Ms. Usha Mehra ( 1 ) SHRI Govind Ram Hada stated to be the nominee director representing the Hada Group on the Board of Directors of M/s. Andhra Pradesh Rayons Limited, defendant No. 4 herein. A collaboration agreement was entered into on 18/31st October, 1977 between the plaintiff and defendant No. 1 i. e. , M/s. Ballarpur Industries Limited. It was agreed that Hada Group would always have its representative on the Board of M/s. A. P. Rayons Limited. ( 2 ) IN June, 1974 M/s. Andhra Pradesh Industrial Development Corporation Limited (APIDC), a Government undertaking promoted a new company in the name and style of M/s. A. P. Rayons Limited, defendant No. 4 herein. Considering the specialised knowledge and experience of the plaintiff the APIDC approached the plaintiff to be a joint co-promoter in the said company. Thus a Memorandum of Understanding for the implementation of joint venture was signed by the parties at Hyderabad in which it was agreed that the Thapar Group and Hada Group would be the joint co-promoter and that the holding of APIDC would be in the ratio of 10:41. The necessary approval to the joint venture was also given by the Government of India. On 17th September, 1977 a tripartite agreement was executed which was specifically approved both by the Government of Andhra Pradesh and Government of India. It was mutually agreed that two of the nominees of co-promoters would be co-opted as Additional Directors of the Board of the Company. The co-promoters were also to have the right to increase the number of directors proportionately pertaining with reference to their investment. The collaboration agreement and the Memorandum of Understanding was entered into between the defendant No. 1 and the plaintiff on 31st October, 1977. It was the term of that agreement that the defendant No. 1 and the plaintiff would always act and function as joint co-promoter of the company. He was also assured in term of the undertaking given by defendant No. 1 that the plaintiff will be made permanent Managing Director of the Company. The plaintiff was further assued that if under any unforeseen circumstances the plaintiff is unable to continue as the Managing Director, the plaintiff shall be absorbed in the company in an equally suitable capacity. ( 3 ) HOWEVER the defendant No. 1 acted malafide and to the prejudice of the plaintiff.
The plaintiff was further assued that if under any unforeseen circumstances the plaintiff is unable to continue as the Managing Director, the plaintiff shall be absorbed in the company in an equally suitable capacity. ( 3 ) HOWEVER the defendant No. 1 acted malafide and to the prejudice of the plaintiff. The defendant No. 1 tried to make the plaintiff disqualified by adopting dubious and malafide means. He was not given notice of the meeting nor the agenda was circulated to him though he was the Vice-Chairman of the company. Instead of looking into the serious lapses the defendant with a malafide intention has released as retire the plaintiff by rotation and recommended for re-election at the ensuring Annual General Body Meeting. This action of the defendant of retiring the plaintiff by rotation and recommending re-election has been assailed by the plaintiff in this suit. ( 4 ) SUMMONS of the suit were issued to the defendants and the defendants instead of filing written statement filed an application under Section 34 of the Arbitration Act pleading inter alia that the suit is not maintainable because the agreement dated 31st October, 1987 entered into between the plaintiff and defendant No. 1 contain an arbitration clause number XVI which inter alia provides that in case of any dispute and difference the matter shall be referred to the arbitration. Since the arbitration agreement is admitted therefore, there is no justification for the continuation of the suit. ( 5 ) THE plaintiff refuted the averments of this application on the ground that the agreement itself provide relief for specific performance. Therefore the suit for specific performance is maintainable notwithstanding the arbitration clause. ( 6 ) I have heard Mr. M. L. Lahoty, counsel for the plaintiff and Mr. O. P. Malhotra, counsel for defendant No. 4. I have also considered the oral submissions and the documents placed on record. The admitted fact is that there is an arbitration agreement between the parties dated 31st October, 1977 which contains an arbitration clause which is as under : "xvi. Arbitration. 16.
M. L. Lahoty, counsel for the plaintiff and Mr. O. P. Malhotra, counsel for defendant No. 4. I have also considered the oral submissions and the documents placed on record. The admitted fact is that there is an arbitration agreement between the parties dated 31st October, 1977 which contains an arbitration clause which is as under : "xvi. Arbitration. 16. If any doubts and/or disputes shall at any time arise between the parties to this agreement on any clause or matter herein contained or their respective rights, claims or liabilities hereunder, or otherwise, however, in relation to arising out of or concerning this Agreement, such doubts or disputes shall be referred to arbitration by two Arbitrators, one each to be appointed by each party and the two arbitrators so appointed designating the Umpire. " ( 7 ) THE short point for determination is if a contract provides two remedies then can a party invoke one set of jurisdiction only or has he got the right to invoke both. In fact the answer would be defendant on the facts of each case. If there are two independent remedies ; one of the arbitration provided in the agreement itself, then a party shall have a right to invoke both the remedies. It is a well-settled rule of construction that the provision of a contract should be so read as to harmonise one and other to make the other redundant unless it is impossible to effect reconciliation between them. The intention of the parties interpreted in various clauses of the agreement should not be read in such a way that one clause becomes redundant by reading the other. ( 8 ) THE Court should construe all the clauses of the agreement together and should try to ascertain the intention of the parties from reading the agreement as a whole considering other provision thereof in the light of the general purpose and the object of the contract itself and to make other part perfectly harmonised and sensible. This means avoiding all absurd consequences in any part of the clause or sentence superfluous unless such a resolution is unavoidable. This is what has been stated in CRAWFORD s Statutory Construction at page 260. ( 9 ) TO arrive at this conclusion one can have the reference of relevant provisions of the clauses namely clauses 6, 7 and 9 which are reproduced as under: "vi.
This is what has been stated in CRAWFORD s Statutory Construction at page 260. ( 9 ) TO arrive at this conclusion one can have the reference of relevant provisions of the clauses namely clauses 6, 7 and 9 which are reproduced as under: "vi. Hada Group s right to nominate a Director. 6. 1. Subject to Shri Hada alongwith his nominees holding shares of Rupees Twenty lakhs in the Company, Hada Group shall be entitled to always have one of its nominee as a Director of the Company. VII. Who will be nominee. 7. So long as Shri Hada is willing and available he shall be the nominee of Hada Group referred to in the foregoing Clause VI. " x x x x x "ix. Voting Rights. 9. 1. Each of the parties hereto (and their permitted nominees) shall make, do or execute or cause to be made, done or executed all such acts, documents, deeds or things, as may be necessary or reasonably required to carry out the intent and purpose of this agreement fully and effectively. 9. 2. Each of the parties hereto (and their permitted nominees) will exercise their voting rights for the time being in the company and take such other steps as for the time being lie within their power. (a) To ensure the due fulfilment of the terms of this agreement and of the co-promoters agreement dated 17th September, 1977 by then. (b) To procure that the company performs and observes the provisions of their Agreement and the Co-promoters Agreement dated 17th September, 1977. 9. 3. The parties hereto shall be entitled to specific performance of the terms of this agreement, including the obligations contained in this clause as to theexercise of voting rights. "from the perusal of the above, it is apparent that if harmonised construction is not placed on clauses VI (i) and IX (iii) then clause IX (iii) would become a dead letter. The right for specific performance is given to the petitioner under clause IX (iii ). Because of clause XVI in the contract the right of the petitioner accruing under clause IX (iii) cannot be taken away. These are two independent remedies available to the petitioner one of arbitration other of civil suit.
The right for specific performance is given to the petitioner under clause IX (iii ). Because of clause XVI in the contract the right of the petitioner accruing under clause IX (iii) cannot be taken away. These are two independent remedies available to the petitioner one of arbitration other of civil suit. The remedy under clause IX (iii) is a specific remedy and this specific and special remedy cannot be made redundant and superfluous because of the general remedy provided under clause XVI. ( 10 ) MR. Malhotra appearing for the defendant contended that since the agreement contains an arbitration clause, hence Arbitrator alone can grant specific performance and not a Civil Court. Moreover the dispute regarding interpretation of clause VI (i) has been in fact covered under clause XVI of the agreement which is an arbitration clause. Moreover once it is pointed out that there is an arbitration agreement, the provision of clause IX (iii) becomes redundant because of the remedy provided. Clauses IX (iii) and XVI are conflicting provisions and cannot be harmoniously construed and reconciled. Therefore the provision of the arbitration would prevail over the provision of specific performance remedy provided under clause IX (iii ). In fact clause IX (iii) is only by way of clarification and is not a special provision. Therefore in the light of the fact that there is admittedly an arbitration clause in the agreement the suit is not maintainable. He has placed reliance on the decision of the Privy Council reported in Jagannadhasahu of Bissemkatan v. Deenabandhu Radho and others. 1 He has also placed reliance on the Supreme Court decision in the case of Joseph Peter v. State of Goa, Daman and Diu1. I am afraid the facts of this case are such that the observations made by the Supreme Court do not help the respondent in any manner. It is further contended that the question of specific performance is covered by the arbitration clause. In order to strengthen his argument he has placed reliance of the Supreme Court decision in the case of Dr. S. Dutt v. University of Delhi3. There the services of the petitioner were terminated and the matter was referred to arbitration.
It is further contended that the question of specific performance is covered by the arbitration clause. In order to strengthen his argument he has placed reliance of the Supreme Court decision in the case of Dr. S. Dutt v. University of Delhi3. There the services of the petitioner were terminated and the matter was referred to arbitration. The Arbitrator in his award held that the Professor of a certain University has been dismissed wrongly and malafide and further stated that the dismissal has no effect on his status and that he still continues to be a Professor of the University. The Arbitrator in his award gave direction of specific performance of a personal contract. ( 11 ) RELYING on these decisions Mr. Malhotra and Mr. Sawhney appearing for the defendants contended that the question of specific performance can always be determined by the Arbitrator. I am afraid this argument has no force. The Supreme Court in the case narrated above set aside the award of the Arbitrator declaring it to be illegal. The question before the Supreme Court in that case was not whether the arbitration clause will supersede the clause of specific performance in a contract. In other words when two independent remedies are provided, will one supersede other was not the point before the Supreme Court, whereas this was the precise issue in the case of Sulochana Uppal v. Surinder Sheel Bhakri4, where Justice Mahinder Narain, held that the dispute relating to specific performance of the agreement can be entertained by the Civil Courts alone. Relying on this judgment I am of the view that the question of interpretation of clause VI (i) which is asking for specific performance cannot be gone into by the Arbitrator because for that specific provisions have been provided under clause IX (i ). Therefore to my mind the remedy under clause IX cannot be declared to be a dead letter, in view of clause XVI which is a general clause in that agreement. Hence the suit cannot be stayed. The application is accordingly dismissed.