TMI Blog1999 (12) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... ineries, for a mandatory injunction directing them to deliver the schedule mentioned properties to them at Chennai and also for permanent injunction. The existence of the alleged hire purchase agreement dated 31-3-1997 is denied. The transaction between the two companies is nothing but a loan transaction is evidently clear from the documents. The transaction was styled and named as Hire Purchase Agreement so as to enable the plaintiff to obtain a tax benefit towards depreciation. The plaintiff not being the owner of the schedule mentioned equipments, is not entitled to repossess the same. This Court does not have the jurisdiction to entertain the suit in view of the valid Arbitration Agreement that has come into existence between the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration. 3. The defendant also filed Application No. 2719 of 1999 for suspending all proceedings in the suit. The company has been declared as a sick industry as contemplated under section 3( i )( o ) of the Sick Industrial Companies Act. In view of its declaration, all proceedings initiated against the defendant company have to be suspended as per section 22. The defendant is possessed of vast properties. If during this time, the process of revival is hampered by various legal proceedings initiated against the defendant company the object of the Act would be totally lost. If all the legal proceedings are suspended as contemplated under section 22, it would only be to the advantage of the creditors. 4. The respondent/plaintiff file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement would constitute an Arbitration Agreement in writing. When the agreement is alleged to be illegal, non-existent and void ab initio, the entire agreement along with the arbitration clause fails and no question of arbitration arises. There must be a valid and binding arbitration agreement between the parties to the legal proceedings. The application ought to have been made before filing a written statement or taking any other step in the legal proceedings. In this case, Application No. 2789 of 1999 has been filed by the defendant and they have also filed Application No. 2790 of 1999. Section 8 of the Arbitration Act is not applicable to the case on hand. 5. The main relief in the suit is one for declaration ownership and possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement. On the other hand, the transaction between the parties is one of loan and not hire purchase agreement. It is further stated that blank signatures have been taken by the plaintiff and now it appears that they must have been used for the purpose of creating a hire purchase agreement. The learned counsel for the applicant further stated that already the plaintiff issued a legal notice dated 30-5-1998 and for which, a reply was also sent on 11-6-1998; ultimately agreeing to refer the matter for arbitration under section 11(5) of the Arbitration Act. According to clause 18( a ) of the alleged hire purchase agreement dated 31-3-1997, the Managing Director of the plaintiff company is empowered to appoint a sole arbitrator to decide all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant dated 11-6-1998, they have denied the existence of the hire purchase agreement and alleged that their signatures were taken in the blank forms. However, in the end, they have expressed their willingness to refer the dispute to an Arbitrator appointed by the Court under section 11(5). Now, the short question that has to be decided is whether the filing of the suit by the plaintiff without invoking the provisions of the Arbitration Act is proper and correct or whether the plaintiff was justified in filing the suit. 11. Section 5 of the Arbitration and Conciliation Act, 1996 relates to extent of judicial intervention, wherein it is observed that notwithstanding anything contained in any other law for the time being in force, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r arbitration in the agreement between the parties, it is mandatory and this is one more circumstance to show that the plaintiff ought to have referred the matter for arbitration invoking the provisions of the said Act. 12. However, the learned counsel for the plaintiff would contend that the applicant has taken part in the proceedings and has also filed counter in some of the applications and, as such, it can be deemed that he should have waived his right for invoking the provisions of the said Act. It is necessary to state that the applicant has not filed any written statement in the suit; on the other hand, the applicant alone has filed the application under section 8. There is no material to come to the conclusion that the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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