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Anoop Puri Vs. Surinder Kaimar Khurana and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberOriginal Miscellaneous Petition Nos. 141 of 1979 and 1309 of 1983
Judge
Reported in1983(5)DRJ280; 1983RLR578
ActsArbitration Act, 1940 - Sections 9
AppellantAnoop Puri
RespondentSurinder Kaimar Khurana and anr.
Advocates: B.S.C. Singh,; P.R. Bahl and; K.M. Sharma, Advs
Cases ReferredDamdar Valley Corporation v. K.K. Kar
Excerpt:
.....the parties regarding the agreement is a matter for decision by the arbitrator.; failure to appoint arbitrator under bonafide belief that agreement does not survive is sufficient cause within the meaning of the provision to section 9(b) of the act. - - i, it is alleged, failed to pay license fee, telephone and electricity bills amounting to rs. 2 as sole arbitrator under section 9(b) of the arbitration act as the petitioner failed to appoint his arbitrator interims of clause 17 of the agreement in spite of notice and waiting for 45 days. ' learned counsel for the petitioner submits that he revoked the license on 31st may, 1979 on account of failure of the respondent to pay the license fee. the machines (i) one super mercedeze size 18x23 and one treadle size 13' x 19' asian have..........machines. the petitioner had a right to revoke the license for breach of any of the terms of the license agreement. the petitioner revoked the license on 31st may, 1979 by telegram and notice on account of alleged breach of terms. respondent no. i, it is alleged, failed to pay license fee, telephone and electricity bills amounting to rs. 20,005.29 as on 31st may, 1979 in spite of reminders. respondent no. i raised disputes and demanded compensation for alleged wrongful cancellation of the license before the expiry of two years. the petitioner has alleged that on 8th june, 1979 the respondent no. i accepted that his license had been properly and validly concelled, that the petitioner stood absolved of his liability whatsoever in respect of the agreement dated 8th march, 1968, that.....
Judgment:

Sultan Singh, J.

(1) THE petitioner Anoop Puri, Proprietor of Saraswati Press carries on business of printing at 3, Deshbandhu Gupta Road, New Delhi. The petitioner granted a license to Surinder Kumar Khurana, Proprietor of M/s. Printrade (respondent No. 1) for the use of his two printing machines on payment of monthly license fee at Rs. 3000.00 payable in advance every month for a period of two years in terms of the agreement dated 8th March, 1978. Respondent No. I was entitled to run. the machines on trial basis in the first instance for three months and thereafter be had an option to discontinue the use of the machines. The petitioner had a right to revoke the license for breach of any of the terms of the license agreement. The petitioner revoked the license on 31st May, 1979 by telegram and notice on account of alleged breach of terms. Respondent No. I, it is alleged, failed to pay license fee, telephone and electricity bills amounting to Rs. 20,005.29 as on 31st May, 1979 in spite of reminders. Respondent No. I raised disputes and demanded compensation for alleged wrongful cancellation of the license before the expiry of two years. The petitioner has alleged that on 8th June, 1979 the respondent No. I accepted that his license had been properly and validly concelled, that the petitioner stood absolved of his liability whatsoever in respect of the agreement dated 8th March, 1968, that respondent No. 1 paid the arrears of license fee that there was a full and final settlement of accounts and no dispute whatsoever relating to the said agreement survived, that he was fully discharged and a discharge certificate- was executed on 8th June, 1979 by the parties in the presence of witnesses, that a receipt for having received back machines and .amount in full and final settlement was issued by the petitioner. Respondent No. 1 sent a notice dated 20th June, 1979 demanding Rs. 3,00,000.00 on account of alleged loss and damages due to illegal cancellation of the license. The petitioner repudiated . the demand. Respondent No. 1 sent another notice dated 28th July, 1979 informing that he had appointed Shri Manohar Lal Bhargav, Advocate, respondent No. 2 as his arbitrator and called upon the petitioner to appoint his arbitrator within fifteen days in terms of clause 17 of the agreement. The petitioner has further alleged that he could not appoint an arbitrator on the ground that no agreement of reference survived after revocation of license on 31st May, 1979 and full and final settlement of disputes on 9th June, 1979. The petitioner by this application under Sections 5, 9(b) and 33 of the Arbitration Act prays for a declaration that agreement of reference no longer subsists. In the alternative he prays that he be allowed to appoint his own arbitrator and the appointment of respondent No. 2 as sole arbitrator be set aside.

(2) RESPONDENT No. 1 has pleaded that he never committed breach of any term of the license agreement dated 8th March, 1978 that the sum of Rs: 20,605.29 was not due from him as on 31st May, 1979, that the petitioner prevented him and his employees from entering the premises and using the two machines by locking the premises and posting goondas at the gate, that .he had no right to revoke the license before the expiry of two years, that notice of one month for termination of the license as agreed was not served by the petitioner. Cancellation of license on 8th June, 1979 is denied. Respondent No. 1 has further alleged that he was made to put his signatures on the discharge document dated 8th June, 1979 under coercion Respondent No. 1 appointed, re.spondent No. 2 as Sole Arbitrator under Section 9(b) of the Arbitration Act as the petitioner failed to appoint his arbitrator interims of clause 17 of the agreement in spite of notice and waiting for 45 days. It is denied that agreement of reference does not survive. He asserts that respondent No. 2 was rightly appointed as Sole Arbitrator. The petitioner in his rejoinder has denied all the allegations of respondent No. 1.

(3) THE following issues were framed on 21st January, 1980.

'1.Has this court jurisdiction to decide as to whether there has been full and final settlement of disputes between the parties 2. Whether there are existing disputes between the parties 3. Whether the appointment of Shri M.L. Bhargav as the sole arbitrator is valid 4. In case Issues I to 3 are decided against the petitioner, is he entitled to nominate his own arbitrator at this stage 5. Relief.'

The parties filed various affidavits in support of their respective contentions. Issue Nos. 1 and 2 :

(4) CLAUSE 17 of the license agreement dated 8th March, 1978 admittedly executed by the parties reads as under :

'IN the case of any dispute arising between the parties touching this agreement or relating to the interpretation of this agreement or any matter concerning this agreement shall be referred to arbitration. One arbitrator each shall be appointed by each of the parties, the said arbitrators shall appoint an Umpire and in the event of any disagreement between the arbitrators the Umpire shall decide adjudicate upon the matter. The decision of the arbitrators and in the event of dispute between the arbitrators, of the Umpire shall be binding on the parties.'

Learned counsel for the petitioner submits that he revoked the license on 31st May, 1979 on account of failure of the respondent to pay the license fee. etc. in accordance with the agreement, that thereafter respondent No. 1 raised disputes and demanded compensation for the alleged revocation of license and subsequently respondent No. 1 accepted that his license had been validly and properly cancelled, that the amount due to the petitioner was paid and a discharge certificate was executed by respondent No. 1 on 8th June, 1979. It is desirable to reproduce the discharge certificate dated 8th June, 1979 :

'THIS is to acknowledge and discharge M/s. Saraswati Press, 3, Deshbandhu Gupta Road, New Delhi through its Proprietor Shri Anup Puri from any I liability whatsoever in respect of the agreement dated 8th March, 1978 with regard to the license of Printing machines belonging to M/s. Saraswati Press to Shri Surinder Kumar Khurana Proprietor, M/s. Printrade, 9437, Gali No. 10, Multani Dhanda, New Delhi. Since the license was revoked and cancelled by M/s. Saraswati Press w.e.f. 1-6-1979 and the license fee has been paid fully and up to date and all accounts settled. There is no other dispute between the parties. This is to confirm, acknowledge and discharge M/s. Saraswati Press and/or Shri Anup Puri of any liability whatsoever and it is in full and final settlement of the accounts between Shri Surinder Kumar Khurana, Proprietor, M.S. Printrade, 9437, Gali No. 10, Multani Dhanda, New Delhi and M/s. Saraswati Press 3, Deshbandhli Gupta Road, New Delhi. Since license is revoked with effect from 31-5-79, Shri S.K. Khurana, licensee is advised to remove his one handle burg platen 10x15 size composing material and paper stocks etc. and we will have no objection whatsoever in removing aforesaid equipment during office hours'. sd/- Anup Puri 8/6/79 283 Witness : sd/- K. Kumar 8.6.79 sd/- S.K. Khurana 8/6/79 ' sd/- B.S. Bhandari 4/17, W.E.A. Karol Bagh, New Delhi. 8/6/79. The receipt dated 8th June, 1979 executed by the petitioner reads as follows : 'Received from Messrs Printrade, Proprietor Shri S.K. Khurana the sum of Rs. 9837.99 (Rupees Nine thousand eight hundred seventy three and paise ninety nine only) on account of license fee up to 31st May, 1979. The license is revoked by mutual consent and now no amount is due from Messrs. Printrade. The amount has been received as under : 2-6-79 Rs. 2000.00 in cash 4-6-79 Rs. 2000.00 in cash 5 6-79 Rs. 5873.99 by draft on Canara Bank. The machines (i) one Super Mercedeze size 18x23 and One treadle size 13' x 19' Asian have been received back in perfect running condition. sd/- Anup Puri 8-6-79 '

sd/- S.K. Khurana Prop. Printrade. Learned counsel for the petitioner submits that there was full and final; settlement that the above two documents put an end to the agreement dated 8th March, 1979, and the execution of the two documents amounted to a fresh agreement with no clause for reference to arbitration. Learned counsel for respondent No. I on the other hand, submits that the petitioner never pleaded that there was any fresh agreement dated 8th June, 1979 in supersession of the original agreement dated 8th March, 1978, that according to the allegations of the petitioner there was full and final settlement between the parties and the petitioner was discharged. Learned counsel further submits that these two questions ; (i) whether there was full and final settlement of the disputes between the parties and (ii) whether the petitioner was discharged of all liabilities, fall within the jurisdiction of the arbitrator to decide. He submits that these questions can only be decided by the arbitrator and not by the court. He further submits that these two documents do not amount to supersession of the .agreement dated 8th March, 1978, that disputes exist between the parties regarding the claim of respond sat No. I against the petitioner for wrongful cancellation of the license agreement before the expiry of two years.

(5) THE point for decision is whether the execution of the two documents amount to supersession of the agreement dated 8th March, 1978 or execution of a fresh.agreement between the parties. A bare reading of the discharge certificate shows that the license fee has been paid fully up to date and all accounts settled. The language of the discharge certificate does not amount to execution of fresh agreement by the parties. Whether there had been full and final settlement of the disputes between the parties is a matter to be decided by the arbitrator and not by the court. Respondent No. 1 has made allegations in his written statement as well as in his affidavit that these documents were got executed by the petitioner under coercion. The receipt dated 8th June, 1979 is executed by the petitioner in favor of respondent No. 1. It shows that the original receipt was received by respondent No. 1 and in token thereof he signed the copy of the receipt. This receipt is not a document executed by respondent No. 1. The contents of the receipt thereforee would not amount to revocation of license by respondent No. 1. In other words, it cannot be said .that the license was revoked by mutual consent of the parties. In any case whether license was validly revoked is also a matter to be decided by the arbitrator. Clause 17 of the agreement is wide enough to include any dispute between the parties touching the agreement Thus whether the agreement was validly revoked is again a matter for decision by the arbitrator. The arbitration clause 17 contained in the agreement is exhaustive and it includes disputes of any nature whatsoever concerning or touching the agreement. Learned counsel for the petitioner submits that the discharge certificate contains a sentence that 'there is no other dispute between the parties' and says that on the basis of this sentence it must be held that there is no existing dispute. After giving my careful consideration to the respective arguments of the parties, 1 am of the opinion that respondent No. 1 has pleaded circumstances under which it is said that this discharge certificate was executed by him under coercion. In other words the submission of the learned counsel for respondent No. 1 is that the question whether the petitioner is not liable to the respondent for violation of the terms of the license agreement dated 8th March, 1978 is again a question for decision by the arbitrator. The disputes have been raised by respondent No. 1 as he is claiming compensation for illegal cancellation of license agreement before the expiry of the fixed period of two years. Whether respondent No. 1 is entitled to compensation or not or whether the discharge certificate and the receipt were executed in full and final settlement of the disputes between the parties are questions to be decided by the arbitrator. Reference to the pleadings shows that the petitioner never pleaded that any new agreement was arrived at between the parties superseding the agreement dated 8th March, 1978 containing arbitration clause 17. The only pleading is that there has been full and final settlement between the parties and no dispute exists between the parties. There is no agreement between the parties superseding the original agreement dated 8th March, 1978.

(6) IN Damdar Valley Corporation v. K.K. Kar, : [1974]2SCR240 it has been observed that the question whether there had been a full and final Settlement of a claim under the contract was itself a dispute arising 'upon' or 'in relation to' or 'in connection with' the contract, that the claim for damages was a dispute or difference which arose between the respondent and the appellant and was 'upon' or 'in relation to' or 'in connection with' the contract and the reference to the arbitrator by the respondent is not barred. Further it has been observed that the question whether the termination is valid or not or whether damages are recoverable for such wrongful termination do not affect the arbitration clause or the right of the respondent to invoke if for appointment of an arbitrator. The ratio of the Supreme Court judgment is fully applicable to the facts oF the present case. Learned counsel for the petitioner however refers to the following observation in para 7 of the said judgment of the Supreme Court :

'AS the contract is an outcome of the agreement between the parties it is equally open to the parties thereto to agree to bring it to an end or treat it as if it never existed. It may also be open to the parties to terminate the previous contract and substitute in its place a new contract or alter the original contract in such a way that it cannot subsist. In all these cases, since the entire contract is put an end to. the arbitration clause, which is a part of it, also perishes along with it'.

In other words, these observations mean that the parties may enter into a fresh contract putting an end to the original contract and if the new contract without any arbitration clause has been arrived at superseding the original contract, the arbitration clause of the original contract would not survive and it would not be incorporated in the new contract I have already held that in the facts and circumstances of the present case the petitioner and the respondent No. 1 have not entered into any new contract and have not revoked the agreement date 8th March, 197S. The dispute is whether there has been a full and final settlement between the parties regarding the agreement dated 8th March. 1978 which as already observed, is a matter for decision by the arbitrator. The above observations of the Supreme Court referred to .^y the learned counsel for the petitioner do not favor him. I am of the opinion that this court has no jurisdiction to decide whether there has been full .and final settlement of disputes between the parties. Respondent No. 1 has raised disputes regarding compensation claimed by him for alleged illegal cancellation of the contract by the petitioner. Thus the disputes are existing between the parties which require decision by the arbitrator. Issues. Nos. 3 and 4

(7) RESPONDENT No. 1 on 28th July, 1979 sent a notice to the petitioner referring to clause 17 of the agreement dated 8th March, 1978 under which one arbitrator is to be appointed by each of the parties and the said arbitrators shall appoint an Umpire in the event of any disagreement between the arbitrators. Respondent No. 1 appointed Mr. Manohar Lal Bhargav, Advocate respondent No. 2 as his arbitrator and sent a copy of the appointment letter to the said arbitrator and also to the petitioner. Respondent No. 1 by his notice further cal'ed upon th3 petitioner to appoint his arbitrator within 15 days of the receipt of the said notice. The notice was duly served but the petitioner did not appoint his arbitrator. Respondent No. I appointed respondent No. 2 as the Sole Arbitrator. Section 9 of the Arbitration Act is as under: '9. Where an arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed, by each party, then, unless a different intention is expressed in the agreement. a) if either of the appointment arbitrators neglects or refuses to act,or incapable of acting, or dies, the party who appointed him may appoint a new arbitrator in his place; b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, ,for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent: Provided that the Court may set aside any appointment as sole arbitrator made under clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an arbitrator or pass such other order as it thinks fit. Explanationn : The fact that an arbitrator or umpire, after a request by either party to enter on the proceed with the reference, does not within one month comply with the request may constitute a neglect or refusal to act within the meaning of Section 8 and this section'. Under this section if one party fails to appoint his arbitrator for 15 days after the service by the other party of a notice in writing to make the appointment the party who has appointed an arbitrator may appoint his arbitrator to act as sole arbitrator in the reference.

(8) THE proviso to Section 9(b) of the Arbitration Act however empowers the court to set aside any appointment as sole arbitrator on sufficient cause being shown. The court can allow further time to the defaulting party to appoint an arbitrator. In the instant case respondent No. 1 no doubt appointed his arbitrator and notified the petitioner to appoint another arbitrator in terms of clause 17 of the agreement but the petitioner did not appoint. The appointment of respondent No. 2 as sole arbitrator was thereforee valid. It is however submitted by the learned counsel for the petitioner that he could not appoint the arbitrator under the bona fide relief that no arbitration agreement survived and that the agreement stood revoked by mutual consent. Failure to appoint an arbitrator under bona fide belie/that agreement of reference does not survive is sufficient cause within the meaning of the proviso to Section 9(b) of the Arbitration Act. 1 am thereforee of the opinion that respondent No. 2 should not be allowed to act as sole arbitrator, and the petitioner must be granted further time to appoint his own arbitrator.

(9) ARGUMENTS in the above case were concluded on 16th March, 1983 and judgment was reserved. Learned counsel for the petitioner made an application (I A. No. 1309 of 1983) dated 21st March, 1983 under Section 151 of the Code of Civil Procedure informing this court that Shri Anoop Puri, petitioner was flown to London on 13th March, 1933 and he died on 17th March, 1983 at 4.30 a.m. (IST). By this application he has prayed that he may be given time for bringing on record the legal representatives of the deceased petitioner. Notice of this application was served upon the respondent's counsel. He submits that the petitioner died after the conclusion of the hearing and before pronouncing the judgment and thereforee the petition would not abate by reason of the death of the petitioner and non-substitution of his legal representatives. Order 22 Rule 6 of the Code of Civil Procedure reads as under:

'NOTWITHSTANDING anything contained in the foregoing rules, whether the cause of action survives or not, there shall be no abatement by reason of the death of either party between the conclusion of the hearing and the pronouncing of the judgment, but judgment may in such case be pronounced notwithstanding the death and shall have the same force and effect as if it had been pronounced before the death took place.'

(10) UNDER this rule if a party dies between the conclusion of the hearing and the pronouncement of judgment, the judgment may be pronounced and judgment amounts to pronouncement before the death of the petitioner. In the instant case it is not disputed that the petitioner died after the conclusion of the arguments. This judgment can thereforee be pronounced without bringing on record the legal representatives of the petitioner.

(11) THE death of the petitioner took place on 17th March, 1983. The legal representatives have aright to be brought on record within a period of 90 days from the date of death. I, thereforee, allow the legal representatives of the petitioner above named to appoint their arbitrator on or before 15th July, 1983.

(12) THE above petition is dismissed. The legal representatives are however granted time to appoint an arbitrator in terms of clause 17 of the agreement dated 8th March, 1978 between the parties on or before 15th July, 1983. In case the legal representatives fail to appoint their arbitrator as above Mr. Manohar Lal Bhargav, Advocate (Respondent No. 2) shall act as sole arbitrator to decide the various disputes. No order as to costs.

(13) A copy of this order be sent to Bawa Shiv Charan Singh, Advocate for the petitioner.


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