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2007 DIGILAW 1998 (DEL)

R. S. SALES CORPORATION v. EASTERN MEDIKIT LTD.

2007-12-08

MUKUL MUDGAL

body2007
MUKUL MUDGAL, J. ( 1 ) THIS appeal by the defendant challenges the order dated 22nd May, 2006 passed by the learned Single Judge by which placing reliance on the plea of the appellant that the suit was not maintainable due to the existence of an arbitration clause, the learned Single Judge appointed an arbitrator. The suit has been filed by the respondent herein for recovery of a sum of Rs. 84,17,996. 80 paise. Further a sum of Rs. 17,00,754 is claimed on account of non-supply of Central Sales Tax Form C, the suit is founded on the allegations that the defendant No. 1 which is the sole proprietorship concern of the defendant No. 2 was appointed as stockist of the plaintiff and a super stockist agreement dated 20th April 1999 was entered into between the parties. The defendant No. 1 was appointed as the super stockist for the territory of Uttar Pradesh on non-exclusive basis. Under the said agreement, the goods were to be supplied by the plaintiff to the defendants and the defendants were to sell those goods. It is averred that the plaintiff used to regularly supply material to the defendants and the defendants were sending payments on regular intervals. The plaintiff and the defendants were maintaining a running account. There are other allegations made in the plaint stating the reasons because of which disputes arose between the parties as according to the plaintiff there were huge outstandings and the plaintiff had to write various letters to the defendants for making the payments. As on 1st April 2005 a sum of Rs. 99,93,663. 80 paise became due and payable. The plaintiff addressed a letter dated 25th May 2005 bringing to the attention of the defendants the aforesaid outstandings and asked the defendants to liquidate the same. After several reminders, the defendants made some payments, the details whereof are given in para 13 of the plaint and which are as under: Date of Cheque Amount (Rs.) Cheque details Date of credit 23. 05. 2005 5,00,000/- 767284 Standard Chartered 04. 06. 2005 07. 06. 2005 5,00,000/- 767285 Standard Chartered 13. 06. 2005 24. 06. 2005 5,00,000/- 767287 Standard Chartered 29. 06. 2005 30. 06. 2005 5,00,000/- 767288 Standard Chartered 08. 07. 05. 2005 5,00,000/- 767284 Standard Chartered 04. 06. 2005 07. 06. 2005 5,00,000/- 767285 Standard Chartered 13. 06. 2005 24. 06. 2005 5,00,000/- 767287 Standard Chartered 29. 06. 2005 30. 06. 2005 5,00,000/- 767288 Standard Chartered 08. 07. 2005 ( 2 ) IT is further alleged that some differences between the defendant No. 2 and his father arose in respect of family properties and on this pretext and to win the sympathy of the plaintiff, the defendants got huge credits from the plaintiff company. The plaintiff was expecting that the defendants would make the payment of the outstanding dues. However, the defendants instead filed a suit in the court of Senior Civil Judge, Kanpur for a perpetual injunction for restraining the plaintiff (respondent herein) from terminating the stockist agreement. On receiving the summons from the said court in the aforesaid suit filed by the defendants, the plaintiff came to know of the intentions of the defendants that they were not willing to make further payments and wanted to entangle the plaintiff in litigation. Thus on coming to know of this intention, the plaintiff filed the instant suit for recovery. The defendants filed their written statement, inter alia, stating that the suit is barred under the provisions of the Arbitration Act as admittedly the invoices issued by the plaintiff itself contained an arbitration clause which is in the following terms: "disputes before referring to the court would be referred to an arbitrator. " ( 3 ) DURING the pendency of the suit, an application under Order VII Rule 11 of the Code of Civil Procedure was filed by the appellant/defendant seeking rejection of the plaint on the basis of the arbitration agreement. ( 4 ) THE learned Single Judge has held that the primary objection raised by the appellant is the existence of the arbitration clause as contained in the invoice issued by the respondent itself. The learned Single Judge, in our view, has rightly treated the application of the appellant under Order VII rule 11 CPC which relies on the arbitration clause, particularly in the light of the fact that when the plaintiff who has filed the suit has no objection for the matter to be referred to the arbitration, as an application for appointment of arbitrator. The learned Single Judge has held that the defendants after taking such a plea cannot thereafter be allowed to wriggle out of the effect of such a plea and make a somersault implying that neither they want a suit nor arbitration. In our view this approach of the defendants cannot be termed bona fide and would only delay the resolution of the disputes between the parties. ( 5 ) THE learned counsel for the appellant has stated that the impugned order was not justified as the suit did not disclose any cause of action and the application under Order VII Rule 11 CPC ought to have been allowed. We asked the learned counsel for the appellant to read the averments in the plaint to show us that even if the averments were not countered no decree could have followed. However, the appellant's counsel was unable to do so. The averments in the plaint do show that the appellant had sought the payment of amount due on the basis of the running amount and this plea had been countered by the appellant in the written statement. The plea of the defendant in the written statement was that the amount has not been authenticated as per Section 32 of the Evidence Act, and, therefore, the plaintiff was not entitled to the decree for Rs. 84,17,996. 80 paise. Thus, unless the averments in the written statement to the above effect are substantiated the plaintiff cannot be non-suited in the application under order VII Rule 11 CPC. The learned Single Judge has dealt with this objection and has referred to the contents of the plaint which we have also referred to and consequently we are of the view the bare reading of the plaint does disclose a cause of action and the application under Order VII Rule 11 cpc was without merit. ( 6 ) WE have also noted the fact that the appellants themselves without following the mandate of the arbitration clause referred to by them in their written statement in the suit at Delhi nevertheless chose to file a suit at kanpur for restraining the respondent from cancelling the agency. Now, at delhi the appellants seek to put forth the arbitration agreement to object to the maintainability of the respondent's suit. The appellants cannot be therefore, permitted to approbate and reprobate. Now, at delhi the appellants seek to put forth the arbitration agreement to object to the maintainability of the respondent's suit. The appellants cannot be therefore, permitted to approbate and reprobate. Since the appointment of the arbitrator is based on the defendants/appellants preliminary objection in written statement and their application under Order VII Rule 11 CPC, in our view, now the appellants cannot back out of the same. ( 7 ) CONSIDERING the peculiar facts and circumstances of this case, we do not find it a fit case for interference, the appeal is dismissed and stands disposed of alongwith CM 16707/2006.