INSTALMENT SUPPLY LIMITED Vs. MALKIAT SINGH

JUDGEMENT

(1.) This petition is filed by the petitioner under Section 20 of the Arbitration Act, 1940 for appointment of an arbitrator and referring the/disputes to him for adjudication. It is stated in this petition that on 15/06/1990 the respondents 1 and 2 as hirers and respondent No.3 as guarantor made a proposal to the petitioner company for hiring a Tata Diesel Truck Model LPT 1210 B/42 bearing chasis No.364 052 5 10980 Engine No.692 D0 2959493 and now bearing registration No. UP-80A-9967. The petitioner company accepted the said proposal, and the petitioner and respondents entered into a Hire Purchase Agreement dated 15/06/1990 whereby the respondents 1 and 2 agreed to take the said. vehicle on hire from the petitioner company and the respondent No.3 agreed to stand guarantee for the respondents 1 and 2 on the terms and conditions contained in the said agreement. The liability of the guarantor in terms of the said agreement is co-extensive with that of the respondents 1 and 2 to the petitioner company. In terms inter alia, of the said Hire Purchase Agreement the respondents 1 and 2 agreed to pay 34 monthly instalments of Rs. 8,300.00 each and the 35 instalment of Rs.7,800.00 falling due on the 10th day of each month, beginning from 10/08/1990. The respondents 1 and 2 were accordingly given delivery/possession of the said vehicle. It is further averred that the respondents 1 and 2 however paid only a sum of Rs.1,94,300.00 towards hire money as against a sum of Rs.2,90,000.00 As on the date of filing the petition, the sum of Rs.2,20,414.00 was overdue on account of hire instalments, additional finance charges and incidental expenses. After adding the value of the vehicle which was estimated as Rs.3,50,000.00 claim of Rs.5,70,414/- is made. Since the respondents did not pay the amount inspite of issuing legal notice, the present petition has been filed for appointment of an arbitrator as agreement between the parties contains clause III as the arbitration clause. The disputes are mentioned in para 9(a) of the petition.

(2.) The respondents 1 and 2 did not enter appearance. However, the respondent No.1 died during the pendency of the petition but his LRs. were not brought on record. This petition therefore abates qua respondent No.1. The respondent No.2 was however proceeded against ex-parte. The respondent No.3 only has contested the petition and filed the reply. Opposing this petition for appointment of the arbitrator, the learned counsel for respondent No.3 submitted as under; 1) The respondent No.3 being the guarantor and there was no notice of demand on the respondent No.3 before filing the present petition, this petition is not maintainable against,the respondent No.3. 2) Tnis court has no territorial jurisdiction to entertain the present petition as all the respondents reside and work for gain at Agra and amount was also disbursed in Agra. Therefore no cause of action or part of cause of action had arisen in Delhi, within the territorial jurisdiction of this court, and therefore this court lacks territorial jurisdiction to entertain this petition. 3) No effective steps are taken by the petitioner against the respondent No.2 who is allegedly absconding alongwith the vehicle and therefore the respondent No.3 cannot be fastened with any liability. 4) As the agreement stands terminated, the arbitration clause also ceases to have any effect. 5) Agreement in question is not properly stamped. 6) this petition is not maintainable as after filing of this petition, the Arbitration Act, 1940 stands repealed and it is Arbitration and Conciliation Act, 1996 which is in operation.

(3.) I do not find any merit in any of the aforesaid submissions. In so far as giving legal notice before filing the present petition is concerned, admittedly notice dated 27/07/1995 was sent to the respondents 1 and 2 wherein the petitioner had stated that the respondents 1 and 2 have failed to pay the overdue hire money inspite of several reminders and the amount in question was demanded from the respondents 1 and 2. It was also stated in this notice that in case the respondents 1 and 2 fail to make the payment, the matter would be referred for arbitration in terms of clause III of the hire agreement. Further admittedly the copy of this notice was sent to the respondent No.3 with the following endorsement" AD Post to Sh.Rajinder Singh( guarantor ) as-his liability is co-extensive with that of the hirers". It was not simply a copy sent but in fact with the aforesaid endorsement even the demand was made from the respondent No.3 as well.