Delhi High Court
Motor & General Finance Ltd. vs M/S. Milap Bus Service (Regd.) on 20 July, 2001
Equivalent citations: 94(2001)DLT171, 2002(63)DRJ148
Author: Sharda Aggarwal
Bench: Sharda Aggarwal
ORDER Sharda Aggarwal, J.
1. It is a petition under Section 20 of the Indian Arbitration act, 1940 for filing of the arbitration agreement in Court and referring the disputes having arisen between the parties to the Arbitrator named in the arbitration agreement.
2. The petitioner's case is that the motor vehicle bearing Engine No. ALT-97840, Chasis No. ALC-116066 and Registration No. UT-7686 was given on hire to respondent No.1 by Hire Purchase agreement dated 30th June, 1982. Respondent No.2 had guaranteed the due performance of the said Agreement by respondent No. 1, as mentioned in Clause C said Agreement. Clause VI of the said Agreement provides for reference of disputes to the sole arbitration of one Shri Inderjit Gulati, Advocate and in the event of his refusal or inability to act as an arbitrator to the sole arbitration of Shri Bal Krishan Jain, Advocate. According to the terms of the said agreement, the respondent No.1 agreed to pay Rs.1,19,680/- in 24 hire Installments. In the event of respondent No.1 making default in payment of any monthly hire payment on the due date, respondent was bound to restore the possession of the said vehicle to the petitioners. The respondent No.1 defaulted in making payment of Installments as he paid only as sum of Rs.43,000/- towards hire money. He filed to pay the balance sum of Rs..76,680/- towards hire money and another sum of Rs.27,816/- towards compensation charges for late payment, despite number of requests and a registered notice dated 17th December, 1984. It is alleged that the disputes having arisen between the parties and there being an arbitration clause, the arbitration agreement be directed to be filed in the Court and Disputes be referred to the arbitrator named in the Agreement.
3. The respondent filed reply raising a number of preliminary objections by treating the petition as a plaint under the Code of Civil Procedure. As regards Hire Purchase Agreement, respondent's case is that initially the Hire Purchase agreement was terminated in the year 1982 and instead they entered into a loan agreement with the petitioners. The respondents' claim is that they had infact paid an amount of Rs.64,470/- to the petitioners but the petitioners gave credit only for Rs.43,000/-. The contention is that despite their requests the petitioners failed to give the details of the account. According tot he respondents, the form of Hire Purchase agreement was not filled up when their signatures were obtained. In the replication/rejoinder petitioners reiterated the claim made in the petition and denied that it was a Loan Agreement and not a Hire Purchase Agreement.
4. On the pleadings of the parties, following issues were framed on 3rd March, 1986:
1. Whether the petition has been filed by a duly authorised person? 1986? OPP.
2. Whether the arbitration agreement contained in Clause VI of the Agreement dated June 30, 1982 is vague and unenforceable? OPR
3. Whether the agreements were signed in blank? OPR
4. Whether the the disputes or any part of the disputes raised by the petitioner in the petition are beyond the scope of the reference ? OPR
5. Relief.
5. Parties filed affidavits by way of the evidence. After two years, respondents moved an application praying that the dependents, who had filed the affidavit on behalf of the petitioners, be produced as witnesses so as to enable the respondents to cross-examine them. That application was allowed in July, 1996. Thereafter, one of the deponents Mr.A.K.Ahluwalia was produced for cross-examination. The other deponent was not produced by the petitioner as he had left the service. Mr.A.K.Ahluwalia was cross-examined on 29th August, 1997. Thereafter respondents took a number of adjournments to adduce their evidence. Ultimately, when respondents failed to adduce any evidence, their evidence was closed on 13th July, 2000.
6. I have heard Ms. Tara Ganju, counsel for the petitioners and Mr.H.S.Dhir, learned counsel for the respondents and carefully perused the records.
7. Learned counsel for the petitioners contends that the present petition is a simple petition under Section 20 of the Indian Arbitration Act (in short the Act) of which there are two requirement: (i) that there is an arbitration agreement; and (ii) the agreement applies to the disputes having arisen between the parties. It is also submitted that these are summary proceedings and are not to be treated as civil suit as contemplated under the Code of Civil Procedure. It is contended that even though no issues were required to be framed, however, taking the issues as they were framed, burden to prove issue No.1 was on the petitioners and the burden to prove issues No.2, 3 and 4 was put on the respondents which they have failed to discharges as no evidence has been adduced by them. It is submitted that as regards issue No.1, the petition has been filed by a duly authorised person and the same stands established by the statement of Mr.A.K.Ahluwalia, who filed his affidavit by way of evidence. It is pointed out that in his affidavit, Mr.Ahluwalia categorically stated that the petitioner company is duly incorporated under the Companies Act. Copy of the Incorporation Certificate of the petitioner company has been stated to be true and correct as per the original certificate of incorporation issued by the Registrar of Companies. He also deposed that he being the General Power of Attorney and duly authorised by the company had signed and verified the petition. The witness was cross-examined by counsel for the respondents. There is no cross-examination of the witness on issue No.1.
8. Mr.H.S.Dhir, counsel for the respondents contend that since the Certificate of Incorporation and General Power of Attorney have not been exhibited, they cannot be read in evidence and as such they remain unproved and the petition should failed on this ground alone. The arguments of learned counsel for the respondents, however, do not convince me. The marking of document as an Exhibit is only for the purposes of the identification ;of a document. Mere exhibiting of a document does not tantamount to its proof. Reliance made by the respondents on the decision of this Court in the case of Sudir Engineering Company Vs. Nitoc Roadways Ltd., is mis-conceived. The judgment does not help them. The ratio of the decision is that an endorsement of exhibit number of a document does not per se prove the document, to enable the same to be admissible in evidence. The crux of the decision is that mere exhibiting of a document does not lead to the conclusion that the document is proved and is admissible in evidence. In other words, an unproved document cannot be taken as proved by mere exhibiting the same. This finding was returned while referring to a number of decisions of Lahore High Court and a Supreme Court decision reported as Sait Taraji Khumachand Vs. Yelamariti Satyam, .
9. It is further urged by the learned counsel for the respondents, that a petition under Section 20 of the Act is to be treated as a suit and as such the petition is liable to be dismissed on Issue No.1 itself. In find the contention of the learned counsel, avoid of any merits. The petition under Section 20 of the Act cannot be said to be a plaint under the Code of Civil Procedure. The language of Section 20 of the Act clearly indicates that the Section relates to a stage prior to the institution of a suit. No doubt sub-section (2) of Section 20 of the Act provides that such application shall be in writing and shall be registered as a suit, but at the same time, it cannot be treated as a plaint filed under the Code of Civil Procedure. A perusal of sub-section (1) of Section 20 of the Act clearly show that it is a stage prior to the institution of the suit. Under the said Section, if notice is given to the other party and if sufficient cause is not show, the Court shall order that the agreement be filed in the Court and refer the matter for arbitration to the Arbitrator appointed by the parties or to an arbitrator appointed by the Court. This question came up for consideration before the Supreme Court in the case of P.A.Ahammed Ibrahim Vs. Food Corporation of India, , wherein it was held as under:
"Reading the order as above, it is apparent that the learned Judge has not verified the provisions of Section 20 of the arbitration Act. Sub-section (20) no doubt provides that the said application shall be in writing and shall be numbered and registered as a suit, but, at the same time, it cannot be stated as a plaint filed under the Code of Civil Procedure. The language of sub-section (1) is clear which proves that in case of an arbitration agreement "before the institution of any suit with respect to the subject-matter of the agreement or any part of it..." any person may apply to a court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in court. This would clearly mean that it is a stage prior to the institution of the suit and is not a suit. Under the said section after notice is given to the other party and it no sufficient cause is shown, the court shall order the agreement be filed in the Court and refer the matter for arbitration to the arbitrator appointed by the parties or to an arbitrator appointed by the court. The procedure for deciding the said application is different from deciding the suit. Final order which is required to be passed in the said application is either to refer the matter to the arbitrator or to reject the same and there is no question of passing any decree in favor of the applicant. Section 20 nowhere provides that application filed for referring the dispute to the arbitrator is to be treated as a plaint under CPC. Hence, it cannot be considered to be a plaint."
10. In this view of the matter, there need not be any formal evidence on the point as to whether the petition has been filed by a duly authorised person. In any case, the petitioners have lead evidence by way of affidavit of Mr.A.K.Ahluwalia, who had signed and verified the petition and the witness was subjected to cross-examination, but there is no cross-examination whatsoever on the point as to whether the petition has been signed by a duly authorised person. Issue No.1 stands proved and is accordingly decided in favor of the petitioners.
11. No evidence has been lead by the respondents on issues No.2, 3 and 4 which relate to the Hire Purchase Agreement and the arbitration clause contained therein. In any case, even a reading of these three issues suggest that the Hire Purchase agreement and the arbitration clause as such is not denied by the respondents. According to the respondents, clause VI of the Hire Purchase Agreement dated 30th June,1982 is vague and unenforceable and the Agreement was got signed by the respondents while it was blank. Since no evidence has been lead on these issues, they are decided against the respondents. The petitioners have placed on record the original Hire Purchase Agreement containing the arbitration clause which is as under:
"Clause VI - (a) All disputes, differences and or claims, arising out of this Hire Purchase 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 referee to the sole arbitration of Shri Inderjit Gulati, Advocate, Delhi or in case of his death, refusal, neglect, inability, or incapability to act as an arbitrator to the sole arbitration of Shri Bal Krishan Jain, Advocate, Delhi. The reference to the arbitrators shall be within the clauses, terms and conditions of this Agreement. The award given by the Arbitrator shall be final and binding on all the parties concerned.
(b) It has been expressly explained by the owners to the Hirer and to the Guarantor that either of this aforementioned Arbitrators are usually appointed by the owners in the hire purchase agreement accepted by them and inspite of the information supplied to them, the said Hirer and Guarantor have willingly agreed to the nomination of the said Arbitrator/s, and they shall not raise any objection against the appointment of any one of the arbitrator/s on the ground that the arbitrator/s is/are connected in any manner, with the owners.
(c) Any party desirous of making a reference to the Arbitrator, shall give fifteen days' Registered Ack. 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 it would ordinarily have been delivered by post. The notice sent by the Arbitrator, to the parties, by registered post, at the addresses mentioned in the Hire Purchase 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."
12. According to the petitioners, respondent No.1 defaulted in making payment of the hire Installments and filed to pay the balance Installments with compensation despite repeated requests and written notices. According to the petitioners, respondent No.1 paid a sum of Rs.43,000/- as against a total sum of Rs.1,04,496. Thus, a sum of Rs.76,680/- had fallen due towards hire money and another sum of Rs.27,,816/- towards compensation charges for late payment. Respondents in their written statement/ reply have admitted that they had been making payments by demand drafts though, according to them, receipts have not been furnished by the petitioners. According to them, a sum of Rs.64,470/- was paid against which a credit of Rs.43,000/- only was given to them. Though at one stage, the respondents contend that the transaction was a loan and not hire purchase and they had signed the document when it was blank, but no evidence has been lead to establish theses contentions. Infact a comprehensive reading of the written statement shows that the existence of the agreement is not disputed. In any case, all the objections which the respondents want to take with regard to the Agreement can be looked into by the Arbitrator. A perusal of the arbitration clause shows that disputes regarding the claim of the petitioners against the respondents clearly fall under this clause.
13. The above discussion shows that there is an arbitration agreement and the agreement applies to the differences which have arisen between the parties. Learned counsel for the petitioners contend that once these two requirements are fulfillled and the arbitration agreement having been filed, disputes between the parties should be referred to the arbitrator named in the arbitration clause. For this proposition, learned counsel has placed reliance on a recent decision of the Supreme Court in the case of Chander Nath Ojha, Jaipur Vs. Suresh Jhalani & ors., wherein it was as under:
"For petition under Section 20 of the Act, two two requirements are: (1) that there is an arbitration agreement, and (2) the arbitration agreement applies to the differences which have arisen between the parties. After theses requirements are met, then the court proceeds to file the arbitration garment and direct the disputes to be referred to arbitration."
14. For the reason stated above, the petition deserves to be allowed. The same is accordingly allowed with costs. I appoint Shri Inderjit Gulati, Advocate, Chamber No.23, Tehsil Bulding, Tis Hazari Courts, Delhi as the sole Arbitrator to adjudicate upon all the disputes, differences and claims between the parties, arising out and in connection with the Hire Purchase Agreement dated 30th June,1982. On entering upon the reference, the Arbitrator shall issue notices to the parietes and adjudicate upon the matter and deliver the Award in accordance with law. The Arbitrator shall fix his own remuneration.