Back
SUPREME COURT OF INDIA
R. BANUMATHI, A.S. BOPANNA, JJ.
Zenith Drugs & Allied Agencies Pvt. Ltd. Represented By Its Managing Director, Shri Uday Krishna Paul – Appellant
Versus
M/s. Nicholas Piramal India Ltd – Respondent
Civil Appeal No.4430 of 2009
Decided On : 30-07-2019
(a) Arbitration law - By agreement dated 01.05.1997 containing an arbitration clause appellant appointed as clearing and forwarding agent for entire North-eastern region - By compromise agreement dated 11.12.2001 appellant appointed as stockiest for Guwahati and Agartala only - Held, arbitration clause in earlier agreement cannot be invoked for disputes arising out of subsequent agreement. (Para 13)
(b) Arbitration and Conciliation Act, 1996 - Section 8 - Parties can be referred to arbitration only if subject matter of the suit is also the same as the subject matter of arbitration - Instantly compromise decree not containing any arbitration clause - Subsequent suit filed by appellant due to failure of the respondent Company to honour terms of compromise agreement - Held, suit claim not covered by arbitration. (Para 14, 16, 20, 22)
(c) Arbitration and Conciliation Act, 1996 - Section 8 - On allegation that compromise obtained by fraud - parties cannot be referred to arbitration. (Para 21)
Facts of the case:
The appellant filed Title Suit inter alia praying for declaration that the contract between the appellant and RPIL-defendant No.1 was valid, subsisting, legal and continuing and for further declaration that defendants cannot terminate the appellant as clearing and forwarding agents in any manner in case of merger with the respondent Company. In the said suit, the parties have compromised the matter and on the basis of compromise deed dated 11.12.2001 the Civil Judge decreed the Title Suit on compromise as per the terms and conditions embodied in the compromise deed. In terms of the said compromise, respondent has made the payment of Rs.23,50,000/-to the appellant and also as a part of compensation package appointed the appellant as its stockist for their products at Guwahati and Agartala.
When the respondents refused to honour the terms and conditions of the compromise decree the appellant filed Title Execution case for execution of the compromise decree. Differences arose between the parties on the alleged diversion of stocks by the appellant’s employee in the year 2002. The respondent filed criminal complaint for offences punishable under Sections 420, 406, 409 and 403 IPC read with Section 34 IPC. The respondent had also filed an application under Section 151 CPC praying for setting aside/recalling of compromise decree dated 24.12.2001 on the ground that the compromise decree was obtained by appellant by false inducement and misrepresentation and the same is vitiated on account of fraud.
Appellant filed Money Suit claiming compensation for rupees twenty crores. Relying upon Clause 17 of the agreement dated 01.05.1997, the respondent filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 praying for referring the parties to arbitration in the Money Suit. The trial court dismissed the application. The respondent filed Civil Revision Petition before the High Court challenging the order of the trial court. The High Court allowed the revision petition and referred the dispute to arbitration.
Finding of the Court:
Parties could not be referred to arbitration.
Result: Appeal allowed.
JUDGMENT :
R. BANUMATHI, J.
1. This appeal arises out of the order dated 26.03.2007 passed by the Guwahati High Court in Civil Revision (P) No.31 of 2005 in and by which the High Court allowed the revision petition preferred by the respondent and referred the parties to arbitration.
2. Brief facts which led to filing of this appeal are as follows:-
The appellant is a Company registered under the Companies Act, 1956 and is involved with various types of agency businesses including that of clearing and forwarding agents, freight contractors, etc. M/s Rhone Poulene India Limited (RPIL) vide agreement dated 01.05.1997 appointed the appellant Company as its clearing and forwarding agent for a period of three years. Clause 17 of the agreement dated 01.05.1997 contains arbitration clause. The agreement was renewed for a further period from 01.04.2001 to 31.03.2002.
3. RPIL vide its letter dated 20.07.2001 informed the appellant that their Company is getting merged with respondent Company-Nicholas Piramal India Ltd. (NPIL) and that pursuant to the merger, RPIL shall cease to exist as a legal entity and therefore, with effect from three months from the date of the letter, the subsisting clearing and forwarding agency agreement shall stand terminated in terms of the provisions of the agreement. The Bombay High Court in Company Application No.252 of 2001 passed the order dated 27.09.2001 inter alia approving amalgamation of RPIL with the respondent Company. The appellant by its letter dated 25.07.2001 objected to the unilateral decision of the respondent Company to terminate the clearing and forwarding agency agreement and requested the respondent to maintain status-quo with respect to the agency until the issue is resolved through negotiations. RPIL vide its letter dated 03.09.2001 informed the appellant that they are unable to accede to the request for withdrawing the termination letter. For all practical purposes, the clearing and forwarding agency agreement dated 01.05.1997 thus stood terminated.
4. The appellant filed Title Suit No.241 of 2001 inter alia praying for declaration that the contract between the appellant and RPIL-defendant No.1 was valid, subsisting, legal and continuing and for further declaration that defendants cannot terminate the appellant as clearing and forwarding agents in any manner in case of merger with the respondent Company. In the said suit, the parties have compromised the matter and on the basis of compromise deed dated 11.12.2001 jointly filed by the parties, Civil Judge, Senior Division, Guwahati vide its order dated 24.12.2001 decreed the Title Suit No.241 of 2001 on compromise as per the terms and conditions embodied in the compromise deed. In terms of the said compromise, respondent has made the payment of Rs.23,50,000/-to the appellant and also as a part of compensation package appointed the appellant as its stockist for their products at Guwahati and Agartala.
5. Case of appellant is that the respondents refused to honour the terms and conditions of the compromise decree therefore, the appellant had filed Title Execution case No.4 of 2002 for execution of the compromise decree dated 24.12.2001. Differences arose between the parties on the alleged diversion of stocks by the appellant’s employee in the year 2002. The respondent filed criminal complaint in C.R. Case No.1446 of 2002 before the Chief Judicial Magistrate, Kamrup for the offences punishable under Sections 420, 406, 409 and 403 IPC read with Section 34 IPC. The respondent had also filed an application under Section 151 CPC praying for setting aside/recalling of compromise decree dated 24.12.2001 on the ground that the compromise decree was obtained by appellant by false inducement and misrepresentation and the same is vitiated on account of fraud.
6. On 30.04.2003, appellant had filed Money Suit No.73 of 2003 claiming compensation for rupees twenty crores. In the suit, the appellant inter alia alleged that due to intentional acts of omission and
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
