UNION OF INDIA Vs. R K & CO

JUDGEMENT

(1.) R.K. & Company made two separate purchases of scrap from the Ordinance Cable Factory, Chandigarh, which is under the Ministry of Defence, Union of India, and the President of India granted permission for their release. However, before the release, the buyer concern was directed to furnish separate securities in the sum of Rs. 1,440/- and Rs. 25,170/-. The direction was complied with. Inspite of payment of the price of the goods they were not released on the pretext that the sales tax was payable by the buyer. The buyer filed a civil suit for mandatory injunction directing the release of the scrap as the buyer concerned was registered with Sales Tax Department and they could furnish Form ST XXII. That suit was compromised between the parties to the effect that the goods would be released on buyer's furnishing Form ST XXII from the Sales Tax Department. The buyer furnished the requisite forms and the goods were released.

(2.) After the goods were released, the firm demanded the return of the security furnished. The amount of the first security of Rs. 14,404/- was returned and out of the other security part amount was returned and the balance amount of Rs. 17,971.38 remained. When inspite of request the balance security amount was not released, suit for recovery of the same was filed in which Union of India through Ministry of Defence raised the point that under Section 34 of the Indian Arbitration Act, 1940 , (for short the Act) the suit was liable to be stayed as there was an arbitration agreement in the purchase contract of the scrap and the matter should be referred to arbitrator. The plaintiff contested this matter and urged that there was no dispute between the parties which could be settled by an arbitrator. On facts, the trial Court found that there was no dispute between the parties and after placing reliance on three judgments referred in para No. 8 of its order dismissed the application filed under Section 34 of the Act by order dated 7.10.1986. This is defendant's appeal against the aforesaid order.

(3.) After hearing the learned counsel for the parties I am of the view there is no merit in this appeal. The real dispute between the parties if any, could be whether full sale price has been paid by the plaintiff before taking delivery of the scrap and whether sales tax was payable by it or not. Regarding the first, no dispute was raised. Regarding the second, dispute was raised but that was also got settled in the previous suit by compromise. The plaintiff furnished the requisite forms from the Sales Tax Department and thereafter got the release of the goods, the price of which had already been paid. If both these securities are clubbed, major part of the security has also been refunded and the balance is not being refunded for which there is neither any justification set up in the application under Section 34 of the Act nor any real dispute has been raised. Merely trying to withhold the security cannot even seemingly be called a dispute. Accordingly, I am of the view that on the peculiar facts the three judgments relied upon by the trial Court in para No. 8 of its order aptly apply to the facts of the present case and the matter cannot be referred to the arbitrator.