GARDEN FINANCE LIMITED Vs. PRAKASH INDS LIMITED

JUDGEMENT

(1.) THIS Notice of Motion is taken out by the plaintiffs. The plaintiffs have filed a suit contending therein that the defendant No. 1, which is a company incorporated under the Companies Act, entered into an agreement with the plaintiffs dated 29th December, 1994 for giving some equipments on lease to the defendants. The lease money of the equipments was also decided by that agreement. It is further contended that the defendant No. 2 also entered into an agreement to give personal guarantee for due and punctual payment of all and every sum payable by the defendant No. 1/company under the lease agreement to the tune of Rs. 2,31,76,800/ -. According to the plaintiffs, as the defendant No. 1 committed default in payment of lease money, the agreement was terminated and the present suit has been filed by the plaintiffs for recovery of the possession of the lease equipments as also for recovery of arrears of lease money from the defendant No. 1 company. So far as the money part of the decree, that is claimed by the plaintiffs in the suit, it is claimed by the plaintiffs that it is joint and several liability of the defendants Nos. 1 and 2 and therefore they are jointly and severally liable.

(2.) BY this Notice of Motion, the plaintiffs pray for appointment of Receiver on the lease equipments and also pray for temporary injunction. It appears that at the ad interim stage, by order dated 6th August, 1999, ad interim order in terms of prayer Clauses (e) and (f) of Notice of Motion was granted and the appeal was carried against the ad interim order. The Appeal Court by an interim order vacated the ad-interim order passed by the learned Single Judge. Against the order of the learned Single Judge vacating the ad-interim order, petition for special leave to appeal preferred before the Supreme Court, which the Supreme Court disposed of by directing the Appellate Court to decide the appeal as expeditiously as possible. The Supreme Court also passed an order of temporary injunction restraining defendant No. 1/company from creating any third party interest over the lease equipments. I am told that the appeal preferred against the ad-interim order is still pending before the Division Bench.

(3.) TWO preliminary objections have been raised to the jurisdiction of this Court to entertain this Notice of Motion. First objection on behalf of the defendants is that the lease agreement between the plaintiff and the defendant No. 1 company contains an arbitration clause. The defendant No. 1/company by a noticed dated 14th August, 1997 invoked that arbitration clause and as the plaintiffs did not take any action, an application under section 11 of the Arbitration and Conciliation Act, 1996 has been filed before the Delhi High Court for appointment of an arbitrator. That application is still pending before the Delhi High Court. The submission is that in terms of the provisions of section 42 of the Arbitration Act, as the proceedings are pending before the Chief Justice of the Delhi High Court under section 11, this Court cannot entertain the present suit. The second objection that has been raised is that the subject matter of this suit is covered by an arbitration agreement and as an oral application has been made to this Court for referring the parties to the arbitrator under section 8 of the Act, in terms of the provisions of section 5 of the Arbitration Act, this Court will not have the jurisdiction to entertain the suit. A further objection to the jurisdiction of this Court is raised. It is urged that a reference of the defendant No. 1 Company has been registered before the B. I. F. R. and therefore, in terms of the provisions of section 22 of the S. I. C. A. Act this suit, which is also a suit for recovery of money from the defendant No. 1 Industrial company, is not maintainable. It is further urged that the defendant No. 2 is the guarantor of the liability of the defendant No. 1/industrial Company and therefore, in terms of the judgment of the Supreme Court in the case of (Patheja Brothers Forgings and Stamping and another v. I. C. I. C. I. Ltd. and others), 2000 (4) Bom. C. R. (S. C.)13 : 2000 Bank. J. (S. C.)746 : 2000 Supreme Court Cases 545 this suit cannot proceed further. It may be pointed out here that the defendants have not filed any reply on merits of the matter.