MMTC LIMITED Vs. SHYAM SINGH CHUDHARY

JUDGEMENT

(1.) This order will dispose of the defendant's application under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') read with Section 151 of the Code of Civil Procedure. The plaintiff has already initiated arbitration for the recovery of its-dues from the Company (defendant No. 4). It has filed the present suit for recovery against the Guarantors as well as the company (defendant No. 4), predicating it on a Guarantee Bond.

(2.) It is contended by learned Counsel for the defendants that, on 15.9.1995, two agreements were executed between the parties. The first is the "Associateship Agreement", the significant contents of which are that the applicants/defendants had to submit personal bonds of the Promoter Directors in respect of the loan to be taken from the plaintiff (Clause 2) and that they had consented to arbitration (Clause 19). The second document executed on the same date was the Bond of Guarantee, the salient covenants of which are that in the event of a default in payment of the principal, interest and other monies due to the plaintiff, the Guarantors will pay the whole of the such amount (Clause 1); and that all legal proceedings arising out of or under the said Guarantee shall be subject to the jurisdiction of the High Court of Delhi (Clause 18). The Guarantee also contains a recital to the effect that the Deed was intended to supplement the Loan Agreement (presumably the "Associateship Agreement" as no objection has been raised on this score). Both agreements have been signed by the Promoter Directors (defendants 1 to 3) of the company (defendant No. 4).

(3.) The contention of learned Counsel for the applicants/defendants is that the suit is not maintainable in view of the existence of the Arbitration Clause, invoked previously. In terms thereof the parties have been referred to the Sole Arbitration of Mr. Justice P.K. Bahri (Retd.) by orders dated 29.10.1998 passed in AA 244/97. It has been clarified by the learned Counsels for the parties that only defendant No. 4 and the plaintiff are adversaries in those proceedings. On my specific query to learned Counsel for the defendants/applicants as to whether defendants 1 to 3 are also necessary parties and ought to join in arbitration proceedings it has been so contended by him. This is independently clear from the fact that it has been prayed in the application that if any disputes still remain, the parties be referred to the pending arbitrations. Learned Counsel for the applicants/defendants has relied on M/s. Chand Chits & Finance (P) Ltd. v. M/s. Super Advertisers and Others, AIR 1992 Delhi 85.