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HIGH COURT OF DELHI : NEW DELHI

O.M.P. 120/2004

Judgment reserved on: 16^th February, 2009

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Judgment decided on : 31^st July, 2009

DR. INDERJIT SINGH MANN

..... Petitioner

Through Mr. Amit Kumar, Adv.

versus

CHARANJIT SINGH GREWAL

..... Respondent

Through Mr. B.A. Mahanti, Sr. Adv. with

Ms. Mamta Tripathy, Adv.

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may

be allowed to see the judgment?

No

2. To be referred to Reporter or not?

Yes

3. Whether the judgment should be reported

Yes

in the Digest?

MANMOHAN SINGH, J.

1.

By this order I shall dispose of OMP No. 120/2004 which has

been filed under Section(s) 34 and 37 of the Arbitration and Conciliation

Act, 1996 against the impugned award dated August 31, 2003 passed by

the learned sole arbitrator Justice S. Ranganathan (Retd.).

2.

The brief facts of the case are that the parties had entered into

a Memorandum of Understanding and agreement dated April 9, 1997 as

regards the sale of shares of M/s Trilaium Technologies Ltd. The two

relevant clauses of this agreement are clauses 6 and 7 which are

reproduced as under :-

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“(6) That in the event of any party defaulting on the

terms of the agreement the other party will have

the right to enforce execution of the agreement

from court of law.

(7)

That in the event of any difference arising out of

the interpretation of any clause of the agreement,

the same shall be referred to a mutually agreeable

sole arbitrator.”

3.

Due to differences between parties, a petition being No.

146/2001 under Section 11 of the Arbitration and Conciliation Act, 1996

was initiated by the petitioner on March 31, 2001. The said application

was disposed of with the consent of the parties vide order dated

November 9, 2001 with the direction that all the claims and counter-

claims of the parties be referred to the appointed sole arbitrator.

4.

The claim of the applicant before the arbitrator was as under:-

(i)

Rs. 1,39,00,000/- towards unpaid balance of pre

sale situation of sale of shares.

(ii)

Rs. 1,36,22,000/- towards accrued interest as on

May 1, 2002.

(iii) Rs. 2,79,05,413/- towards liability to be

discharged and paid to Punjab & Sind Bank.

(iv) Personal Guarantees to be furnished by the

respondents so that existing guarantees of the

claimants and their associates are released.

5.

The

Respondent

challenged

the

admissibility

and

maintainability of the aforesaid claims on the basis that as per Clause

No. 7 of the agreement, only differences arising out of the interpretation

2009:DHC:3030

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of any clause in the agreement shall be referred to a mutual agreeable

sole arbitrator and the present differences had nothing to do with

interpretation of any clause. However, inspite of this objection, the

Respondent still made the following counter claims:

(i)

Refund of Rs.161 lacs plus interest @ 24% p.a.

(ii)

Rs.155 lacs plus interest, being the amount spent

in running of the Company M/s Trillenium

Technologies Ltd. and including other advances

made to the same.

(iii)

Other claims against the abovementioned

Company.

6.

The Learned Arbitrator terminated the arbitration proceedings

by impugned order dated August 31, 2003 on the ground that reference

of arbitration cannot be sustained as the disputes referred are out of the

purview of the arbitration clause in the agreement between the parties.

7.

The Learned Arbitrator cited AIR 1999 SC 3627 wherein it

has been stated that the agreement containing arbitration clause must

contemplate that substantial rights of the parties will be determined by

an arbitral award. The Learned Arbitrator also cited KK Modi V. KN

Modi 1998 (3) SCC 573 and Bharat Bhushan Bansal V. U.P Small

Industries Corporation AIR 1999 SC