Delhi High Court
The Motor & General Finance Ltd. vs T.K. George And Anr. on 23 July, 2001
Equivalent citations: 95(2002)DLT350
JUDGMENT V.S. Aggarwal, J.
1. The Motor and General Finance Limited, hereinafter described as the applicant has filed the present petition under Section 20 of the Arbitration Act, 1940.
2. The facts alleged by the applicant can well be delineated. On 31st March, 1986 respondent no. 1 (T.K. George) and respondent no. 2 (M. Stalin) as hirer and guarantors respectively made a proposal to the petitioner/applicant for hiring a Tata Diesel Truck Model 1986. The applicant company accepted the proposal and entered into a hire purchase agreement dated 31st March, 1986. Respondent no. 1 in pursuance of it agreed to take the said vehicle on hire from the applicant company with respondent no. 2 as guarantor. The liability of both the respondents was co-extensive. The amount was to be paid in 47 Installments and accordingly the delivery of the vehicle was given to respondent no. 1.
3. Respondent no. 1 stated to have paid only a sum of Rs. 76,300/- towards hire money and Rs. 11,000/- towards incidental expenses. As per the agreement, the balance amount had not been paid. Applicant company issued a registered notice and terminated the hire of the said vehicle and called upon the respondents to pay the balance amount. Contending that respondents are jointly and severally liable to pay the amount have failed to pay the same. It is the applicants version that the disputes have arisen. As per clause 6 of the hire purchase agreement all disputes, differences or claims are to be settled by arbitration and have to be referred to the named arbitrator.
4. Notice of the application had been issued. Respondent no. 1 had been proceeded ex parte while respondent no. 2 filed the written statement. It had been pleaded that the agreement had been entered into on 31st March, 1986 and the present petition is thus barred by time because it has been filed after the expiry of three years period. The jurisdiction of this court to entertain the petition was also challenged contending that respondent no. 2 had signed the agreement in Kerala without knowing the contents thereof. It was denied that respondent no. 2 stood as a guarantor and liability to pay as such was denied. On 26th February, 1998 this court had framed following issues:-
1. Whether there exists a valid arbitration agreement between the parties?
2. Whether the petition is barred by limitation?
3. Whether this court has territorial jurisdiction to try this petition?
4. Relief, if any.
5. Subsequently even respondent no. 2 had not put in appearance and evidence was led by filling of the affidavit on behalf of the applicant.
6. Issue No. 1: Exhibit PW 2/1 has been proved and exhibited as the agreement between the parties. It clearly reveals that respondent no. 1 was the hirer with respondent no. 2 as his guarantor. Due execution has been proved by virtue of the affidavit placed on record. In fact respondent admitted that the agreement is signed by him though he asserts in the written statement that he did not know the contents. These later facts that respondent no. 2 was not aware of the contents has not been proved. Therefore, it must be held that the said agreement is duly proved.
7. Clause 6 of the same reads:-
Clause VI - (a) All disputes, differences, and or claims arising out of this HIRE PURCHASE AGREEMENT, including of non payment of hire amount or other dues payable by the hirer/hirers and guarantor/guarantors to the owners 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 Vikramajit Sen, Advocate, Delhi or in case of his death, refusal, neglect, incapability to act as an arbitrator to the sole arbitration of Shri Inderjit Gulati, Advocate, Delhi. The reference to the Arbitrator shall be within the CLAUSE, TERMS AND CONDITIONS of this Agreement. The award given by the Arbitrator shall be final and binding on all the Parties concerned.
8. It clearly reveals that there was an arbitration clause and consequently issue no. 1 is decided in favor of the applicant holding that there was a valid arbitration agreement between the parties.
9. Issue No. 2: The agreement between the parties had been entered into on 31st March, 1986. It is on strength of this fact that plea has been offered that petition has been filed after the expiry of three years of the said agreement and therefore is barred by time. The petition as such had been filed on 17th October, 1989. But perusal of the different clauses of the agreement reveals that respondent no. 1 had to make payment of the amount advanced in Installments. Therefore it would be a continuous cause because each payment that had been made would extend the period of limitation. This court on 22nd September, 1999 had perused the ledge account pertaining to respondent no. 1. The order recorded that there was a credit entry of Rs. 10,600/- in favor of respondent no. 1 dated 29th June, 1988. In other words, it tantamount to acknowledgement of the amount that was issued and thus period of limitation would be running from that date when last payment is stated to have been made. From the said date period of three years had not expired. Necessarily it must be held that petition/application was within time.
10. Issue No. 3: Respondent no. 2 picked up the plea that the courts at Delhi had no jurisdiction because he had executed the agreement at Kerala. The place where the agreement was executed at Kerala has not been mentioned. Further perusal of the agreement PW 2/A reveals that there is nothing on the record to indicate that the agreement had been executed by respondent no. 2 at any place in Kerala. In fact perusal of the agreement particularly clause 16 reveals that agreement had been accepted and executed at New Delhi and all the terms and conditions had to be performed at New Delhi. Consequently the Delhi courts will have jurisdiction to entertain and try the petition. Issue accordingly is decided in favor of the applicant.
11. Relief: For these reasons the application is allowed. The hire purchase agreement is valid and reference is made to the arbitrator Shri Inderjit Gulati for deciding the disputes pertaining to the said agreement.