- (1.) THE only question for consideration in this application is what is the scope of arbitration agreement dt. 28th Jan. 1981 between R.S.Kedia and Sunil Kumar Dey and Srinivas Pandit. THE relevant portion of the said arbitration agreement is set out hereinbelow :- "Whereas the parties above mentioned have executed a Hire Purchase Agreement today with regard to the Motor Vehicle TDV of 315 H.P. having 6 cylinders and painted bearing No. 692 011 000606 on the Engine No. 3440-73094472 on the chasis registered under Police registration No. WGT 1674 complete with accessories. Year of Manufacture 1981. This agreement witnessed that we hereby agree that notwithstanding condition No. 15 of the said Agreement of Hire Purchase executed by us today all disputes differences claims arising out of the terms of the said Agreement of Hire Purchase with exception of the rights of the owners to seize the Article under all circumstances in terms of the Hire Purchase Agreement and all the disputes with regard to the claims under/on Demand Pronote executed by the hirer alone or both hirer and guarantor in favour of the owners in connection with the said Hire Purchase Agreement and all claims with regard to the compensation due to the instalments unpaid interest thereon, seizing expenses and charges, postage and telegrams, other incidental expenses and damages done to the vehicle in machinery, tyres and tubes etc. to the vehicle regarding which the said Hire Purchase Agreement is executed today shall be referred to the Sole Arbitration of Mr. G.P.Lath of 6 Old Post Office Street, Calcutta-1 under the provisions of Indian Arbitration Act 1940 or any statutory modifications thereof. THE award and of the said arbitration shall be final and shall be binding on the parties to this agreement and the said Hire Purchase Agreement executed today provided that regarding the right of the owner to seize and take possession of their vehicle at any time under the provisions of the said Hire Purchase agreement, the decision of the owners shall be final and irrevocable and not subject to this reference to the Arbitrator. THE fee of the Arbitrator in case of any such reference shall be 2% of the value of the claim of the claimant with a minimum of Rs. 25/-. THE Arbitrator shall be competent to decide the liability of the parties for the cost of the Arbitration."
(2.) FOR the purpose of proper determination of the said question it is necessary to consider the facts culminating in this application. The material facts inter alia are that on or about 28th Jan. 1982 the petitioner and respondent No. 2 entered into a hire purchase agreement in writing with the respondent No. 1. In the said agreement the respondent No. 1 was termed as owner and the respondent No. 2 was termed as hirer and the petitioner was termed, as guarantor. The respondent No. 1 agreed to let on hire to the respondent No. 2 and agreed to take on hire from the respondent No. 1 one TDV motor vehicle bearing No. 692001000606 on the engine and No. 344073094472 an the chassis on inter alia the following terms and conditions :- a) the hirer would pay to the owner on the execution of the aforesaid agreement the sum of Rs. 34541.88 p. as an initial payment by way of hire which shall become the absolute property of the owner and shall punctually pay to the owner at its address for the time being at Calcutta without previous demand 18 consecutive monthly rents or hires consisting of Rs. 9250/-each except as to the first of such payment would be made on 15th Mar. 1981 and each subsequent payment on or before 15th of every succeeding calendar month; b) the hirer would be at liberty at any time during the continuance of the said agreement to terminate the hiring by returning the said vehicle to the owner in Calcutta in the same order and condition in which it was delivered to the hirer (fair wear and tear excepted); c) the hirer would pay to the owner interest at the rate of 2% per mensem on the amount of any sum overdue including any sum for taxes, fees, repairs and supplies which might be due from the hirer to the owner in respect of the said vehicle; d) the hirer would hold the said vehicle as a Bailee of the owner and shall not have any proprietary right or interest as purchaser therein until they shall have exercised their option of purchase as provided in the said agreement and shall have the whole amount due under the said agreement or under any terms thereof. By and under the said agreement of Hire Purchase and for the consideration mentioned therein the petitioner guaranteed due performance and observance by the hirer of terms and conditions of the said agreement and agreed to pay to the owner at is his address for the time being at Calcutta within the said jurisdiction on demand any money or which might become payable under the said agreement and not paid by the hirer either by way of debt or damages, costs or expenses. Another agreement in writing dt. 28th Jan., 1981 was made between the parties whereby the parties agreed to refer the disputes to arbitration. The said arbitration agreement has already been set out earlier. The petitioner duly paid the said sum of Rs. 34, 541.88 p. at the time of execution of the aforesaid hire-purchase agreement whereby possession of the said vehicle was duly made over to the petitioner by the respondent 1. According to the petitioner he also paid a sum of Rs. 1, 04, 000/- by way of instalments from time to time. The respondent 1 duly determined the said hire-purchase agreement on ground of defaults in payment and lodged his claim for a sum of Rs. 1, 80, 647.50 p. as per particulars set out hereinbelow : The petitioner and the respondent No. 2 filed their counter-statement of facts and contested the claim of the respondent No. 1. The learned Arbitrator passed an award and subsequently a judgment and decree was passed in terms of the said award. Thereafter JUDGEMENT_75_AIR(CAL)_1990Html1.htm an application was made for setting aside the said decree on the ground that no notice was served under S.14(2) of the Arbitration Act. Thesaid application was allowed and the decree was set aside. The petitioner in the instant application has prayed for setting aside of the said award on the ground that there isno scope for passing an award under the Arbitration Agreement dt. 28th Jan., 1981. According to the petitioner there is no scope for any reference of dispute which can be decided by the arbitrator as all the disputes have been excepted under the said arbitration clause. It may be noted however, that the petitioner appeared before the arbitrator and contested the claim of the respondent No. 1 and never raised any question as to jurisdiction of the arbitrator. In support of his contention the learned Advocate for the petitioner relied upon an unreported judgment and decision of a single Judge of this Court in Matter No.2230 of 1987 between Bijoy Kumar Pande and Auto Trade Finance Corporation. In that case it was held by the learned Judge in respect of disputes under a similar arbitration clause and agreement that not a single dispute referred to arbitration is arbitrable under the arbitration agreement. Accordingly Mr. Shibdas Banerjee, learned Advocate for the petitioner, submitted following the said unreported judgment and decision that there is no scope for arbitration on the basis of the said agreement and award passed on the basis of the said arbitration agreement cannot have and effect and ought to be set aside. He further submitted that the Court should interpret the agreement as contra proferentum and against the financier. In support of his contention he relied upon the judgment and decision in the case of State of Maharashtra v. Dr. M.N.Kaul (dead) by his legal representative and another, reported in AIR 1967 SC 1634. In that case, stay was obtained on condition of furnishing bank guarantee. The time during which the bank guarantee was to remain in force expired and the original petitioner also died. The authorities concerned wanted to recover the amount of bank guarantee from the bank to which the bank objected. While holding that a document of bank guarantee is to be strictly construed according to its words the Supreme Court observed that there are exceptions to the same when there is ambiguity in the words itself. When the ordinary rules of construction fall the Courts interpret the guarantee contra proferentum that is against the guarantor or use the recitals to control the meaning of the operative part where that is possible. But it was clearly held in that case that the cardinal rule is that the guarantor must not be made liable beyond the terms of his engagement and contention of the bank that the guarantee which was no longer enforceable was accepted by the Supreme Court in that case.
(3.) THE learned Advocate for the respondent 1 Radheshyam Kedia on the other hand submitted that the parties have submitted to the jurisdiction of the arbitrator by filing statement of claim and counter-statement of claim. THE learned Advocate further submitted that the petitioner filed counter-statement of claim and appeared before the learned Arbitrator but did not raise this question as to jurisdiction of the learned Arbitrator. Under such circumstances the petitioner is estopped from raising this contention at the moment. THE learned Advocate further submitted that this is not such a case where the contract itself is illegal. THE parties can always proceed under such circumstances and the scope of the arbitration agreement may be enlarged by the parties themselves as has been done in this case. THE learned Advocate for the respondent further submitted that the said document dt. 28-1-81 being a commercial document Court should lean in favour of giving effect to the document and not construe it in a manner so as to invalidate the document.;