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High Court Of Delhi
M.G.F.(INDIA) LTD. - Appellant
Versus
RAJINDER SINGHAL - Respondent
S. 903A of 1997
Decided On : 08/21/2003
Held:
Execution of this agreement is not denied by the parties. It is thus evident that parties to the suit have expressly agreed to refer their disputes in accordance with the provisions of the Indian Arbitration Act 1940 or any statutory amendment thereof. I find support for recording this finding from well known two cases namely "Thysson case" and also another landmark judgment known as "Rani Construction case". Their Lordships while taking assistance of "Rani Construction case" and also while incorporation the expression "unless otherwise agreed" observed that "the parties were clear in their mind that it would be the old Act or any statutory modification or re-enactment of that Act which would govern the arbitration and that parties could anticipate that the new enactment may come into operation at the time the dispute arise. Their Lordships further held that "When the agreement uses the expression unless otherwise agreed and law in force it does give an option to the party to agree when the new Act would apply to the pending arbitration proceedings". That agreement can be entered into even before the new Act come into force and it cannot be said that agreement has to be entered into only after the coming into force the new Act.
Although arbitral proceedings have commenced before the enactment of the new suit yet parties had expressly agreed that their disputes shall be either governed by the old Act or in case new enactment comes into force then provisions of those new enactment would govern their case. This being the legal preposition, the petition as filed by the petitioner under the old Act is not maintainable and has to be dismissed.
( 1 ). This is a petition under Section 20 of the Arbitration Act, 1940 seeking reference of disputes to the Arbitrator as named in the Lease Agreement dated 11th December, 1991. The facts as emerged in the petition are that the petitioner company purchased one Ashok Leyland Diesel engine at the instance of respondent No. 1 from M/s Sudhir Engineering Company on 2nd november, 1991 for a consideration of Rs. 3,64,000.
( 2 ). The said equipment i. e. Ashok Leyland Diesel Engine complete with 125 KVA alternator and all standard accessories were leased out to respondent no. 1 and in consideration thereof a lease agreement dated 11. 12. 1991 was executed between the petitioner and the respondent No. 1. The respondent no. 2 stood as guarantor for respondent No. 1. The said equipment was given to the respondent No. 1 for a period of three years starting from 11. 12. 1991.
( 3 ). Respondent No. 1 was to make payment of lease rentals at the rate of rs. 12,600/- per month for 35 months besides payment of insurance and other incidental charges. According to the petitioner the total value of the lease agreement was Rs. 4,52,000/ -.
( 4 ). It was agreed in the lease agreement that in case the respondent No. 1 made default in payment of lease charges, the petitioner shall be entitled to terminate the lease agreement and exercise the right to retake possession of the said equipment and also claim by way of liquidated damages the arrears of monthly lease charges. Amongst the terms as stated above various other terms formed part of that lease agreement which are not necessary to reproduce here for the sake of repetition.
( 5 ). It is the case of the petitioner that after taking the said equipment by the respondent No. 1, he committed breaches of the terms and conditions of the lease agreement and had only made a payment of Rs. 28,500/- and not the rest. According to the petitioner a sum of Rs. 4,23,500/- is due from respondent no. 1 and respondent No. 2 besides other amounts detailed in para 9 of the petition.
( 6 ). The petitioner has filed this petition under Section 20 of the Arbitration act, 1940 because of their being arbitration clause in the lease agreement as contained in Clause 39 (a) of the said agreement.
( 7 ). This petition was filed on 1st May, 1997, not under the new Act i. e. The arbitration and Conciliation Act, 1996, but under the old Arbitration Act, 1940. The petitioner while filing the petition under the old Act has assigned reasons stating in para 1 of the petition that the present petition is maintainable under the Arbitration Act, 1940 in view of the provisions of Section 85 and Section 21 of the new Act i. e. Arbitration and Conciliation Act, 1996. It has further been stated that the arbitral proceedings in respect of the disputes between the parties had commenced in the year 1995 i. e. before coming into force the new act and therefore according to the petitioner, the present petition is maintainable under the old Arbitration Act, 1940.
( 8 ). The petition is contested by the respondent. Detailed reply to the petition has been filed by them refuting the maintainability of the petition under the old Act besides denying the claim of the petitioner, it being barred by time.
( 9 ). As regards the first objection of the respondent about maintainability of the petition, it is stated in the reply that since the Indian Arbitration Act, 1940 has been repealed by Section 85 of the Ordinance and is no longer part of the statute and therefore no petition is entertainable or maintainable under the provisions of the old Act after the new Arbitration and Conciliation Act, 1996 came into force.
( 10 ). On the pleadings of the parties, the following issues were framed:
1. Whether the petition under the Indian Arbitration Act, 1940 is not maintainable?
2. Whether the petition is barred by time?
3. If Issues No. 1 and 2 are decided against the respondent, whether the matter is not liable to be referred to arbitration? If
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