High Court Of Delhi
APOLLO TYRES LIMITED - Appellant
Versus
NATIONAL INSURANCE COMPANY LIMITED - Respondent
Interim Application 3972 of 1985
Decided On : 09/12/1986
ARBITRATION - STAY OF PROCEEDINGS - SECTION 34 OF THE ARBITRATION ACT - CONDITIONS FOR STAY - SCOPE OF ARBITRATION AGREEMENT - PARTIES TO ARBITRATION AGREEMENT - SUFFICIENCY OF REASONS FOR NOT REFERRING DISPUTE TO ARBITRATION.
Fact of the Case:
Plaintiff filed a suit against four defendants, including defendant No. 2, for recovery of money. Defendant No. 2 filed an application under Section 34 of the Arbitration Act, seeking a stay of proceedings on the ground that there was an arbitration agreement between the plaintiff and defendant No. 2.
Finding of the Court:
The court found that there was an arbitration agreement between the plaintiff and defendant No. 2, but that all the parties to the suit were not parties to the arbitration agreement. The court also found that the scope of the arbitration agreement was limited to disputes arising between the plaintiff and defendant No. 2 with regard to lorry receipts, while the suit involved wider issues, including allegations of fraud and misappropriation against defendants 3 and 4.
Issues: Whether the court should stay the proceedings in the suit under Section 34 of the Arbitration Act.
Ratio Decidendi: The court held that the conditions for a stay of proceedings under Section 34 of the Arbitration Act were not satisfied in the present case. The court noted that all the parties to the suit were not parties to the arbitration agreement, that the scope of the arbitration agreement was limited, and that complicated questions of law and fact were involved in the suit. The court also found that there were sufficient reasons not to refer the dispute to arbitration, including the allegations of fraud and misappropriation against defendants 3 and 4.
Final Decision: The court dismissed the application for a stay of proceedings.
( 1 ) THIS order would dispose of application filed under -Section 34 of the Arbitration Act by defendant No. 2.
( 2 ) THE facts giving rise to this application are that the plaintiff had filed asuit for recovery of Rs. 9,51,9051- against National Insurance Company Limited-defendant No. 1, Ms. Chadha Motor Transport Co. (P) Ltd. , defendant No. 2, M s. Kohli Auto Corporation-defendant No. 3 and Shri Narinder Singh of M/s. Kohli Auto Corporation-defendant No. 4 on the allegation that the plaintiff bad obtained from defendant No. 1 an open policy of Marine (Inland Transit) Insurance bearing. No. 750/4400363/82/9/0/sdp? dated 4th November, 1982 to cover "all consignments of tyres, tubes and flaps securely packed during transit by rail/road/conveyance"; that the plaintiff and defendant No. 2 had agreed vide agreement operative from 15th October 1980 that defendant No. 2 would securely carry for the plaintiff plaintiff s products from Jullundur station to different stations in the Punjab for delivery on the customers producing lorry receipts after discharging them from the bank concerned; that on different dates between 3rd January 1983 and 17th March 1983 the plaintiff delivered several consignments of motor vehicle tyres to defendant No. 2 for conveyance and delivery to plaintiff (self) as detailed in para 8 of the plaint; that inbreach of the agreement defendant No. 2 not only wrong fully failed to deliver the said goods to the plaintiff but further also wrongfully and collusively delivered the said goods to defendant. Nos. 3 and 4 who in turn converted the same causing loss and damages to the plaintiff and assuch this suit against all the four defendants.
( 3 ) THIS suit has been contested by defendant No. 1 on the one hand and defendants 3 and 4 on the other while defendant No. 2 has filed this application under Section 34 of the Arbitration Act on the allegation that there is an arbitration agreement between the plaintiff and defendant No. 2 as per terms and conditions on the back of lorry receipts and as such the proceedings in suit should be stayed as the matter in dispute is liable to be referred to arbitration.
( 4 ) THIS application has been contested by the plaintiff, inter alia, on the ground that the suit is not liable to bestayed in as much as all the parties to the suit are not parties to the alleged arbitration agreement ; that the said ; agreement is not a valid agreement; that the dispute is not in respect of the lorry receipt and the disputes are of much wider scope than the scope of arbitration agreement.
( 5 ) I have heard the learned counsel for defendant No. 2 and the plaintiff and have gone through the file and after giving my considered thought to the matter before me I have come to the following findings :--
( 6 ) THE existence of arbitration agreement is no longer in dispute inasmuch as Ex. P1 to P31 are the consignee copies of the various lorry receipts filed by the plaintiff and admitted by defendant No. 2 and it contains clause 9 which reads as under :
"9. All dispates in respect of this lorry Receipt shall be decided by reference to arbitrator to be kept at AMRITSAR alone, one Arbitrator will be appointed each by the Claimant and by the company. "
DEFENDANT No. 2 also has filed 17 driver copies of these lorry receipts. I, therefore, hold that the arbitration agreement does exist between the plaintiff and defendant No. 2. .
( 7 ) THE fact that defendant No. 1 and defendants 3 and 4 are not parties to this arbitration agreement is proved by Ex. P1 to P31, consignee copies of lorry receipts. These lorry receipts do not show that defendant No. 1 or defendants 3 and 4 were parties to these lorry receipts and as such I further hold that defendants 1, 3and4 are not parties to the arbitration agreement relied upon by defendant No. 2.
( 8 ) THE last contention on behalf of the plaintiff is the scope of the suit vis-a-vis scope of arbitration agreement; it is not disputed before me that scope o
REFERRED TO : Anderson Wright Ltd. v. Moran and Company
Paras Nath Dubey and another v: Kedar Nath Kejriwal and another
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