COMPETENT MOTORS Vs. MARUTI UDYOG LIMITED

JUDGEMENT

(1.) -

(2.) BY this petition under Section 20 of the ArbitrationAct the petitioners seek direction to respondent No. 1 for filing the arbitration agreement and for reference of the disputes in terms of the arbitrationclause The petition proceeds on the allegations that petitoner No. 1 MessrsCompetent Motors is a registered partnership firm of which Shri NarenderAnand petitioner No. 2, is a registersd partner. Petitioner No. 2 has filedthe present petition on behalf of petitioner No.1 as its partner. RespondentNo I is Maruti Udyog Ltd. and Shri Raj Chopra is respondent No. 2 inthis suit. It is alleged that petitioner No. 2 and respondent No. 2 have beencarrying on business under the name and style of Competent Builders by virtueof partnership deed dated 20/02/1978. A dealership agreement dated 1/09/1983 was entered into between respondent No. 1 Maruti UdyogLtd. on the one side and the petitioners and respondent No. 2 on the otherside' by which the petitioner No. 1 was appointed a dealer of respondentNo.' I for the Union Territory of Delhi. Originally, petitioner No. 1 hadonly one show-room at Competent House, Connaught Place, New Delhi bu-twith effect from 8/12/1985 another showroom was opened by peti-tioner No. 1 at 5, Bhikaji Cama Place, R.K. Puram, New Delhi (hereinaftercalled new show-room), by spending huge amount, and since the inceptionof the new show-room, the petitioners have been operating from both theplaces. It is further claimed that the new show-room was inaugurated by ShriR C. Bhargava, Managing Director of respondent No. 1 in the presence ofnumber of others including officers of respondent No. 1 It is stated in thepetition that on 17/01/1987, a letter was received by respondent No. 2for and on behalf of petitioner No. 1 and from respondent No. l.wberinitwas mentioned that a separate seniority list of customers was being drawn foreach of the show-rooms and therefore interse seniority of customers was notbeing adhered to and the petitioner No. 1 was advised to discontinue thecollection of payments at the new show-room with immediate effect. Thisletter was followed by another letter dated 22/01/1987. RespondentNo. 2 intimated the receipt of the said letter to the petitioner No. 2 byletter dated 29/01/1987. It is further stated that immediately on receiptof letter, petitioner No. 2 on 30.1.1987 replied to the Regional Manager ofrespondent No. 1 that the new showroom was commissioned on 8.12.1985with the approval of respondent No. 1 and inauguration was performed bythe Managing Director of Marauti Udyog Ltd with a view to provideConvenient service to the customers of South Delhi. The collection of pay-ments made there is with the aim of service to the customers. Discontinuanceof collection of payment on the new showroom would cause inconvenienceto the customers of South Delhi. It was further pointed out that theCompetent Motors were strictly adhering to the seniority of date of pay-ment supply of vehicles to the customers and a sum of Rs. 2.5crores wasdeposited on 22.1.1987. The petition further proceeds that certain disputeshad arisen between the partners of M/S Competent Motors, i.e. betweenpetitioner No. 2 and respondent No. 2, which resulted in the modificationof the supplementary agreement of partnership dated 19.7,83 by a supple-mented modification dated 30.9.86 with effect from 1.10.1986.

(3.) THE respondents are contesting the claim of the petitioner. THEy havefiled the written statement as well as reply to the application. THE case of therespondent is that the petition has been filed by Competent Motors at 5,Bhikaji Cama Place, who were never appointed dealers by respondent No. 1.Dealership agreement was entered into by the respondent company withCompetent Motors at 101, Competent House, F-14, Middle Circle ConnaughtPlace, New Delhi. Petitioner No I is thus not competent to file the presentpetition as it has no locus standi to file the sar.ie. It is further statedthat the frame of the petition is not maintainable as one of the partners ofCompetent Motors has filed this petition on behall' of the firm and a singlepartner cannot seek reference to arbitration. THE petition discloses no causeof action and it is misconceived. It is further stated that a dealeraship is nota right which is perpetual in nature and it continues only as long as themanufacturer wishes the dealer to continue. No injunction can be sought by adealer against the principal. On merits, it is stated that as per Clause 12 ofthe agreement, it was agreed that the dealer would operate with facilitieshaving been provided at 101, Competent House, F-14, Middle Circle,Connaught Place, New Delhi and the operation of the dealership would onlybe from that place and that a showroom would also be there. Reliance isalso placed on clause 6(a) of the agreement wherein it is provided that thedealer is bound to promote, develop and maintain sales and service of partsand the dealer has thus to follow the Sales Policies of the Respondent Companywith a view to achieving the purpose for which the dealership has been granted.It further states that M/s Competent Motors wanted to open a second show-room and the same was inaugurated by the Managing Director of therespondent company and the respondent company agreed to the new show-room being opened but did not permit Competent Motors to do all thefunctions of dealership from the new showroom. It is further stated that thepartners of Competent Motors without the knowledge and consent of respon-dent No 1 entered into the agreement to divide the business of partnershipand this violates clauses 5,12 and 30 between the petitioner and respondentcompany. It is further stated that the petitioner has not brought out thematerial fact that the respondent company was compelled to discontinue collec-tion of payment because it failed to ensure release of vehicles to customersbased on combined list of seniority on the date payment by the other showroomwhich led to the delivery of vehicles in breach of the seniority of the dateof payments. It was further denied that the petitioner was authorised by therespondent company to operate from both the places i.e. Connaught Placeand the new showroom. THE case of the respondent company is that thenew show-room was only for the purpose of display of vehicles of the respon-dent company. It is further stated that despite various demands made by therespondent for adhering to the seniority based on the dates of payment,the petitioner has ignored the same. This breach of dealership agreementwas committed due to the fact that the two partners, inter se, did not maintainthe combined list of seniority because of their bifurcation of business. THEymaintained two separate lists of seniority without the written permission ofthe respondent company and thus violated the sales policy and principlesof the dealership agreement. It is further stated that the complaints werereceived in the office of the respondent company that the seniority list wasnot being maintained properly which compelled the respondent company totake action as it did take. It is claimed that the respondent company has everyright to direct the dealer to discontinue collection at the new show-room andalso have the authority and right and to direct release of the advertisementin the local newspaper informing the general public and prospective customerswith regard to discontinuation of the collection of payment at the newshowroom. It is denied that any dispute has arisen between the CompetentMotors Middle Circle Connaught Place and the respondent company whichcan be referred for arbitration.