Delhi High Court
Ms Shoes East Ltd. vs Delhi Stock Exchange Asso. Ltd. & Ors. on 14 September, 2018
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~10
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 14th September, 2018
+ CS (OS) 1199A/1998
MS SHOES EAST LTD. ..... Plaintiff
Through: Mr. Pavan Sachdeva, Plaintiff in
person (M-9871000014).
versus
DELHI STOCK EXCHANGE ASSO. LTD. & ORS. ..... Defendants
Through: Mr. S.N. Choudhri, Mr. H.D.
Talwani & Mr. Sukanya Choudhari,
Advocates for D-5 (M-9811174566).
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
I.As. 23436/2014, 23437/2014 (for delay)
1. These are the applications which have been filed seeking setting aside of order dated 22nd April, 2010 by which a Sole Arbitrator was appointed to adjudicate the disputes between the parties and for condonation of delay of 4 years and 174 days in filing the application. The chronology of events leading to filing of the present application is as follows.
2. An agreement dated 10th January, 1995 was entered into between the Plaintiff and M/s Apple Industries Limited - later know as Apple Finance Limited (hereinafter, „M/s Apple Finance Limited‟), by which it agreed to underwrite the public issue of the Plaintiff company - M/s MS Shoes East Ltd. Disputes had arisen between the parties in respect of the said underwriting transaction. The agreement contained an arbitration clause pursuant to which suit no.1199A/1998 came to be filed against 35 Defendants. The agreement showed the address of the said Defendant who was Defendant No.5 in the original proceedings as 811, Indra Prakash CS (OS) 1199A/1998 Page 1 of 7 Building, 21, Barakhamba Road, New Delhi-110001. Summons and notices were issued to the Defendants from time to time. Once such summon was issued on 3rd December, 1998 for 11th February, 1999. The said summon was served on Apple Finance Limited and bears its seal and receipt.
3. Thereafter, however, summons continued to be issued and the said Defendant was served through publications in two newspapers published in Delhi.
4. The Court vide its order dated 22nd April, 2010, appointed Justice Ms. Manju Goel (Retired) as the Sole Arbitrator to adjudicate upon all the disputes between the parties including Plaintiff and Defendant No.5 as well as the disputes between the Plaintiff and other underwriters. The Learned Arbitrator passed award dated 23rd July, 2012 and there are several petitions pending in this Court raising objections to the enforcement of the award.
5. In the present application, the case of the Applicant - M/s Apple Finance Limited is that the said company was never served in the suit, summons were not issued to the correct address and hence the order dated 22nd April, 2010 is liable to be set aside.
6. Mr. S. N. Choudhari, Ld. Counsel for Applicant/Apple Finance Limited submits that the Plaintiff - M/s MS Shoes (East) Ltd represented through Mr. Pawan Sachdeva was well aware of the address of the company in Mumbai. In fact the Plaintiff had filed a complaint before the MRTP on 21st August, 2011 where the address of Apple Finance Limited has been given as M/s Apple Financial Services Ltd., Investment Banking Division, 11/13, Botawala Building, 1st Floor, Horniman Circle, Mumbai, Maharashtra. The company had closed its office at the Barakhamba Road address provided in the suit, on 30th June, 1998 and hence when the plaint CS (OS) 1199A/1998 Page 2 of 7 was filed on 17th April, 1998, and summons were issued, the Defendant was never served. Since, proper summons were not served upon the Defendant, the order of appointment of arbitrator is liable to be set aside.
7. Mr. Choudhari, Advocate relies upon provisions of order IX Rule 13 as also Article 123 of the Limitation Act.
8. On the other hand, Mr. Pavan Sachdeva appearing in person, for the Plaintiff submits that the agreement contained the Delhi address of Apple Finance Limited i.e., 811, Indra Prakash Building, 21, Barakhamba Road, New Delhi-110001. That is the reason why the suit was filed with the said address. He places heavy reliance on the summon which is on the record, which has also been verified from the original files, which bears the seal of M/s Apple Finance Limited received as on 10 th December, 1998. It is also submitted by the Plaintiff that in the MRTP proceedings, the Plaintiff had mentioned the factum of filing of the present suit though the number etc. was not given. However, the Defendant was well aware of the proceedings pending before this Court as is clear from the Reply and written submissions filed on behalf of the Defendant in the MRTP. Reliance is also placed on a reply filed by M/s Apple Finance Limited to the MRTP complaint in which the following averment has been made:
"7. That the underwriters Agreement contains an arbitration clause under which any dispute arising out of or in relation thereto ought to be referred to Arbitration as per the Arbitration and Conciliation Act, 1996. The complainant has already filed a petition before the Delhi High Court Petition No.1299A of 1998 for Appointment of Arbitrator to decide the same alleged cause of action against the Respondent and the said Petition is pending before the Delhi High Court. The complainant is estopped from initiating the same proceedings on the CS (OS) 1199A/1998 Page 3 of 7 same alleged cause of action before the MRTP Commission."
The said reply is dated 10th August, 2001. The extract from the written submissions are set out herein below:
"2. Compensation Application is not Maintainable due to parallel proceedings on the same cause of action and claiming same relief:
That the Petitioner has instituted a civil proceeding for recovery of underwriting amount against the Respondent and the same is evident from para 14 at page 8 of the Compensation Application wherein it has been stated that "Although civil proceedings for recovery of underwriting amount is pending but the present petition is independent and distinct for a separate cause of action i.e. for deceptive and/or unfair trade practice and is maintainable." and such the Compensation Application is not maintainable before this Hon‟ble Court. Clause 20 of the Underwriter Agreement dated 10.01.1995 stipulates an arbitration proceedings under which any dispute arising out of or in relation thereto ought to be referred to Arbitration as per the Arbitration and Conciliation Act, 1996 and the Petitioner/Complainant has already filed a Petition bearing No.1299A/1998 before the Hon‟ble High Court of Delhi against the Respondent for appointment of Arbitrator to decide the disputes between the parties on the same cause of action as has been alleged in this Compensation Application and said petition is pending adjudication."
9. This Court has heard the submissions of the parties. The history of this litigation is dates back 20 years and an order which was passed on 22nd April, 2010 is being sought to be challenged by way of the present application. Going by the strict interpretation of Order IX Rule 13, there is no doubt that the submission of Mr. Chaudhari may be correct i.e. that if a CS (OS) 1199A/1998 Page 4 of 7 summon is not duly served, an application is for setting aside the order is maintainable. However, the facts in the present case and the chronology of the events reveal that both parties have committed serious blunders in the prosecution and defence of this litigation.
10. First, Defendant has received the summon in the present suit as is clear from the original summon bearing the Defendant's seal and receipt dated 10th December, 1998. The summon is clear that it bears the seal of M/s Apple Finance Limited with the signature of the person who has received it and the date. Going by the provisions of Order IX Rule 13, this summon constitutes sufficient service. There is no allegation that the said seal was fabricated.
11. Secondly, the other reason which compels the Court to not to accept the application of the Defendant is that pursuant to the MRTP complaint filed by the Plaintiff, the Defendant had put in appearance in the said proceedings and had complete knowledge of the suit pending before the Delhi High Court. Though, the suit number is wrongly mentioned in the reply and in the written submission as 1299A/1998, the fact that the suit was pending and the orders in the suit came to be passed, several years later in 2010 showed that there was no reason for the Defendant to have not appeared in these proceedings and exercised due diligence. All the parties in the MRTP were duly aware of the pendency of the present petition before this Court, where the Plaintiff was seeking appointment of an Arbitrator. So much time having passed since the filing of the present suit and the Defendant having had the knowledge of the proceedings, this is not a fit case for exercise of jurisdiction under Order IX Rule 13.
12. One of the biggest challenges in a civil dispute is the service of CS (OS) 1199A/1998 Page 5 of 7 defendants. It is usually noticed that at the stage of service of summons and notices, considerable time is elapsed and enormous effort is spent even by the Registry of the Court in ensuring the issuance, delivery and reporting of summons. Parties who are served and who have knowledge usually keep avoiding the court process till adverse orders are passed and then seek setting aside of the orders, as has been done in the present case. The Defendant was served way back in 1998. Twenty years have gone by. The factum of service may not have been brought to the notice of the Court, leading to further fresh summons being issued and service by publication being effected. However, that does not mean that the service done in 1998 is to be ignored and simply made a `relic‟ in the records of this Court. The Defendant had complete knowledge of the present suit, but chose to stay away. Such conduct is always fraught with severe consequences. Since the award has been passed, the Defendant has already filed a separate petition challenging the award. The same would be considered on its own merits. But to set aside the appointment of the arbitrator at this stage, would be giving a premium to conduct such as in the present case, wherein a party after acquiring knowledge can chose at its own luxury to approach the court seeking setting aside of the said appointment.
13. Finally, there was no reason for the Plaintiff not to have given the Mumbai address which was mentioned in the MRTP complaint when service was not being affected in the present suit. The Plaintiff continued to prosecute the present suit on the basis of the 811, Indra Prakash Building, 21, Barakhamba Road, New Delhi-110001. This has led to the filing of the present application and so much consumption of judicial time, which could have been completely avoided. Both parties were doing their best to hide CS (OS) 1199A/1998 Page 6 of 7 from each other and the Court, the real facts.
14. Considering that so much judicial time has been spent on this matter including the present application, the conduct of the parties having not been completely above board, while rejecting the application under Order IX Rule 13 CPC, both parties are directed to deposit Rs.10,000/- each as costs in the Delhi High Court Advocates' Welfare Trust.
15. I.A.23437/2014 and I.A.23436/2014 are accordingly dismissed. I.A. 11896/2017 (for grouping of matters)
16. This is an application filed for being listed along with I.A nos. 23437/2014 and 23436/2014.
17. In light of the above order passed, this application does not survive and is dismissed as being infructuous.
CS (OS) 1199A/1998
18. List on 27th November, 2018.
PRATHIBA M. SINGH JUDGE SEPTEMBER 14, 2018 Rahul CS (OS) 1199A/1998 Page 7 of 7