VISHWA NATH KHANNA v. RAM SWARUP RASTOGI AND SONS — 1986 DIGILAW 20 (DEL)

M. K. Chawla ( 1 ) ON 25th January, 1975, the petitioner, Sh. Vishwa Nath Channa filed suit No. 52-A/75 under Section 20 of the Arbitration Act seeking the direction of the filing of an arbitration agreement dated 2. 1. 73 in the Court and the reference of disputes to the arbitration of Motion picture Association, Delhi. As per the averments, respondent No. 1, M/s Ram Swaroop Rastogi and Sons is a partnership firm consisting of Mr. Ram Swaroop Rastogi, his wife, Smt. Phool Mati Rastogi and their sons S/sh. Jagdish Kumar Rastogi, Kuldeep Rasrtogi and Kamal Kumar Rastogi. This firm owns the cinema known as Shilpi Theatre at Lucknow. ( 2 ) MR. Vishwa Nath Khanna, the petitioner is a distributor of picture and is carrying on his business at Delhi. On 2nd January, 1973, Sh. Vishwa Nath Khanna and Sh. Kuldip Rartogi entered into an agreement whereunder the petitioner was given the complete control of the arrangement for the screening of motion pictures in Hindi/english/other languages in Shilpi Theatre for a period of 156 weeks with an option to extend the period by another 104 weeks. The petitioner was required to pay a fixed sum of Rs. 5,100. 00 per week as the hire amount for the first contracted period and Rs. 5,350. 00 per week for the option period. The box office collections were to be paid by the second party, i. e. Sh. Kuldeep Rastogi and he was required to deposit the said amount after, deducting the entertainment tax in the account of the petitioner. The petitioner was further required to deposit a security of Rs. one lac which is returnable by the second party in weekly instalments of Rs. 1,000. 00 which was to be deducted by the petitioner out of the hire money payable to the second party every week. Rupees 80,000. 00 were to be deducted in the abovesaid manner and the balance of Rs. 20,000. 00 were to be adjusted in the last month. This agreement contained an arbitration clause. ( 3 ) THE above-said arrangements worked satisfactorily for 90 weeks except that the deposit of the daily box office collections had become irregular and large amounts becomes payable to the petitioner on that account. 20,000. 00 were to be adjusted in the last month. This agreement contained an arbitration clause. ( 3 ) THE above-said arrangements worked satisfactorily for 90 weeks except that the deposit of the daily box office collections had become irregular and large amounts becomes payable to the petitioner on that account. In November, 1974, the petitioner got comprehension that the respondents were negotiating with another party for screening and exhibition of pictures during the continuance of the agreement with the petitioner. Thereafter, lot of litigation ensued between the parties which ultimately led to the filing of the present petition. ( 4 ) THE respondents, however; contested the petition and raised a number of preliminary objections. On merits, they took up the stand that Sh. Kuldeep Rastogi had no authority to enter into the agreement in question on behalf of the firm. In fact he had no discussion with the petitioner at Delhi. After the framing of the issues and the filing of the affidavits by way of evidence in support of their stand, R. N. Aggarwal, J. by order dated 14th October, 1977 allowed the petition and pass the following order : "in view of my findings on various issues I allow the petition and order that the arbitration agreement be filed in Court and disputes detailed in paragraph 14 of the amended petition, except the dispute regarding the payments made over and above the amount of Rs. one lac, be referred to the arbitration of the Motion Pictures Association. The Association will appoint the areitrator/arbitrators within 4 weeks to decide the disputes. The petitioner will have his costs from the respondents. I assess the counsel fee at Rs. 5. 000. 00. " ( 5 ) THE petitioner has filed the present application praying for the appointment of another sole arbitrator/arbitrators in place of the appointed arbitrators, Sh. Ramesh Sahni and Sh. A. K. K. Raman who have resigned and refused to act as arbitrators in this case. The petitioner has alleged that before the arbitrators, the parties filed the statement of claim and the counterclaim. In spite of the extension of time for making and publishing the award the learned arbitrators have not taken any further steps in the proceedings and in fact, have refused to act as arbitrators. The petitioner has alleged that before the arbitrators, the parties filed the statement of claim and the counterclaim. In spite of the extension of time for making and publishing the award the learned arbitrators have not taken any further steps in the proceedings and in fact, have refused to act as arbitrators. The sub and substance of the respondents defence is that the present petition has become infructuous since all the claims refer to arbitration by the order of this Court have already been settled and there remains nothing to be adjudicated upon. ( 6 ) HOWEVER, the fact remains that the previous arbitrators have neglected to complete the proceedings and to make or publish their award. During the course of the arguments learned counsel for the parties agreed that there is no harm in issuing the directions to the Motion Pictures Association, Delhi to appoint another sole arbitrator/arbitrators according to the rules. The arbitrators shall announce the award within a period of four months from the date they enter upon the reference. This disposes of OMP 100/83. ( 7 ) DURING the pendency of the proceedings of suit No. 52-A of 1975 and the other litigation at Lucknow the petitioner succeeded in getting a Receiver appointed of Shilpi Theatre, Lucknow from Hon ble the Supreme Court of India. This order was to remain operative till the disposal of the said suit 52-A/75. Subsequently, the petitioner also succeeded to continue the interim Receiver from this Court. The petitioner has now moved the petition under Section 20 of the Arbitration Act praying for the reference of disputes to the arbitrators to be appointed by the Motion Picture Association in OMP 100/83. These disputes are mentioned in paragraph 14 of the amended petition. It is the case of the petitioner that these very disputes arise out of the agreement dated 2. 1. 73 and in fact form part of the statement of claim already filed before the arbitrators. It is also alleged that these disputes are of clarificatory nature to the disputes already before the learned arbitrators as per the order of R. N. Aggarwal, J. dated 14. 10. 77. ( 8 ) THE respondents, in their reply, have taken same stand of the disputes having already settled by efflux of time on which no further proceedings are required to be taken. 10. 77. ( 8 ) THE respondents, in their reply, have taken same stand of the disputes having already settled by efflux of time on which no further proceedings are required to be taken. It is also alleged that most of the disputes are outside the scope of agreement dated 2. 1. 73 and barred by time. ( 9 ) I have carefully perused the disputes mentioned in the petition which are sought to be referred to the learned arbitrators. In these disputes the petitioner has claimed certain amount for the breaches alleged to have been committed by therespondent of the terms and conditions of the agreement dated 2. 1. 73. In his previous suit the petitioner has not mentioned the amounts against each dispute. Learned for the petitioner state at the Bar that in their statement of claim before the learned arbitrators they have almost claimed these very amounts made the subject matter of the present petition. Even otherwise, I am of the opinion that these disputes arise out of the agreement dated 2. 1. 73 and are subject matter of the disputes already pending before the learned arbitrators. As to whether these disputes have become infructuous because of the efflux of time or not is a question, that can also be gone into by the learned arbitrators. The respondents shall be at liberty to contest the claim set out in the present petition. Once the respondents accept the execution of the agreement containing an arbitration clause there is no reason as to why the disputes mentioned in paragraph 14 of this petition be not referred to the arbitrators who have already been required to enter upon the reference and decide the disputes on per the order of this Court dated 14. 10. 77. This suit stands disposed of. ( 10 ) THIS is respondent s application under Section 33 of the Arbitration Act seeking the declaration that the arbitration agreement dated 2. 1. 73 between the parties has been exhausted and the reference made to the Motion Pictures Association of Delhi for arbitration of the disputes mentioned in para 14 of the plaint in suit No. 52-A/75 be withdrawn having become infructuous. ( 11 ) IN view of my order in OMP 100/83 and S. No. 779-A/81 this application stands disposed of. 1. 73 between the parties has been exhausted and the reference made to the Motion Pictures Association of Delhi for arbitration of the disputes mentioned in para 14 of the plaint in suit No. 52-A/75 be withdrawn having become infructuous. ( 11 ) IN view of my order in OMP 100/83 and S. No. 779-A/81 this application stands disposed of. ( 12 ) THIS is the petitioner s application under Section 41 read with Schedule 2 of the Arbitration Act for according permission to execute the decree passed in Suit No. 94/1976 by the Commercial Sub Judge, Delhi from the amounts lying in this Court to the credit of the respondents. ( 13 ) AS observed earlier, the petitioner succeeded in the appointment of a Receiver from the Supreme Court of India and thereafter from this Court to manage the affairs of Shilpi Theatre, Lucknow. During the Receiver, after clearance of all dues, the Receiver deposited a sum of Rs. 71,850$39 in this Court out of which a sum of Rs. 7,000. 00 was paid to the petitioner towards costs. The balance amount is still lying in this Court. ( 14 ) DURING the subsistence of the petitioner filed a suit bearing No. 94/,76 in the Court of the Commercial Sub-Judge, Delhi seeking a decree in the sum of Rs. 20,000. 00 along with interest @ 12% per annum. After contest the suit was decreed on 4. 7. 81. The total decretal amount recovered by the petitioner against the respondents as on the date of the filing of the present application comes to Rs. 42,537. 35. ( 15 ) DURING the course of hearing arguments, learned counsel for the respondents agreed that his clients have no objection if the amount of the decree of suit No. 94/76 is allowed to be withdrawn from the amounts already tying deposited in their account in this Court and the balance amount be paid to the respondents. Learned counsel for the petitioner has no objection to the same. ( 16 ) I, therefore, allow the application and direct the petitioner to withdraw the amount of the decree from the amount lying deposited in the name of the respondents. The balance amount be paid to the respondents. IA stands disposed of.