VISHNU AGENCIES P LTD Vs. SRIRAM SAHAKARI GRIH NIRMAN SAMITY LTD
LAWS(CAL)-1976-5-11
HIGH COURT OF CALCUTTA
Decided on May 21,1976

VISHNU AGENCIES P LTD Appellant
VERSUS
SRIRAM SAHAKARI GRIH NIRMAN SAMITY LTD Respondents


Referred Judgements :-

DHANRAJMAL GOVINDRAM V. SHYAMJEE KALIDAS AND CO. [REFERRED TO]
JAWAHAR LAL BARMAN VS. UNION OF INDIA [REFERRED TO]
MANOHAR LAL CHOPRA VS. RAI BAHADUR RAO RAJA SETH HIRALAL [REFERRED TO]
HAKAM SINGH VS. GAMMON INDIA LIMITED [REFERRED TO]


JUDGEMENT

- (1.)THIS is an application under section 41 of the arbitration Act, 1940, and section 51 of the Civil Procedure Code, inter alia, for an injunction restraining the respondent No. 1 and its agents and servants from prosecuting, proceeding and taking any steps in the suit pending in the Court of Civil Judge, Varanasi.
(2.)THE facts of this case discloses how a party can abuse the process of the Court by harassive, vexatious legal proceedings and also render the provisions of the Arbitration Act, and arbitration agreements in fructuous if possible by adopting dilatory process.
It is necessary to set out the relevant facts which would show the dishonest and dilatory tactics and the ingenious scheme adopted by the Respondents. The Respondent No. 1, Sri ram Sahakari Grih Nirman Samity limited, is a co-operative society registered under the provisions of the uttar Pradesh Co-operative Societies act. One of the objects of the respondent No. 1 is to acquire lands plots, houses building and to construct building structures thereon. The respondent no. 2, Satya Narayan Kabra, was at all material times, the Chairman of the respondent No. 1. It appears that the petitioners granted accommodation loans to the respondent No. 1 for the purpose of enabling it to acquire plots of lands, houses etc. and an agreement in writing dated the 5th of October 1970, was entered into between the petitioner No. 1, Vishnu Agencies Private limited, and the respondent Nos. 1 and 2 in respect of the said loan and repayment thereof. The said loan agreement dated the 5th of October, 1970, contained an arbitration clause. It is alleged by the petitioner No. 1 that pursuant to the said agreement it duly lent and advanced various sums of moneys particulars of which are set out in paragraph 8 of the petition on different dates to the Respondent No. 1. As disputes and differences arose in respect of the said loan and repayment thereof the petitioner No. 1 made an application under section 20 of the arbitration Act, being Special Suit No. 29 of 1972 before this Court. The respondent No. 1 filed their affidavit -in- opposition in the said application and alleged collusion and conspiracy between the petitioners and the then office bearers of the Respondent No. 1 including Respondent Nos. 2 to 7. Thereafter the Respondent No. 1 also made an application under section 33 of the arbitration Act, being Award Matter no. 265 of 1972 for determination of the existence, scope and effect of the said arbitration agreement dated the 5th of October, 1970. The said two applications, that is, the petitioners application under section 20 and the respondent No. 1 application under section 33 of the Arbitration Act, 1940, were heard together before me, by an order and judgment dated the 6th of february and 7th of February, 1974, I dismissed the application under section 33 of the Arbitration Act, made by the respondent No. 1 and by another judgment and order dated the 7th of February, 1974, I allowed the application under section 20 of the Arbitration act, made by the petitioner for filing the arbitration agreements and for order of reference. It appears that the Respondent No. 1 preferred an appeal from the said judgments and order dated the 7th of February, 1974, being the Appeal No. 64 of 1974 and obtained an interim stay of the operation of the said order from the Appeal court dated the 21st of February, 1974, the said application was finally disposed of by the Appeal Court by an order dated the 3rd of June, 1974, when the stay of the operation of the order of the Trial Court was continued for a period of eight weeks and directions were given for filing the statement of facts and counter statement of facts before the Arbitrator without prejudice to the rights of the respective parties and the Respondent No. 1 in case obtaining leave from the Supreme Court, the order of stay would continue till the disposal of the appeal. In case the application for stay before the supreme Court is rejected, the stay granted by the Appeal Court will stand vacated. The substance of the said appeal Court order dated the 3rd of june, 1974, is set out in paragraph 19 of the petition. The Respondent No. 1 moved to the Supreme Court in or about July, 1974, under Article 136 of the Constitution of India for special leave to appeal from the said order of the Trial Court dated the 6th and 7th of February, 1974, in Matter No. 265 of 1972. The said application of the respondent No. 1 was dismissed by the supreme Court by an order dated the 30th of July, 1974. Thereafter, the respondent No. 1 proceeded with the appeal No. 64 of 1974 in Special Suit no. 29 of 72 before this Court and by a judgment and order dated the 23rd of september, 1974, the Appeal Court dismissed the said appeal with costs. This relates to an agreement for loan containing an arbitration clause between the petitioner No. 1 and the Respondent No. 1 dated the 5th of October, 1971. Similar was the fate in respect of another loan agreement between the respondent No. 8, Kharkhari Coal company Limited, and the Respondent no. 1 dated the 27th of February, 1971, which also contained an arbitration clause. Similar disputes were raised by the Respondent No. 1 in respect of the loan under the said agreement dated the 27th of February, 1971, and simultaneously with the other agreement dated the 5th October, 1970, between the petitioner No. 1 and the Respondent No. 1 another application under section 20 being Special Suit No. 28 of 1972 were filed by the Respondent no. 8 against the Respondent No. 1. and others and an application under section 33 was filed by the Respondent no. 1 against the Respondent No. 8 and others being Award Matter No. 266 of 1972 and all the proceedings before the appeal Court and the Supreme Court were ultimately rejected by the Supreme Court and the Appeal Court.

(3.)IT appears that after the disputes arose in respect of the said agreements dated the 5th of October, 1970, and 27th of February, 1971, with the petitioner no. 1 and the Respondent No. 8 respectively, the Respondent No. 1 failed in its attempt through its present management to frustrate and delay the arbitration proceeding and they were successful to the extent of protracting the matter by various proceedings before the Trial Court, Appeal court and the Supreme Court and gained nearly three years. Thereafter, it appears that the arbitration agreement dated the 5th of October, 1970, was filed in this Court on the 7th of April, 1974 and the Arbitrator by a letter dated the 2nd of May, 1975 gave directions for filing the statement of facts and counter statement of facts. After getting extension of time to file the statement of facts up to 6th of June, 1975 the petitioner No. 1 duly filed its statement of facts. The Respondent no. 1 by a letter dated the 16th of May, 1975, addressed to the Sole Arbitrator, the said letter is annexed to the petition and marked with annexure "f" it was, inter alia, contended that the Arbitrator was the Income-tax Lawyer of the Petitioner No. 1 and the Respondent no. 8 and as such was not competent to arbitrate in the matter and also in view of section 60 of the U. P. Co-operative Societies Act, 1965, and Rules 178 and 186 and Rule 200 framed there under and also in view of a notification published by the U. P. Government dated the 31st of December, 1968, pages 109 and 199 the loans which were the subject matter of the reference were unenforceable in law. The petitioner No. 1 and respondent no. 8 alleged that huge sums are now due and payable by the respondent No. 1 to the petitioner No. 1 and respondent No. 8 in respect of the said two loan agreements as set out in paragraphs 28 and 29 of the petition. It also transpires that there are serious disputes between the members of the committee of management of the Respondent No. 1. In fact, criminal proceedings are pending between them and the administration of the respondent no. 1 is at a stand still as no account has been audited and balance-sheet has been filed since July, 1971. It also transpires that the Respondent No. 1 was threatening and trying to take steps for disposing of its loan by allotment to its alleged members and were also threatening to dispose of the same. It is alleged by the petitioner No. 1 that it came to know about the same from a circular dated the 24th of April. 1975, issued on behalf of the Respondent no. 1. Thereafter, the petitioner No 1 made an application under section 41 of the Arbitration Act, 1940, in this court by taking out a notice of motion dated the 5th of June, 1975, and obtaining an interim order restraining the respondent No. 1 its agents and servants from dealing with or in any way alienating or allotting, transferring or charging, encumbering the property of the Respondent No. 1 mentioned in the schedule to the said petition'. The said application was finally disposed of by my order dated the 12th of June, 1975, by which the receiver was appointed on the lands and properties mentioned in the said order. The said order is set out in paragraph 33 (d) of the petition. Similar application was also made in respect of the agreement between the Respondent No. 8 and the respondent No. 1 under section 41 of the Arbitration Act, 1940, and a similar order was also made by me on the 12th of June, 1975. It appears that after the receivers have taken possession of the assets and properties of the Respondent No. 1 pursuant to the said order dated the 12th of June, 1975 the respondent No. 1 caused a suit to be filed in the Court of Civil Judge, Varanasi (Sriram Sahakari Grih Nirman samity Ltd. and Ors.) praying for a declaration that the agreement and contract dated the 5th of October, 1970, entered into between the petitioner no. 1 and respondent Nos. 1 and 2 and also the agreement dated the 27th of february, 1971 entered into between the Respondent No. 8 and the Respondent Nos. 1 and 2 were not executed by the Respondent No. 1 and the same were not binding upon the Respondent no. 1 and the same were illegal, void ab initio and honest in law and for various other relief. It is alleged by the petitioners that the allegations in the plaint in the Varanasi Suit are identical as those which were raised in the said sections 20 and 33 applications under the Arbitration Act, before this Court which were terminated by the order of dismissal by the Supreme court in both the said two matters as hereinbefore stated. The petitioner has set out their contentions in paragraph 35 of the petition.
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