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Ritu Puri Vs. S.K. Khurana and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit No. 972 of 1983 and Interim Application No. 4053 of 1983
Judge
Reported in1986(10)DRJ118
ActsArbitration Act, 1940 - Sections 34
AppellantRitu Puri
RespondentS.K. Khurana and ors.
Advocates: B.S.C. Singh and; K.M. Sharma, Advs
Excerpt:
.....alleged that the defendant no, i failed to pay the license fee, telephone and electricity bills. anoop puri failed to appoint his arbitrator. 1. the court came to the conclusion that the question as to whether the agreement of june 8, 1979 bad validly revoked the original agreement dated march 8, 1978 was a matter for decision by the arbitrator and, thereforee, it could not be said that there were no disputes between the parties which required decision by the arbitrator. anoop puri failed to appoint their arbitrator by july 15, 1983. mr. apart from that it is worth noting that the plaintiffs in the present suit are seeking nothing else but to set up the agreement of june 8, 1979 which was the subject matter of consideration in omp 141 of 1979. the plaintiffs have only adopted the..........on payment of monthly license fee of rs. 3000.00 in terms of the agreement dated march 8, 1978. anoop puri had the right to revoke the license for breach of any of the terms of the license agreement. anoop puri revoked the license on may 31, 1979 by telegram and notice on account of alleged breach of terms. it was alleged that the defendant no, i failed to pay the license fee, telephone and electricity bills. the defendant no. 1, however, raised some disputes and demanded compensation for alleged wrongful cancellation of his license before the expiry of two years. defendant no. 1 had appointed an arbitrator according to the arbitration clause in the agreement dated march 8, 1979 whereunder each party was to appoint an arbitrator and the matters in disputes arising out of the agreement.....
Judgment:

H.C. Goel, J.

(1) One Anoop Puri, predecessor-in-interest of the plaintiffs, had granted a license to the defendant No. I, Surinder Kumar Khurana, for the use of his printing machines on payment of monthly license fee of Rs. 3000.00 in terms of the agreement dated March 8, 1978. Anoop Puri had the right to revoke the license for breach of any of the terms of the license agreement. Anoop Puri revoked the license on May 31, 1979 by telegram and notice on account of alleged breach of terms. It was alleged that the defendant No, I failed to pay the license fee, telephone and electricity bills. The defendant No. 1, however, raised some disputes and demanded compensation for alleged wrongful cancellation of his license before the expiry of two years. Defendant No. 1 had appointed an arbitrator according to the arbitration clause in the agreement dated March 8, 1979 whereunder each party was to appoint an arbitrator and the matters in disputes arising out of the agreement were to be referred to two arbitratorl. Defendant No.1 appointed his arbitrator in accordance with the agreement between the partics. Anoop Puri failed to appoint his arbitrator. Defendant NO.1 thereon appointed Mr. M L Bhargava, Advocate, as the sole arbitrator in the case in accordance with the terms of the agreement. Mr. M.L. Bhargava had earlier been appointed by the defendant No. I as his arbitrator. Anoop Puri then moved an application under Sections 5, 13 and 33 of the Arbitration Act (for short the Act) to this Court being O.M.P. 141 of 1979. It was alleged by Anoop Puri that on June 8, 1979 defendant No.1 had accepted that his license had been properly and validly cancelled and he stood absolved of his liability whatsoever in respect of the agreement dated March 8, 1978 and defendant No. I paid the arrears of license fee and prepared a full and final settlement of the accounts and that no dispute whatsoever relating to the said agreement dated March 8. 1978 survived and that he stood fully discharged. A discharge certificate was also executed on June 8, 1979 between the parties and a receipt for having received back machines and the amount in full and final settlement was also issued by Anoop Puri in favor of the defendant No. 1. This petition of Anoop Puri was contested by the present defendant No. 1. The Court came to the conclusion that the question as to whether the agreement of June 8, 1979 bad validly revoked the original agreement dated March 8, 1978 was a matter for decision by the arbitrator and, thereforee, it could not be said that there were no disputes between the parties which required decision by the arbitrator. It was held that the matters in dispute were to be decided by the arbitrator. Anoop Puri died on March 17, 1983. The arguments in the case had, however, concluded before the Court on March 16, 1983. The legal representatives of Anoop Puri were not formally brought on record of the case. They were however given an opportunity to appoint their arbitrator by a certain date, superseding the appointment of Mr. M.L. Bhargava as the sole arbitrator. I am informed that Smt. Ritu Puri, plaintiff No. 1, widow of Anoop Puri, appointed Mr. D.P. Sharma, Advocate as her arbitrator in the case after the decision in the said OMP-J41/79. The telegram by which she appointed Mr. D.P. Sharma, Advocate as her arbitrator did not say that she appointed Mr. Sharma as arbitrator as a next friend of Ms. Mahima Puri, minor daughter of Mr. Anoop Puri also. Mrs.N. Puri, mother of Anoop Puri, also did not join in the appointment of an arbitrator by Smt. Ritu Puri. The judgment in the OMP-141/79 also stated that in case the two heirs of Mr. Anoop Puri failed to appoint their arbitrator by July 15, 1983. Mr. M.L. Bhargava, Advocate shall-act as the sole arbitrator to decide the various disputes.

(2) The plaintiffs Ms. Ritu Pari and Ms Mahima Puri, thereafter filed the present suit against Surinder Kumar Khurana for a declaration to the effect that a fresh agreement came into existence between Anoop Puri and defendant No. 1 on June 8, 1979 and that all the disputes under the agreement of March 8, 1978 were settled by the agreement dated June 8, 1979 together with a decree for permanent injunction against defendant No.1 restraining him from taking any action under the agreement dated March 8, 1978 and restraining the defendants from proceeding with the reference. The allegations of the plaintiffs in the suit are cleat agreement executed between Anoop Puri and defendant No. 1 on June 8, 1979 not only put an end to the earlier agreement dated March &, 1978, that also created a new and fresh agreement between the parties as detailed in the plaint. Defendant No. 1 filed an application under Section 34 of the Act, being I.A. 4050 of 1983. It is alleged in the application that there was an arbitration agreement between the parties i.e. the agreement dated March 8, 1978 and the matters between the parties already stood referred to the arbitrators Mr.M.L. Bhargava and Mr. D.P Sharrna, Advocates and that thereforee, the proceedings of the suit were liable to be stayed till the decision of the reference. This application was contested by the plaintiffs in their reply in writing. On the pleadings of the parlies, the following, issues were framed :

(1)Does the application amount to filing of a written statement and thereby debarred the applicant to avail of the provisions of Section 34 of the Arbitration Act OPP. (2) Was the arbitration agreement mutually cancelled by the parties by means of a fresh agreement as alleged by the plaintiffs OPP. (3) Is issue No. 2 barred by Order 2 Rule 2 or by the principles of res-judicata Op defendant (4) Are the proceedings of the suit liable to be stayed under section 34 of the Arbitration Act Op Defendant

(3) Issues No. 1 and 3 were treated as preliminary issue by G.R. Luthra, J. by his order dated March 28, 1985 and it was held that they shall first be heard and decided. FINDINGS: Issue NO. 1 :

(4) Defendant No. 1 in the application under Section 34 of the Act, among others, also alleged that the suit of the plaintiff was barred by limitation and that the suit was not properly stamped and the suit should have been valued at Rs. 3 lakhs and a court-fee thereon i.e. Rs. 5272.00 ought to have been paid in the suit. Defendant No. I also alleged that the suit was barred by principles of res-judicata and also under Order 2 Rule 2 CPC. Mr.Bawa, learned counsel for the plaintiff's, submitted that in an applications under Section 34 of the Act all that a defendant has to state is about the existence of an arbitration agreement between the parties and the fact that the defendant has been ready and willing to refer the matters in dispute to arbitration, it was submitted that defendant No. 1 having raised the said pleas also in the application, the application was in the nature of a written statement to the suit. I do not find any merit in this submission. The application read as a whole shows that defendant No. 1 has alleged that an arbitration agreement subsists between the parties in respect of the subject matter of the suit and the details of the same are given in the application. It is further striated by defendant No. 1 in para 4 of the application that defendant still remains ready and willing to do all things necessary to the proper conduct of arbitration. Defendant No. 1 prayed in the application that the proceedings in the suit be stayed under Section 34 of the Arbitration Act. I am of the view that the application in question has to be treated as an application under Section 34 of the Act. The mere fact that defendant No. 1 also raised certain objections in the application regarding the maintainability of the suit as stated by me above, in my opinion, did not change the real nature of the application and the sum and substance of the application remains the same, namely that of an application under Section 34 of the Act. It is worth noting that defendant No. 1 in its application did not reply to the averments made by the plaintiffs in the plaint. In the end the issue is held against the plaintiffs. Issue No. 3:

(5) A perusal of the judgment of a Single Judge of this Court in OMP-141 of 1979 in the case between the parties shows that H.L. Puri, predecessor-in-interest of the plaintiffs had filed a petition under Sections 5, 13 & 33 of the Act against the defendants wherein also Anoop Puri had alleged that on June 8, 1979 present defendant No. 1 had accepted that his license had been properly and validly cancelled and that Anoop Puri stood absolved of his liability whatsoever in respect of the agreement dated March 8, 1978 ; that Surinder Kumar Khurana, defendant No. 1, had paid the arrears of license fee and that there was a full and final settlement of accounts and no dispute whatsoever regarding the said agreement survived and Anoop Puri stood fully discharged. The same discharge certificate of June 8, 1979 was the basis of these allegations. The learned Judge held that clause 17 of the agreement is wide enough to include any dispute between the parties touching the agreement and thus the question as to whether the original agreement of March 8, 1978 was validly revoked as alleged by Anoop Puri is a matter for decision by the arbitrator. Under these circumstances the petition of Anoop Puri was dismissed and the parties were directed to get the matter decided by the arbitrators in accordance with the terms of clause 17 of the agreement dated March 8, 1978. The plaintiffs in the present suit also seek to set up the same agreement of June 8, 1979 by virtue of which the original agreement March 8. 1978 is alleged as having stood revoked and discharged. This matter has already been adjudicated upon between the parties by the said judgment of Sultan Singh, J. in OMP141 of 1979. It was submitted by Bawa Shiv Charan Singh that in the application Anoop Puri had alleged that the agreement dated March 8, 1978 stood revoked and discharged by the subsequent agreement of June 8, 1979 and it was in view of this plea of Anoop Puri that the learned Judge held that the question as to whether the agreement dated March 8, 1978 stood discharged was also within the province of the arbitrator. However, in the present suit the allegations of the plaintiffs are not the same as they were in OMP-141 of 1979. According to Mr. Bawa in the present suit is alleged that by the agreement dated June 8, 1979 a new contact came into being between the parties and that thereforee, the judgment in OMP-141 of 1979 cannot operate as res-judicata on the matters in issue in the present suit. It is also submitted that the question as to whether a fresh agreement had come into being between the parties or not could not form the subject matter of the petition under Sections 3, 5 and 33 of the Act and as such it cannot be said that the said judgment operates as res-judicata on the matters in issue in the present suit. There is no merit in this submission. The judgment in OMP-141 of 1979 shows that it was urged on behalf of Anoop Puri in that application that by the agreement dated June 8, 1979 the original agreement dated March 8, 1978 stood discharged and further that a fresh agreement had come into being between the parties. Sultan Singh, J. towards the end of para 5 of his judgment observed that there was no agreement between the parties superseding the original agreement dated March 8, 1978. It was again reiterated in para 6 of the judgment that it was already held that on the facts and circumstances of the present case the petitioner and respondent No. 1 had not entered into any new agreement and had not revoked the agreement dated March 8, 1978. It is obvious that it was urged on behalf of Anoop Puri before the learned Judge that the agreement dated June 8, 1979 had the effect of not only discharging the original agreement dated March 8, 1978 but thereby a fresh agreement had also come into being between the parties and this contention did not prevail with the Court and was repelled. Bawa Shiv Charan Singh referred to the observations towards the end of para 5 of the judgment wherein it is stated that reference to the pleadings shows that the petitioner i.e. Anoop Puri never pleaded that any new agreement was arrived at between the parties superseding the agreement dated March 8, 1978 containing arbitration clause 17 and the only pleading was that there had been full and final settlement between the parties and no dispute existed between the parties. These observations only go to show that the learned Judge while considering the merits of the submission of Anoop Puri that a fresh agreement had come into being, which was raised during arguments before the learned Judge only pointed out that that was not specifically pleaded by Anoop Puri in his pleadings. However, it is clear that Anoop Puri was allowed to urge that plea and that plea was duly considered and a finding given thereon. Apart from that it is worth noting that the plaintiffs in the present suit are seeking nothing else but to set up the agreement of June 8, 1979 which was the subject matter of consideration in Omp 141 of 1979. The plaintiffs have only adopted the device of choosing to call that agreement as giving rise to a fresh agreement between the parties instead of simply saying that the original agreement dated March 8, 1978 stood discharged and satisfied by the subsequent agreement of June 8, 1979 and the receipt by Anoop Puri of the same date which are extracted in the judgment of OMP-141 of 1979 shows that by those two documents the original agreement of March 8, 1979 purports to have been finally settled. There is nothing in either of these two documents to suggest that anything was required to be done by either party in future. Thus ex facie there was no question of any fresh agreement having come into being between the parties by the agree ment dated June 8, 1979. The plaintiffs have also not alleged anything-as to how the discharge certificate had the effect of creating any new agreement between the parties other than discharging the original agreement of March 8, 1978. In the end it is held that issue No. 2 is barred by the principles of res-judicata by the judgment in OM.P-141 of 1979. Issue NO. 2:

(6) In view of my finding on issue No.3, there is no question of recording an independent finding on issue No. 2. Issue NO. 4 :

(7) It was not disputed by Mr. Bawa that in case issues No. 1 and 3 are held against the plaintiffs, issue No. 4 is bound to be decided in favor of defendant No. 1 as is obviously the position. The issue is accordingly held in favor of defendant No. 1.

(8) As a result of my above findings, I accept the application and the proceedings in the suit are stayed till the decision of the arbitrators in the reference.


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