B. RAGHUVEERIAH, PROP., L.B. INDUSTRIES Vs. THE NATIONAL SMALL INDUSTRIES CORPORATION LTD., BY ITS REGIONAL MANAGER, SRI S.F. SETHNA

JUDGEMENT

(1.) THIS is an application under Section 34 of the Arbitration Act, 1940, by the defendant in C. S. No. 4 of 1968 on the file of this Court. The applicant -defendant and the plaintiff -respondent entered into a hire -purchase agreement dated 11th February, 1964, for the sale of one complete plant of bolts and nuts making machine by the respondent -plaintiff to the applicant -defendant. The case of the respondent -plaintiff is that the machine was supplied to the applicant defendant but notwithstanding that supply the applicant -defendant failed to pay the first to sixth instalments payable under the agreement in accordance with the terms of the agreement. The respondent -plaintiff further avers in the plaint that the applicant -defendant failed to pay the instalments which fell due, in spite of repeated reminders made by the respondent -plaintiff and allowed the same to accumulate that the respondent -plaintiff took steps to retake possession of the machinery in exercise of the power conferred upon it under Clause (4) of the agreement and served a notice dated 8th September, 1966, on the applicant -defendant through its Junior Field Officer; that the respondent -plaintiff's agent was not able to seize the machinery as the applicant -defendant was assuring him that he would pay a substantial amount towards the arrears; that the applicant -defendant at last sent a cheque for Rs. 10,000 dated 29th October, 1966, drawn on the Syndicate Bank Ltd., Secunderabad, towards part -payment of the arrears of hire rent; that the said cheque was, however, dishonoured by the bank for want of funds; that the applicant -defendant's manager by his letter dated 12th December, 1966, informed the respondent -plaintiff that as the applicant -defendant was admitted in the hospital with a heart attack, he could not arrange funds for the said cheque, that the applicant -defendant was making efforts to send a draft for the said amount and that if the draft was not received the respondent -plaintiff may present the cheque again to the bank during the last week of January, 1967; that the cheque when so presented was again dishonoured and the applicant -defendant failed to pay the amount in spite of repeated letters written by the respondent -plaintiff that the respondent -plaintiff finally caused a Lawyer's notice to be issued through its Counsel on 16th September, 1967, calling upon the applicant -defendant to pay the arrears of instalments which had fallen due under the aforesaid agreement; and that the applicant -defendant duly received the said notice and sent a reply dated 21st September, 1967, containing false and untenable allegations and failed to pay the said arrears. The further case of the respondent -plaintiff in the plaint is that as the applicant -defendant disputed his liability to pay storage charges, demurrage charges and interest on blocked up capital which were occasioned by applicant -defendant's delay in completing the hire purchase formalities and in taking delivery of the machinery and as the applicant -defendant has also put forth fanciful and imaginary claims against the Corporation alleging loss of estimated profits on the ground that the delay in supplying the machinery was due to the Corporation's negligence and indifference the parties referred these specific matters of dispute to the arbitration of two arbitrators, one nominated by each party, under Clause 16 of the agreement; that the said proceedings were, on the date of the institution of the suit, pending before the arbitrators; that according to the respondent -plaintiff so far as the payment of instalments of hire rent which fell due under the agreement was concerned, there was no dispute and the same Was not the subject -matter of the arbitration proceedings and that the applicant -defendant's contention that the arrears were also covered by the arbitration proceedings was a clear after -thought and made with ulterior motive to gain time and delay the payment of the amount, in view of the assurances which were made by the applicant -defendant with regard to the payment of the arrears and the conduct of the applicant -defendant in sending a cheque for Rs. 10,000 It is on these averments that the suit was instituted for recovery of a sum of Rs. 91,633 -12 with further interest on the principal amount of Rs. 67,865 -45, from the date of suit till date of payment. This plaint was presented on 28th November

(2.) THE further facts that emerge from the affidavits filed in this application are that the summons in the abovesuit, which was numbered as C.S. No. 4 of 1968 on the file of this Court, were served on the applicant -defendant on 15th July 1968 prior to that the arbitrators appointed by the parties entered on their reference on 9th October, 1967, and the arbitration proceedings were conducted at Hyderabad on various dates from 17th January, 1968 to 4th March, 1968. One of the issues framed by the arbitrators was :: Whether the first party (the applicant -defendant) is entitled to claim set -off if any, towards the arrears of the instalments due by him and whether the same is covered by the arbitration proceedings.

(3.) THIS issue was framed obviously on the basis of the claim of the applicant - -defendant that there were delay and laches on the part of the respondent -plaintiff in supplying the machinery and consequently he suffered loss of profit and there were also certain other defaults committed by the respondent -plaintiff for all of which the applicant -defendant was entitled to be compensated by the respondent -plaintiff and the right of the respondent -plaintiff to recover the arrears of instalments due under the hire -purchase agreement was not unqualified one and as a matter of fact the applicant -defendant made a total claim of Rs. 4,54,824 -89 while the cost of machinery supplied to the applicant -defendant was itself Rs. 2,08,261 -52. The applicant -defendant states in his affidavit filed in support of this application as follows: The arbitrators gave their award on 25th March, 1968 and as the said award is not valid and proper, and not in accordance with the provisions of the Arbitration Act, and law, and as the Arbitrators failed to file the said award into Court in spite of my notice to do so, I filed an O. P. on the file of the City Civil Court Hyderabad, to direct the said Arbitrators to file the said award into Court' that I can take the necessary steps either to set aside or modify the award or any other appropriate step for redress.