Satguru Distributors Pvt. Ltd. v. Castrol India Ltd.
2005-02-09
N.N.TIWARI
body2005
DigiLaw.ai
ORDER Narendra Nath Tiwari, J. 1. In this writ application the petitioner has prayed for quashing the order dated 6.8.2004 passed in Money Suit No. 36/2002 passed by Sub-Judg-II, Dhanbad whereby the Court below has allowed the application filed by the defendant- respondent under Section 8 of the Arbitration and Conciliation Act, 1996 (Hereinafter to be referred to as the said Act or Arbitration Act). 2. The petitioner is the plaintiff in the Money Suit No. 36/2002. He has filed the said suit praying relief for recovery of Rs. 2,98,692/-. The petitioners case is that he was appointed as a distributor for the product of the defendant by an agreement which was valid up to 27.2.1999. The plaintiff as required, furnished Bank guarantee of Rs. 5,00,000/-, which was renewed from time to time and the last renewal, was valid up to 5.3.2000 by M/s. Canara Bank, Govindpur Branch. The petitioner was required to keep signed blank cheques with the defendant to be used in the event of the plaintiffs failure to pay off the bills of the defendant, on demand. The plaintiff was also entitled to certain commission/remuneration or amount of other incentives payable under the various schemes of the defendant and other trade expenses incurred by the plaintiff on behalf of the defendant. As per the consignment supplied by the defendant till the month of February, 2001, a sum of Rs. 4,97,562.99 was found payable to the plaintiff on accounting, against which the plaintiff had submitted its vouchers and claimed Rs. 3.38,333.48 leaving a balance of Rs. 1,59,229.51 which the plaintiff paid to the defendant by a demand draft dated 23.2.2001 and was received by its Area Sales Manager, Ranchi. The said amount was payable in full and final settlement of all the claims of the defendant who verified the claims properly and received the Bank Draft and thus nothing was payable to the defendant by the plaintiff. But the defendant sent its representative to Canara Bank, Govindpur Branch on 2.3.2001 with a letter to the defendant dated 1.3.2001 asking the Bank to remit Rs. 3,00,000/-out of the amount covered by the Bank guarantee No. 1/98, which was paid to the defendant by the said Bank. After a long time the defendant sent a Bank Draft of Rs. 76,348/- along with letter dated 9.7.2001 approving the said amount only out of Rs.
3,00,000/-out of the amount covered by the Bank guarantee No. 1/98, which was paid to the defendant by the said Bank. After a long time the defendant sent a Bank Draft of Rs. 76,348/- along with letter dated 9.7.2001 approving the said amount only out of Rs. 3,38,333.48 claimed by the plaintiff, thereby refusing the claim of the balance amount of frivolous grounds. According to the plaintiff he is entitled to the amount of Rs. 3,38,333.48 from the defendant which was duly supported by the documents. 3. The said suit was originally against M/s. Tata B.P. Lubricants India Limited. Subsequently the said Company was dissolved and merged with M/s. Castrol India Limited. The original defendant M/s. Tata B.P, Lubricants India Limited was therefore deleted from the cause title of the suit by order dated 7.7.2004 and the present respondent M/s. Castrol India Limited was substituted as the defendant. 4. The defendant, M/s. Tata B.P. Lubricants India Ltd. appeared and filed written statement. A petition under Section 8 of the Arbitration and Conciliation Act was also filed by the defendant praying for reference of the dispute for arbitration in accordance with the arbitration clause in the agreement (Annexure-2). M/s. Castrol India Limited after its appearance as defendant adopted the written statement filed by the said Tata B.P. Lubricants India limited by filing a petition which was allowed by the Court below by order dated 7.7.2004 The said defendant also filed a petition under Section 8 of the Arbitration and Conciliation Act, 1996, stating, interalia, that the dispute and differences between the parties are in relation to a matter covered by the agreement dated 27.2.1996 which provides for arbitration and as such the disputes are referable to the arbitrator. The plaintiff-petitioner filed his rejoinder opposing the said petition and stating, interalia, that the alleged agreement dated 27.2.1998 was valid only for one year i.e. till 27.2.1999 and arbitration clause can not be invoked in respect of a matter/transaction made after the said period in respect of which the present suit has been filed. It was also stated that earlier the similar petition was filed by the erstwhile defendant which was not entertained. 5. Mr.
It was also stated that earlier the similar petition was filed by the erstwhile defendant which was not entertained. 5. Mr. Manjul Pd., learned counsel appearing on behalf of the petitioner, submitted that the agreement was between the petitioner and that of M/s. Tata B.P. Lubricants India Limited for appointment of distributor for the period from 28.2.1998 to 27.2.1999, on the terms and conditions mentioned in the agreement. Clause 26 of the agreement provided that any difference or dispute arising out of or in relation to anything contained in this agreement shall be referred to for arbitration consisting of three arbitrators and the award of all or a majority of the arbitrators shall be binding on the parties. The arbitration was to be conducted in accordance with the Arbitration and Conciliation Act, 1996 with any statutory modification or re-enactment in Mumbai, the agreed place of arbitration. According to the learned counsel the said agreement came to an end on 27.2.1999. Any transactions made thereafter between the parties are not covered by terms and conditions of the said agreement and any subsequent dispute or difference is also not covered by the arbitration clause provided in the said agreement. Learned counsel submitted that all the disputes of civil nature are cognizable by the Civil Court under the provision of Section 9 of the Civil Procedure Code unless the jurisdiction is excluded or barred by said or any local Act or there is any concluded contract between the parties to the contrary providing for alternative forum for settlement of any dispute arising between them. According to the learned counsel it is well settled that the exclusion of the Civil Court jurisdiction cannot be ordinarily inferred. According to him in the instant case any dispute arising between the parties beyond the period of the agreement can not be brought within t he ambit of the terms and conditions of the agreement in which one of the terms was for arbitration and the said term lost its force after 27.2.1999 i.e. after expiry of the period of agreement. Learned counsel further submitted that the original defendant M/s. Tata B.P. India Limited had appeared and filed his written statement contesting the plaintiffs suit. Subsequently the present defendant-respondent appeared and adopted the written statement filed by its predecessor-in-interest and thereby contested the claim.
Learned counsel further submitted that the original defendant M/s. Tata B.P. India Limited had appeared and filed his written statement contesting the plaintiffs suit. Subsequently the present defendant-respondent appeared and adopted the written statement filed by its predecessor-in-interest and thereby contested the claim. Learned counsel urged that the defendant having submitted their first statement of defence has no right to file petition under Section 8 of the said Act as they have already submitted themselves before the jurisdiction of the Court. Learned counsel in support of his submission relied on a decision reported in P. Anand Gajapathi Raju and Ors. v. P.V.G. Raju (Dead) and Ors., reported in (2000) 4 SCC 539 . 6. Mr. V. Shivnath, learned counsel appearing on behalf of the respondent, on the other hand, submitted that the instant dispute has its origin in the said agreement which was valid between the parties from 28.2.1998 to 27.2.1999 relating to the subject matter of the agreement. The learned counsel further submitted that the Bank guarantee was furnished pursuant to the terms of the said agreement and the said Bank guarantee was renewed and was valid up to 5.3.2001. The plaintiff-petitioner has made claim for recovery of the amount alleging illegal withdrawl of money covered by the Bank guarantee. Learned counsel urged that when there is an agreement to refer the dispute for arbitration, the same can not be decided in a civil suit. Learned counsel relied on two decisions of the Supreme Court, one, reported in (2003) 10 SCC 51 , Angang Group International Trade Corporation v. Pipavav Railway Corporation Ltd. and Anr., in 2003 (4) JCR 140 (SC) : 2003 (6) SCC 503 , Hindustan Petroleum Corporation Limited v. Pinkcity Midway Petroleums. 7. The learned counsel concluded that the dispute between the parties is fully covered by the terms of the said agreement and the same is to be decided by the arbitrator and the Court below has rightly allowed the defendants petition filed under Section 8 of the said Act and there is no illegality and infirmity in the impugned order of the Court below. 8. On perusal of the terms of Annexure-2 which is said to be the agreement between the parties, it is evident that the same was regarding appointment of the plaintiff as distributor for Tata B.P. Lubricants India Limited and was for the period from 28.2.1998 to 27.2.1999.
8. On perusal of the terms of Annexure-2 which is said to be the agreement between the parties, it is evident that the same was regarding appointment of the plaintiff as distributor for Tata B.P. Lubricants India Limited and was for the period from 28.2.1998 to 27.2.1999. Clause 26 of the said agreement (Annexure-2) provided for arbitration in the following terms : "Any difference or dispute arising out of or in relation to anything contained in this Agreement shall be referred to an arbitration of three arbitrators. One arbitrator shall be appointed by each party and the third arbitrator shall be appointed by those two arbitrators. The award of all or a majority of the arbitrators shall be binding on the parties. The arbitration shall be concluded in accordance with the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof for the time being in force. The place or arbitration shall be in Mumbai." 9. From the plaint of the suit (Annexure-1), it is evident that the cause of action for the suit arose on 25.2.2001 when the final payment was made to the defendant by the plaintiff, on 2.3.2001. when the defendant came at Govindpur to encash the Bank guarantee and on 12.7.2001 when the letter of the defendant dated 9.7.2001 along with the Bank Draft of Rs. 76,348 was received by the plaintiff at Govindpur and subsequent thereto. None of the dispute transactions is of the period from 28.2.1998 to 27.2.1999 i.e. the period of the said agreement. The transactions mentioned in the plaint are of subsequent dates, not covered by any agreement in which the arbitration clause is provided for settlement of dispute between the parties. So for the connection of the Bank guarantee with the said agreement (from 28.2.1997 to 27.2.1998) is concerned, the same is not substantiated by any term of the said agreement or any other document or material on record. The defendant also has not made out any case that there is any dispute of the period when the agreement was subsisting. So far the legal position is concerned, it is well settled that if there is an arbitration clause in the agreement between the parties, the Civil Court has no jurisdiction to proceed with the suit, once an application under Section 8 is filed.
So far the legal position is concerned, it is well settled that if there is an arbitration clause in the agreement between the parties, the Civil Court has no jurisdiction to proceed with the suit, once an application under Section 8 is filed. For the said proposition, the learned counsel for the respondents rightly placed reliance on the decision of the Apex Court in Hindustan Petroleum Corporation, supra. It is also well settled that where there is any objection regarding such clause and contract or regarding a concluded contract between the parties, such disputes or matters may be proved or inquired into by the arbitrator as has been also held by the Supreme Court in Angang Group International Trade Corporation, supra. But the ratio of the said decisions are not applicable in the facts and circumstances of the instant case in which admittedly there is no existence of any agreement between the parties after 27.2.1999. It is also admitted position that the cause of action for the suit is of post-agreement period. The present disputes between the parties do not arise out of anything contained in the said agreement. In that view, Clause 26 of the alleged agreement as contained in Annexure-2 has absolutely no application, operation or force so as to forestall or change the course of the money suit filed in the Civil Court of competent jurisdiction for trying and deciding the issued and controversies between the parties having no nexus with the agreement containing an arbitration clause. The Court below while passing the impugned order has committed serious errors in allowing the respondents petition under Section 8 of the Arbitration and Conciliation, Act on the basis that the plaintiff is continuing with the business without any subsequent agreement hence, the rights and liabilities shall be governed by the said post agreement, which was admittedly not operative after 27.2.1999. The impugned order of the learned Court below dated 6.8.2004 is, thus, wholly perverse and is hereby quashed. This application is, accordingly, allowed. However, there shall be no order as to costs.