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2000 DIGILAW 331 (DEL)

J. N. TEXTILES v. BON CHANCE

2000-03-24

VIKRAMAJIT SEN

body2000
VIKRAMAJIT SEN ( 1 ) THESE are Objections filed by the Respondent/objector for the setting aside ofthe Award dated 9. 3. 1995 published by Shri Mahender Pal Goel, Sole Arbitrator. The Objector has contended that there was no Arbitration Agreement subsistingbetween the parties. The clause relied upon by the Petitioner can be found printed onits Bills. It states that "any dispute regarding this bill shall be referred to the Arbitrationof Delhi Hindustani Mercantile Association or their appointed Judge Tribunal and thedecision shall be binding upon both parties". The Respondent/objector has furthercontended that the Award deserves to be set aside since it emanates from aunilateral Reference, since the Respondent/objector had not consented to thearbitration. Both these points are no longer res Integra. Three Learned Singlejudges have come to the same opinion on this subject; it is well-settled, !n Tikkanlalsewaram Vs. Jiwandas Desraj, 1980 Rajdhani Law Reporter 681, S. B. Wad, J. had held that where the arbitration clause is contained on the bills of sale thereference to Arbitration, of Delhi Hindustani Mercantile Association or its nomineeas in the present case, was proper. The learned Judge has relied on the decision ofthe Division Bench of this Cousin P. C. Agarwal Vs. K. N. Khosla, ILR 1975 Delhi 64. A similar arguments were raised in the case titled as M/s. Luda Ram Ved Prakash Vs. M/s. Maharani of India, AIR 1989 Delhi 169. The learned Judges held as follows: "5. It is, indeed, not in dispute that the goods have been sold to the objector-firm vide the bills which contained the clause regarding the goods havingbeen sold in accordance with the rules and regulations of Delhi Hindustanimercantile Association, Delhi. The mere fact that objectors are not membersof the said Association would not mean that if they had purchased the goodsaccording to the aforesaid condition they would not be bound by the rulesand regulations of the said Assaciation. It is not disputed that the rules andregulations of the said Association contain the arbitration clause and also themode how the reference to the arbitrator is to be made. The law does notrequire that an arbitration agreement must be signed by the parties beforethe same could not be considered binding. The only requirement of S. 2 of thearbitration Act is that the arbitration agreement must be in writing. However,this point stands now settled by this Court in various judgments given fromtime to time. The law does notrequire that an arbitration agreement must be signed by the parties beforethe same could not be considered binding. The only requirement of S. 2 of thearbitration Act is that the arbitration agreement must be in writing. However,this point stands now settled by this Court in various judgments given fromtime to time. Reference may be made to Chaudhary Hukam Chand and Sonsvs. Sagar Silk and Sarees, (1982) 22 DLT 196 , Chhajjumal Samer Chandvs. Firm Sohan Lal Kanhaiya Lal, ILR (1971) 2 Delhi 416, and Krishanchander Ramesh Chander and Brothers Vs. Sohan Leu, (1983) 23 Delhi LT (SN) 9. All these are single Bench judgments. However, in Sohan Lal Vs. Krishan Chander Ramesh Chander and Brothers, (1983) 24 Delhi LT 305, adivision Bench of this court also held that if goods are sold subject to therules and regulations of Delhi Hindustani Mercantile Association the arbitrationclause appearing in the said rules and regulations would be deemed to bebinding on the parties even though the purchaser is not member of the saidassociation and such a clause appearing in the bills on the basis of which thegoods are sold even though bills are not signed by the purchaser would bringabout the arbitration agreement between the seller and the purchaser. Counsel for the objectors tried to distinguish this judgment by arguing that inthe said case at least some of the bills were. signed by the purchaser. Theratio of law laid down in the judgment is not based on this fact alone becauseout of 84 bills in the said case only very few of them had been signed, but thearbitration agreement was held to be arrived at between the parties inrespect of the bills including the bills which did not bear signature of thepurchaser. So, mere fact that objectors had not signed the bills would notmean no arbitration agreement had come into existence between the partieswhen the facts show indisputably that the goods were sold on the basis of thebills which contained a printed clause that they are being sold subject to therules and regulations of the said Association. 9. Then, it has been argued by the learned counsel for the objections thatreference to Arbitrator was unilateral and thus, the whole of the proceedingsbefore the Arbitrator were vitiated. There is no merit in this contention in viewof the ratio laid down by a Division Bench of this Court in P. C. Aggarwal Vs. 9. Then, it has been argued by the learned counsel for the objections thatreference to Arbitrator was unilateral and thus, the whole of the proceedingsbefore the Arbitrator were vitiated. There is no merit in this contention in viewof the ratio laid down by a Division Bench of this Court in P. C. Aggarwal Vs. K. B. Khosla, AIR 1975 Delhi 54. In the cited case also, there were the Rulesof Delhi stock Exchange Association subject to which the contracts had beenmade and the said Rules provided the whole machinery as to how thedisputes are to be referred to arbitration. Taking resort to the said provisions,the Arbitrator was appointed and it was held by the Division Bench that aseparate reference to the arbitration is necessary only where there is a bareagreement between the parties that disputes between them shell be decidedby resort to arbitration and Sec. 2 (a) of the Arbitration Act is comprehensiveenough to cover both a bare arbitration agreement and an agreement thatdispute shall be decided by resort to arbitration with a reference of thedispute between the parties to arbitration. It was held that consent of theparties to the reference is distinct from a mere agreement to refer disputes. The consent can be given in advance in a written agreement or submissionor a written comprehensive arbitration agreement in advance before thearising of the future dispute and that the nature of reference had becomeconsensual in the law of arbitration. So, making reference to-the Rules andregulations of the Association, it was found that as parties have agreed to bebound by the said Rules and Regulations, the appointment of arbitrator andreference of disputes to the said arbitrator in accordance with the said Ruleand Regulations could not be considered to be a unilateral reference. Thisjudgment was followed in M/s. Tikkan Lal Sewa Ram Vs. M/s. Seth Jiwandass Des Raj, (1980) 18 DLT 248 by S. B. Wad, J. , where also the goodshave been sold on the basis of Beejhaks containing an agreement to bebound by Rules and Regulations of Delhi Hindustani Mercantile Association. The only point raised in this case was that the reference to arbitration wasunilateral and thus was void. M/s. Seth Jiwandass Des Raj, (1980) 18 DLT 248 by S. B. Wad, J. , where also the goodshave been sold on the basis of Beejhaks containing an agreement to bebound by Rules and Regulations of Delhi Hindustani Mercantile Association. The only point raised in this case was that the reference to arbitration wasunilateral and thus was void. It was held following the ratio laid down by thiscourt in the case of P. C. Aggarwal (supra) that such a reference is notunilateral when it is made in accordance with the Rules and Regulations ofthe Association and no fresh agreement for reference was needed in suchlike cases. I, following the aforesaid judgments, hold that a reference to thearbitration was not unilateral". ( 2 ) YET an another decision of a learned Single Judge on this very point is to befound in Madan Mohan Rajgarhia Vs. M/s. Mahendra R. Shah and Anr. , 1995 (32)DRJ 517 , Usha Mehra, J. held that the arbitration clause printed on the bill would beapplicable even to a non-member. She had relied on the precedents reported as M/s. Krishan Chander Ramesh Chander and Bros. Vs. Sohan Lal, AIR 1982 Delhi122 as well as Banwari Lal Kotiya Vs. P. C. Aggarwal, AIR 1985 SC 1003 . Thelearned Judge observed as follows: "being even a non-member, he would be covered by the arbitration clausebecause he accepted that in the event of further dispute between him anddefendant those be referred to arbitration and parties would be governed bythe Rules, bye-laws and Regulations of the Exchange. Having accepted theprinted clauses of the agreement i. e. the arbitration clause which formed partof the contract, the contract is to be governed by the rules, bye-laws andregulations of the stock Exchange, Bombay. Therefore, even if the plaintiff isa non-member he will still be governed by those regulations, rules and bye-laws". ( 3 ) THE third contention of the learned counsel for the Respondent/objector is thatthe Reference was premature. The argument is that Respond that in the legal noticedated 8. 11. 1994 issued, on behalf of Petitioner by its Advocate, the Respondentobjector had been called upon to pay a sum of Rs. 11,63,175,80 within fifteen days ofthe receipt of its notice, it has been strenuously argued that this notice was receivedon 28. 11. 1994. The argument is that Respond that in the legal noticedated 8. 11. 1994 issued, on behalf of Petitioner by its Advocate, the Respondentobjector had been called upon to pay a sum of Rs. 11,63,175,80 within fifteen days ofthe receipt of its notice, it has been strenuously argued that this notice was receivedon 28. 11. 1994. These oral arguments are contrary to the pleadings before meinasmuch as in para D of the application it has been averred that the legal noticedated 8. 11. 1994 was served on 20. 11. 1994. The argument of the learned counsel forthe Respondent/objector proceeds that time for payment would have run out only on13. 12. 1994 and hence the commencement of arbitration prior to this date would bepremature. There is no substance in this argument for the reason that the periodpostulated by the legal notice expired on 5. 12. 1994. Even if the appropriate date was13. 12. 1994, there is no statutory or legal stipulation that arbitration proceedingscannot be commenced. This argument have been appreciated if some payment hadbeen tendered on or before 13. 12. 1994. This is not the case. ( 4 ) LEARNED counsel for the Respondent/objector had also taken great pains tosubmit that sufficient opportunity had not been given to the Respondent/objector tocontest the proceedings before the Arbitrator. He has relied on a letter dated30. 12. 1994 addressed to the Delhi Hindustani Mercantile Association bringing totheir attention that it had received a notice dated 15. 12. 1994 on 29. 12. 1994 forhearing scheduled for that very date. I have perused the proceedings of the Arbitrator. The first hearing is prior to 15. 12. 1994 since the first order records the issuance ofnotice for that date. Much emphasis was laid by learned counsel for the Objector onthe absence of the date of the first hearing. It was contended that this is sufficientreason to set aside the Award since it discloses the manipulation of dates and of therecords. This argument is wholly misconceived. The Arbitrator is not a trained lawyeror Judge and, therefore, quite possibly, ignored the dating of his first order. Thiswould not vitiate the proceedings. On 15. 12. 1994 notice to the Respondent wasissued for 29. 12. 1994 on which date notice was again issued for 12. 1. 1995. On this date a representative of the Respondent/objector had appeared. The Arbitrator is not a trained lawyeror Judge and, therefore, quite possibly, ignored the dating of his first order. Thiswould not vitiate the proceedings. On 15. 12. 1994 notice to the Respondent wasissued for 29. 12. 1994 on which date notice was again issued for 12. 1. 1995. On this date a representative of the Respondent/objector had appeared. While recordingthe statement of the special Attorney of the plaintiff, the Arbitrator had adjourned theproceedings to 19. 1. 1995. On 19. 1. 1995 summons were again sent to the Respondentthrough registered A. D. post as well as under postal certificate for the next date ofhearing. On that date, that is 2. 2. 1995 as there was no appearance on behalf ofrespondents they were proceeded ex-parte. However, the Award was not publishedon that very date itself and there was subsequent hearings on 16. 2. 1995 and23. 2. 1995. The Award was published on 9. 3. 1995 manifestly without any unduehaste. The argument that sufficient opportunity had not been given to the Respondent/objector is therefore, wholly misconceived and is rejected. ( 5 ) LEARNED counsel for the Respondent/objector had thereafter raised argumentstouching upon the production of only six bills and that the claim was based on booksof accounts and that the bills had not been signed by the Objector. All these objectionspertain to factual findings of the Arbitrator which, by a catena of judgments, is notopen to challenge under Section 33 of the Arbitration Act, 1940. This Court is notsitting as a Court of Appeal. Reference may be directed towards Union of India Vs. Pallia Ram, AIR 1963 SC 1685 , Coimbatore District Podu Thozillar Sangam Vs. Balasubramania Foundary and Ors, AIR 1987 SC 2045 , M/s. Sudarsan Tradingco. Vs. Government of Kerala and Anr. , (1989) 2 SCC 30, Hind Builders Vs. Union of India, AIR 1990 SC 1340 , Jawaharlal Wadhwa and Anr. Vs. Haripadachakroberty, (1989) 1 SCC 76 , Hindustan Construction Co. Ltd. Vs. Governorof Orissa and Ors. , AIR 1995 SC 2189 , Trustees of the Port of Madras Vs. Engineering Constructions Corporation Ltd. , (1995) 5 SCC 531 , Army Welfarehousing Organisation Vs. Gautam Construction and Fisheries Ltd. , 1989 (5)Scale 296. ( 6 ) FOR the aforementioned reasons the Objections are dismissed with costs ofrs. 5,000. 00. Ltd. Vs. Governorof Orissa and Ors. , AIR 1995 SC 2189 , Trustees of the Port of Madras Vs. Engineering Constructions Corporation Ltd. , (1995) 5 SCC 531 , Army Welfarehousing Organisation Vs. Gautam Construction and Fisheries Ltd. , 1989 (5)Scale 296. ( 6 ) FOR the aforementioned reasons the Objections are dismissed with costs ofrs. 5,000. 00. S. 1150a/95 ( 7 ) THIS is a petition under Sections 14 and 17 of the Arbitration Act for making theaward dated 9. 3. 1995, for a sum of Rs. 11,65,575. 80, Rule of the Court. Therespondent had filed Objections to the Award which have been dismissed. ( 8 ) I have perused the Award. It does not suffer from any illegality, apparent on theface of it. I see no cause to remit the award or to set it aside. The Award dated 9. 3. 1995 is made Rule of the Court. ( 9 ) THE decree-sheet be drawn up accordingly.