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2009 Supreme(SC) 1607

TARUN CHATTERJEE, R.M.LODHA
Branch Manager, M/s. Magma Leasing &Finance Limited – Appellant
Versus
Potluri Madhavilata – Respondent


Judgement Key Points

Certainly. Here are the key points from the provided legal document:

  • The arbitration clause in a contract remains effective and does not perish when the contract is terminated due to breach. It continues to be operative for resolving disputes "in respect of," "with regard to," or "under" the contract (!) .
  • The scope of an arbitration clause is broad, covering disputes related to the validity, breach, or termination of the contract, provided the clause is drafted in wide terms (!) (!) .
  • Even if the contract is repudiated, frustrated, or terminated, the arbitration clause can still be invoked for disputes arising out of or in connection with the contract, especially if the clause is expressed in wide and general terms (!) (!) .
  • The arbitration clause is considered collateral and procedural, distinct from the substantive obligations of the contract, and can survive the termination or rescission of the main contract (!) (!) .
  • The survivability of the arbitration clause is supported by the principle that disputes concerning breaches or damages can be arbitrated even after the contract's performance has ended (!) (!) .
  • The arbitration agreement is separable from the main contract, and its validity is not necessarily dependent on the continued validity of the main contract (!) (!) .
  • When a dispute arises regarding the existence, validity, or breach of the contract, and the arbitration clause is broad, the dispute is typically within the scope of arbitration, regardless of the contract's termination (!) .
  • The Court is mandated to refer the parties to arbitration if the conditions under the applicable law are satisfied, including the existence of an arbitration agreement and compliance with procedural requirements (!) (!) .
  • The arbitration clause's broad language and legal principles support its continued applicability for resolving disputes even after the underlying contract has been terminated due to breach or other reasons (!) (!) .

Please let me know if you need further analysis or assistance.


JUDGEMENT

R.M. Lodha, J.—

1. Leave granted.

2. The core question that falls to be determined in this appeal by special leave is : does the arbitration agreement survive for the purpose of resolution of disputes arising under or in connection with the contract even if its performance has come to an end on account of termination due to breach ?

3. MAGMA Leasing Limited Public United Company (for short, ‘MAGMA’) is a financial institution engaged in the business of providing funds for purchase of plant and machinery and other assets by way of hire purchase. Smt. Potluri Madhavilata-respondent no. 1 (hereinafter referred to as ‘hirer) entered into an agreement of hire purchase with MAGMA for purchase of a motor vehicle (Bolero Camper-AP 16 TV 1263) on January 31, 2005. As per the terms of hire purchase agreement, the hirer was required to pay hire purchase price in 46 installments. It appears that the hirer committed default in payment of few installments and as a result thereof, MAGMA seized the said vehicle from the hirer on August 6, 2005. MEGMA also sent a notice to the hirer intimating her that hire purchase agreement has been terminated. Thereafter some correspondence seems to hav
























































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