Additional District Judge resident of A/9, Ganpati Apartment, 6 Alipur Road, Civil Lines, Delhi 110054 (Cellular No. 9810827815) as a sole arbitrator to adjudicate the disputes between the parties. The fees of the arbitrator shall be Rs. 5,000/- per hearing subject to a maximum of Rs. 60,000.00. The parties are directed to appear before Shri B.L. Garg, retired Additional District Judge on May 2, 2006 at 04.00 pm.
15. Copy of this order be communicated to the Arbitrator forthwith. The parties are also directed to communicate the order to the Arbitrator. Copies of this order be also given dusty to the parties.
16. With these directions the petition is disposed of.