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1996 Supreme(Del) 794

High Court Of Delhi
LIBERTY SALES SERVICE - Appellant
Versus
JAKKI MULL AND SONS AND SHANTI NATH JAIN - Respondent
Decided On : 10/01/1996

Headnote:Arbitration Act 1940 - Section 20 — Appointment of arbitrator — Interim injunction — Plaintiff entered into agreement share in business — Nature of agreement — Discussed — Interpreted — Right of the parties — Goods to be sold by defendant on commission basis — Defendant shall employ employees — It was also agreed that 85% of sale proceed shall be payable to plaintiff after deducting the amount of commission and the staff shall be appointed by the defendant and the same shall remain there in the premises. Trial court passed conditional order and held the plaintiff shall remain in possession — Appealed against in SLP — Supreme Court vacated the order of Trial court — Impugned order set aside — Defendant pleaded plaintiff is bound to pay compensation and plaintiff cannot seek relief in view of his conduct Learned Subordinate Judge dismissed in application for injunction — Suit dismissed — FAO also dismissed.

K. Ramamoorthy, J.

( 1 ) THERE is suit No. 885/94 filed by Liberty Sales Service under Section 20 of the Arbitration Act,1940. The Liberty Sales Service filed a suit 264/94 in the lower court. That is withdrawn to this Court. and that is renumbered as suit No. 997/96. There was interim order passed by the lower court and against that order there was an appeal to the Senior Sub Judge in MCA. 1129/94 and that appeal was also withdrawn to this Court and that is renumbered as FAO. 231/96.

( 2 ) I shall fcollow the rank of the parties in suit No. 885/94 in this Court. Liberty Sales Service shall be hereinafter called the plaintiff and Jakki Mull and Sons shall be hereinafter referred to as the defendant.

( 3 ) WITH reference to a shop No. E-27, Connaught Place, New Delhi there was an agreement between the plaintiff and the defendant on 5. 1. 1991 in and by which the parties agreed to have share in the business carried on therein by selling of shoes. What is the nature of the agreement and what are the rights that flow from the reement are the points to be decided in this case.

( 4 ) ACCORDING to the defendant, the goods belonging to the plaintiff shall be sold by the defendant on commission basis. The staff employed by the defendant shall be there in the premises. Everyday the defendant after deducting the amount of commission and also for expenses was to transfer 85% of the sales amount to the plaintiff. The agreement was for a period of 3 years. The period expired on 31. 3. 1994. The plaintiff filed the suit in the lower court for an injunction. Thereafter, the plaintiff filed suit No. 885/94 under Section 20 of the Arbitration Act, 1940 for the appointment of an arbitrator. In this suit also the plaintiff prayed for an ad-interim injunction order. Hon ble Mr. Justice R. C. Lahoti passed the following order on 1. 3. 1995 :-

"as the petitioners are in possession, the same deserves to be protected. The interim order made by this Court on 23. 5. 94 takes care of the interest of the respondents. It is, therefore, directed that the petitioners shall remain in possession of the premises during the hearing of the petition. If the arrangement devised by the Court on 23. 5. 94 does not work and poses practical difficulties then the petitioner may either tender the amount of Rs. 30,000. 00 per month by means of a crossed cheque or bank draft or pay order to the respondents through their counsel or may deposit the amount in the Court which shall be available to be withdrawn by the respondents. This shall be done for the period commencing from the date with which the arrangement between the parties under the agreement dated 5th January, 1991 has failed. "ultimately, the learned Judge said that the petitioners shall within a week file a written undertaking on affidavit signed and sworn in through an authorised representative of theirs undertaking to compensate the respondents with such amount as the Court may assess in the event of their petition being dismissed or decided against them.

( 5 ) THE defendant took -up the matter to the Supreme Court and the Supreme Court vacated the order passed by the learned Judge and the Supreme Court said in the following terms :-

"leave granted. Having heard both sides, we are satisfied that in the facts and circumstances of the case, the interim order dated 1. 3. 1995 made by the High Court which has the effect of recognising the prima facie possession of the property with the respondent and permitting its continuance subject to payment of Rs. 30,000. 00 per month as rent to the appellant is not justified. Even the tentative finding on the question of possession of the disputed property may have an impact on the merits of the other points involved or decision between the parties in this and other lifigations between them. The facts do not justify grant of the equitable relief of temporary injunction in this case. We refrain from mentioning or commenting upon the detailed submissions made by both sides since









































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