GURU NANAK INVESTMENT COMPANY v. JAI PAL SINGH — 1986 DIGILAW 386 (DEL)

S. B. Wad ( 1 ) THIS is an appeal against the order of the Additional District and Sessions Judge, Delhi, dated 26-7-1985. Though the said order the learned Judge and dismissed the application of the appellants under Section 20 of the Arbitration Act. ( 2 ) THE appellants M/s. Guru Nanak Investment Company had pleaded that on 18-10-1980 respondents no. 1 and 2 as hirer and respondent no. 3 as guarantor executed hire purchase agreement in respect of truck number DHL- 1990. Under the said hire purchase agreement the respondents had agreed to pay a sum of Rs. 35,000. 00 is monthly instalments of Rs. 1600. 00 each. It was alleged that the first instalment had fallen due on 18-1-1981 and the last instalment on 18-10-1982. On payment of the said instalment the respondents were to become the owner of the said truck. It is alleged that the respondents paid sum of Rs. 26,995. 00 leaving a balance of Rs. 8005. 00 and Rs. 8386. 00 towards incidental charges. Since the respondents had failed to make the payment a dispute had arisen between them. Clauses 15 (a) of the hire purchase agreement required the dispute to be referred to the sole Arbitrator Shri S. L. Saluja, Advocate. The respondent No. I contested the petition. Respondents 2 and 3 did not appear despite service of summons and they were proceeded ex parte. Respondent No. I totally denied the alleged transaction, He denied that he took the truck on hire purchase. He also denied the execution of the hire purchase agreement. According to him the signatures of the respondents were obtained on a blank paper. He further alleged that the truck was purchased by him from one Tej Singh. ( 3 ) ON the analysis of the evidence before him the Additional District and Sessions Judge came to the conclusion that the appellants had advanced a sum of Rs. 25,000. 00 to the respondents and in consideration thereof they had executed the hire purchase agreement. The learned Additional District and Sessions Judge also rejected the contentions of the respondents that they were made to sign the blank papers. 25,000. 00 to the respondents and in consideration thereof they had executed the hire purchase agreement. The learned Additional District and Sessions Judge also rejected the contentions of the respondents that they were made to sign the blank papers. However, the learned Judge held that the appellants have failed to produce any evidence to show that they were the owner of the vehicle and, therefore, held that the hire purchase agreement was a camouflage and it was a case of simple loan transaction. ( 4 ) THE counsel for the appellants submits that after recording the findings of fact on the genuineness of the hire purchase agreement the learned Additional District and Sessions Judge has fallen in error in dismissing his application on the assumption that the appellants have not proved their ownership. He submits that the learned Judge took to himself the functions which properly belong to the Arbitrator. ( 5 ) THERE is considerable merit in the submission of the appellants. For the purposes of an application under Section 20 of the Arbitration Act the court has to find out whether there is a valid arbitration agreement between the parties. It the context of the total denial of the transaction by the respondents also of the allegation of fraud of getting signatures on the blank papers the Additional District and Sessions Judge was quite right in probing these matters. If he had come to the conclusion that the hire purchase agreement was not genuine or that it was entered into by a fraud practised on the respondents the learned Additional District and Sessions Judge could have refused to grant the relief under Section 20 of the Arbitration Act. But once he found that the hire purchase agreement was genuine, and that it was made for consideration he should not have exceeded his jurisdiction in probing the question of ownership. That question was really in the realm of arbitration. The learned Judge had followed an erroneous approch and treated the application as if it was a suit before him. In this context the learned Judge was in error in dismissing the application of the appellants under Order 18, Rule 17 (a) for summoning the record from the Transport Authorities regarding the hire purchase agreement. The appellants have now moved an application in this court to permit them to file the certified copy of the record of the Transport Authorities. In this context the learned Judge was in error in dismissing the application of the appellants under Order 18, Rule 17 (a) for summoning the record from the Transport Authorities regarding the hire purchase agreement. The appellants have now moved an application in this court to permit them to file the certified copy of the record of the Transport Authorities. Considering the fact that this document would go to the root of the matter I allowed the application and permitted the appellants to produce the said certified copy on record. ( 6 ) FOR the reasons stated above the impugned order is set aside and the appllants application under Section 20 of the Arbitration Act is allowed. The matter be referred to arbitration of the sole Arbitrator S. L. Saluja, Advocote. ( 7 ) THE counsel for the appellants has submitted that under the orders of this Court truck number DHL 1890 was seized from the respondent. It was found that all vital parts of the truck were removed and only the chasis and bore body as shown in photo are in existence. It is also submitted that the registration papers of the said vehicle are not handed over by the respondents to the appellants. Since the truck DHL-1890 is the subject matter of the dispute between the parties the Arbitrator is free to give appropriation of the amount. ( 8 ) THE appeal is allowed with costs.