Lakshmi Machine Works Ltd. v. Marathe Textiles Mills
2013-11-25
ANOOP V.MOHTA
body2013
DigiLaw.ai
Judgment : The Appellant/original Defendant has filed the present Appeal from Order challenging Order dated 11.12.2012 passed by the learned Joint Civil judge, Senior Division, Sangli, whereby Applications at Exhibits 20 and 31, under Section 34 of the Arbitration Act, 1940 (Act of 1940) were rejected and thereby directed the parties to proceed expeditiously in the Suit. The Plaintiff filed the Suit on 22.03.1993 for the breach of contract by mis-performance/delay in supplying the machineries so agreed. The prayers are joint and several against both the Respondents (Defendants). An mandatory injunction was also sought against them to continue to supply the spares of the machinery supplied by them and to provide service maintenance. 2. Both the contesting Respondents/Defendants filed these Applications within reasonable time i.e. 17.06.1994 and thereby requested to stay the civil proceedings till the disposal of arbitration proceedings in view of Section 34 of the Act of 1940. By the impugned order, both the Applications were rejected. We are not concerned at this stage the delay in rejecting such Applications which is practically more than 19 years. 3. Admittedly, two Revisions filed by the Appellants within limitation and thereafter challenged common order dated 11 December 2012. On 13 September 2013, the learned Judge, after recording the submissions, permitted the Appellants to file an Appeal from Order and thereby continued the ad interim reliefs granted in the Revisions for four weeks. The Revision Applications were accordingly disposed of with liberty to the Applicants to file appropriate Appeals from Orders. The Appeal is therefore preferred by the Appellants only and not the Agents/Respondent No.2. There is no dispute with regard to the acceptance of order/offer in question subject to the enclosed General Conditions of Sale of Goods (Reference No. 771-D). Letter dated 23 August 1989 also refers to “the enclosed General Conditions of Sale of Goods”. There is no dispute that the parties, based upon proposal and offer, accepted the contract and proceeded accordingly. There was no objection raised at any earliest point of time immediately after receipt of the order of acceptance where reference is made to the General Conditions of Sale of Goods. The objection was raised for the first time only in reply filed to the Applications filed by the Appellant about the non-receipt of General Conditions and specifically the last pages which reflects arbitration clause in question.
The objection was raised for the first time only in reply filed to the Applications filed by the Appellant about the non-receipt of General Conditions and specifically the last pages which reflects arbitration clause in question. The arbitration clause is reproduced as under: “X ARBITRATION Any dispute whatsoever touching the quotation/contract including any dispute arising out of resale under Clause VII (b) shall be referred to two arbitrators each residing in Coimbatore holding responsible position in a firm or company which is a member of the Indian Chamber of Commerce Coimbatore, one to be appointed by each party to the dispute. The arbitrators shall before proceeding with the arbitration, nominate an umpire qualified as above mentioned and in the event of their inability to agree on an umpire the arbitrators will request the President of the Indian Chamber of Commerce Coimbatore to recommend an umpire and the umpire suggested by the said President can be chosen by two arbitrators. The arbitration will be held in accordance with the provisions of the Indian Arbitration Act 1940 and/or any then subsisting statutory modifications thereof.” Respondent No.1/Plaintiff submitted that as there was denial to the acceptance and/or receipt of these Conditions including arbitration clause, the submission that there exists no arbitration agreement between parties, rightly accepted by the learned Judge and thereby rejected those Applications is, in my view, unacceptable, specially when there is nothing on record to show and/or justify and/or any objection taken immediately after receipt of the acceptance of order dated 23 August 1989 including the terms and conditions having arbitration clause. Admittedly, it is a commercial contract between the parties. The regular practice and/or usage and such terms and conditions in the market while dealing with such goods is not new and/or foreign to any of the parties. The dispute, if any, touching the quotation/contract including the terms required to be referred to the Arbitrator as prescribed under the Indian Chamber of Commerce Coimbatore Rules, Regulations and/or Conditions. The arbitration required to be held in accordance with the provisions of the Indian Arbitration Act 1940 and/or any other subsisting statutory modification thereof. 4. The learned Judge, in my view, overlooked the basic principle specially in view of the present facts and circumstances when there was no objection raised at earliest point of time about the written documents and the non-receipt of the General Conditions in question.
4. The learned Judge, in my view, overlooked the basic principle specially in view of the present facts and circumstances when there was no objection raised at earliest point of time about the written documents and the non-receipt of the General Conditions in question. The basic burden lies upon the Plaintiff to prove otherwise. At ad interim stage, the Court, in my view, failed to consider the following observations and the principles so announced by the Supreme Court. 5. The Apex Court in Food Corporation of India and anr v. Yadav Engineer and Contractor, (AIR 1982 SUPREME COURT 1302) has observed referring to Section 9 of Code of Civil Procedure (CPC) and Arbitration Act in the following words:- “4 …................... No two contracting parties are under any legal obligation to provide for an arbitration agreement. If the parties enter into an arbitration agreement implying that they would like that the disputes covered by the agreement will be resolved by a forum of their choice, the approach of the Court must be that parties to the contract are held to their bargain. If in breach or derogation of a solemn contract a party to an arbitration agreement approaches the Court and if the other side expeditiously approaches the Court invoking the Court's jurisdiction to stay the proceedings so that by this negative process the Court forces the parties to abide by the bargain, ordinarily the Court's approach should be and has been to enforce agreements rather than to find loopholes therein. More often it is found that solemn contracts are entered into on the clearest understanding that any dispute arising out of the contract and covered by the contract shall be referred to arbitration. It may be that one or the other party may not have entered into the contract in the absence of an arbitration agreement. Therefore, when in breach of an arbitration agreement a party to the agreement rushes to the Court, unless a clear case to the contrary is made out the approach of the Court should be to hold parties to their bargain provided necessary conditions for invoking S. 34 are satisfied.” 6. Therefore, in view of above clear position of law and in the present facts and circumstances, I see there is no reason for the learned Judge to reject such Applications for the reason so recorded. 7.
Therefore, in view of above clear position of law and in the present facts and circumstances, I see there is no reason for the learned Judge to reject such Applications for the reason so recorded. 7. The learned Judge, in my view, therefore, is wrong while rejecting those Applications mainly on the ground that the agreement was not signed by the Plaintiff and Defendants and, therefore, overlooked the arbitration clause in the agreement. It is further observed that this can be decided by recording evidence by both the parties. The learned Judge is wrong in holding that the relief so prayed cannot be granted by the Arbitral Tribunal. The injunction so sought in prayer clause (bb), even if, is a matter of discussion for the Arbitral Tribunal to grant relief, but considering the facts and circumstances, now practically in view of lapse of more than 20 years, the mandatory injunction so sought need to be tested and can be tested even by the learned Arbitrator. Prayers (a) and (b), if we take note of and there was delay and the reason for the damages was delay in supply of machinery and, therefore, unless the same is considered by the learned Arbitral Tribunal, the grant of protection as prayed in prayer (bb) required to be tested even by the learned Arbitrator. 8. The learned counsel appearing for the Appellant, on instructions, makes statement that they have no objection, if they make submission before the learned Arbitral Tribunal with regard to prayer (bb). Let the learned Arbitral Tribunal to consider the same in accordance with law. 9. The scope, purpose and object of arbitration proceedings in view of above decisions and the pronouncements made by Hon'ble Supreme Court from time to time and in the present facts, case is made out by the Appellant to interfere with the order. Order accordingly. 10. Even considering the submissions so raised by the learned counsel appearing for the Plaintiffs that let trial be proceeded expeditiously and there is no point now referring to the Arbitral Tribunal is also unacceptable.
Order accordingly. 10. Even considering the submissions so raised by the learned counsel appearing for the Plaintiffs that let trial be proceeded expeditiously and there is no point now referring to the Arbitral Tribunal is also unacceptable. I am inclined to observe that considering the contract between the parties, apart from the terms and conditions and the fact of having provisions to settle such disputes, through the agreed Tribunals, would assist the Plaintiffs to get the dispute resolved at earliest rather than resorting to the Civil Court jurisdiction as done in the present case. The tenure of the order, even if accepted, during the trial and/or after leading evidence by and between the parties, if Court comes to conclusion that there exists arbitration clause, the proceedings again required to be transferred and/or stayed, as it would be for the Arbitrator to decide the claim so raised by the Plaintiff in the Suit. There will be further delay if the course as adopted and/or insisted by the learned counsel appearing for the Plaintiff and/or by the Plaintiffs. This observation is only because the learned counsel appearing for Respondent No.1 also opposing the present Appeal on the ground of delay and insisted to contest the matter before the Civil Court. Both the parties by consent can proceed accordingly, but once the Application is filed under Section 34 of Arbitration Act and submission is made and as a case is made out, the Court cannot overlook the provisions so referred above, merely because Respondent No.2 (Agent) failed to challenge the order by filing separate Appeal from order, though he was party to the order passed by the learned Judge in Revisions dated 13 September 2013. Once the common order goes, in view of above, the submission even if any would not be sufficient to grant relief so prayed by the Appellant in the Application as well as in the Appeal from Order. In view of order dated 13 September 2013, the submission that there was no separate Application filed for condonation of delay in filing the present Appeal is of no assistance to reject the Appeal as this Court granted liberty to the Applicant to file appropriate Appeal from order on 13 September 2013 itself.
In view of order dated 13 September 2013, the submission that there was no separate Application filed for condonation of delay in filing the present Appeal is of no assistance to reject the Appeal as this Court granted liberty to the Applicant to file appropriate Appeal from order on 13 September 2013 itself. There was no issue with regard to the delay and now in the present Appeal, in view of above admitted position, there is no delay in filing the Appeal itself. 11. Considering the pendency of the dispute between the parties, I am inclined to observe that having once allowed the Application filed by the Appellant under Section 34 of the Act of 1940, the effect will be of staying the Suit and the Arbitral Tribunal will decide the main dispute between the parties. It is therefore desirable that the Arbitral Tribunal to adjudicate and resolve the dispute preferably within a year. Both the parties to cooperative for early disposal. The parties to take steps accordingly. 12. In the result, the following order: ORDER (i) The Appeal from Order is allowed. The impugned order is quashed and set aside. (ii) The Applications at Exhibits 20 and 31 are allowed. (iii) The Arbitration proceeding is expedited. To be disposed of within one year. (iv) Both the parties to cooperate for early disposal of even before arbitral tribunal. (v) No costs. 13. The learned counsel appearing for Respondent/Plaintiff seeks stay of this order. As the request is to stay its own proceedings, the learned counsel appearing for the Appellant submitted that the Suit should not be proceeded further in view of this order passed by this Court. 14. The order passed by this Court is accordingly stayed for four weeks, but the Suit of Appellant will not be proceeded till further order. 15. In view of disposal of Appeal from Order, Civil Application No. 1332 of 2013 is also disposed of accordingly. No costs.