Bombay High Court
Masumi Overseas Pvt. Ltd. And Anr vs The State Trading Corporation Of India ... on 27 April, 2022
Bench: K.R. Shriram, N.R. Borkar
950-IAL-12527-2022.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL APPEAL (L) NO. 12518 OF 2022
WITH
INTERIM APPLICATION (L) NO. 12527 OF 2022
Masumi Overseas Pvt. Ltd. and another ... Appellants/Applicants
Versus
The State Trading Corporation of India Ltd.
and another ... Respondents
.........
Mr. Sanjeev Rawat alongwith Ms. Kranti Garg and Ms. Kavita Vijaypure
instructed by Mr. Dhairyasheel Sutar for the Applicant/Appellant.
Ms. Laxmi Maria Jenkins for Respondent No.1.
.........
CORAM : K.R. SHRIRAM AND
N.R. BORKAR, JJ.
DATED : APRIL 25, 2022 P.C. :-
1. Petitioner is impugning an Order passed by Learned Single Judge of this Court on 6th April, 2022 rejecting Petitioner's application to refer the disputes to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 (the said Act).
2. Appellant No.1 is a Company. Appellant No.2 is a Director of Appellant No.1, who was one of the Applicants in Notice of Motion which came to be rejected by the impugned order. Respondent No.2 is another Director of Appellant No.1 but has not joined in the Appeal with the Appellants because Mr. Rawat states his whereabout are not known. Kanchan P Dhuri 1 / 5
950-IAL-12527-2022.odt
3. Plaintiff (Respondent No.1) has filed the Summary Suit against Appellants and Respondent No.2 (hereinafter referred to as Defendants) for recovery of a sum of Rs.87,24,63,640/- (Rupees Eighty Seven Crores Twenty Four Lakhs Sixty Three Thousand Six Hundred Forty Only) with interest of Rs.7,08,60,732/- (Rupees Seven Crores Eight Lakhs Sixty Thousand Seven Hundred Thirty Two Only) calculated @ 15% p.a. It is Plaintiff's (Respondent No.1) case that Defendants are also liable to pay to Plaintiff further interest at the rate of 15% from the date of the filing of the suit till payment and realization.
According to Plaintiff (Respondent No.1), Defendants are jointly and severally liable to pay to Plaintiff the aforesaid amount towards Post Shipment Credit facility availed of by Defendants. Inspite of repeated reminders and issuing Demand Notices Defendants have failed and neglected to make the payment to Plaintiff. As per Plaintiffs, Appellant No.2 and Respondent No.2 have submitted their personal guarantee dated 7 th January, 2010 admitting the liability to pay to Plaintiffs the amount of the outstanding Exports Bills of the Foreign buyers in view of the Post Shipment Credit facility availed of by Plaintiff from the Bankers of Plaintiff.
According to Ms. Jenkins, Appellants are only resorting to dilatory tactics to avoid paying huge amounts to Respondent No.1 - State Trading Kanchan P Dhuri 2 / 5 950-IAL-12527-2022.odt Corporation of India.
4. We have considered the impugned order and we find no reason to interfere. Appellants had taken out Notices of Motion No.1697 of 2012 and 1698 of 2012 to refer the disputes to arbitration. These Notices of Motion came to be dismissed by an order dated 13 th January, 2014. Appellants carried the matter to the Apex Court which also dismissed the Special Leave Petition. The decision was based on the Judgment of the Apex Court, Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya1.
5. Mr. Rawat submitted that by virtue of the amendment to Section 8, w.e.f. 23rd October, 2015, Appellants are within their right to seek a reference once again to refer the disputes to arbitration. Mr. Rawat submitted that sub-section (1) of section 8 now says ".... if a party to the arbitration Agreement or any person claiming through or under him, so applies ...." . Mr. Rawat submitted that therefore, a Director of the Company who is Appellant No.2 can apply under Section 8, since the Director (Appellant No.2) is claiming through the Company. In our view, this is a fallacious argument because even if a party to the Arbitration Agreement or any person claiming through or under him can file an Application under Section 8 still the Agreement is only one. An Application by the Company itself has been rejected by the Order dated 13th January, 2014 and therefore, on the same 1 AIR 2003 SC 2252 Kanchan P Dhuri 3 / 5 950-IAL-12527-2022.odt Agreement some other party cannot claim.
6. Moreover, when we asked Mr. Rawat to show us whether the personal guarantee Agreement has any Arbitration clause, Mr. Rawat stated that the recital of the personal guarantee refers to the Agreement dated 15 th December, 2006 between Appellant No.1 and Respondent No.1 and therefore there is incorporation of the arbitration clause by reference. Mr. Rawat relied upon a Judgment of the Apex Court in Vidya Drolia and others v. Durga Trading Corporation2. Though Mr. Rawat did not submit any preposition relying on this Judgment, considering the issue that was before the Apex Court, we would assume that Mr. Rawat wanted to make submission on the scope and ambit of jurisdiction of this Court while considering an application under Section 8 of the said Act. But that Judgment of the Apex Court was basically to decide, whether the ratio expressed in Himangni Enterprises vs. Kamaljeet Singh Ahluwalia3 that landlord-tenant disputes governed by the provisions of the Transfer of Property Act, 1882, are not arbitrable as that would be contrary to public policy was correct. This Judgment does not come to the aid of Mr. Rawat. Further the recital in the personal guarantee cannot be even considered as an incorporating clause. The recital only states that there is an Agreement dated 15 th December, 2006 entered into between Appellant No.1 and Respondent No.1. Mr. Rawat was unable to show any 2 2021(2) SCC 1 3 (2017) 10 SCC 706 Kanchan P Dhuri 4 / 5 950-IAL-12527-2022.odt clause which states that Agreement dated 15 th December, 2006 is incorporated by reference in the personal guarantee, let alone the arbitration clause in the Agreement dated 15th December, 2006 being incorporated in the personal guarantee.
7. Moreover, we are in concurrence with the views expressed by the Learned Single Judge that if the Appeals which have been filed against the Orders dated 25th June, 2019 and 7th August, 2019 are decided, it would take care of the concern of Appellants.
8. Appeal therefore dismissed with costs in the sum of Rs.2 Lakhs to be paid to Respondent No.1 within two weeks. The cheque shall be forwarded to the Advocate for Respondent No.1.
9. Interim Application also stands dismissed.
( N.R. BORKAR, J. ) ( K.R. SHRIRAM, J. ) Digitally signed by KANCHAN KANCHAN PRASHANT DHURI PRASHANT Date: DHURI 2022.04.29 17:14:26 +0530 Kanchan P Dhuri 5 / 5