MAGMA LEASING LIMITED Vs. NEPC MICON LIMITED

JUDGEMENT

(1.) The Court : This is an application by the first defendant under Section 8 of the Arbitration and Conciliation Act, 1996 ("the said Act" for short) for stay of this suit and for reference to arbitration.

(2.) The cause of action of the plaintiff as laid in its plaint which is an annexure to the present application is stated briefly hereinafter :-The plaintiff is a financial institution. As and by way of financial accommodation the plaintiff purchased from the first defendant its five several wind turbine generators that the said defendant had set up in village Nallurpelayam in the district of Coimbatore, Tamil Nadu ("the said generators" for short) and let the same to the said defendant on and subject to the terms and conditions contained in five several hire-purchase agreements in writing all dated 14th June, 1995 ("the said agreements" for short). The said agreements were each executed by the said defendant but not by the second defendant. Each of the said agreements is identical in terms and contains an arbitration clause to which I shall refer presently. Copies of the said agreements which are annexures to the plaint are also annexures to the present application.

(3.) In terms of the said agreements the first defendant executed demand promissory notes in favour of the plaintiff and the second defendant executed letters of guarantee. Simultaneously, with the execution of the aforesaid documents the first defendant also made over to the plaintiff fifty five several post-dated cheques for Rupees 11,45,883/- each covering the amounts of the agreed quarterly instalments payable under each of the said agreements. The said defendant also made over to the plaintiff eleven several post-dated cheques in payment of the additional hire-charges in consequence of increase in the rate of interest aggregating Rs. 96,565/- for each quarter from 1st October, 1995 and ending 1st April, 1998.