TMI Blog1995 (11) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... as he being an appointee of the Chairman and Managing Director of the appellant himself, respondents' case may not be fairly examined. He prays that any retired High Court Judge may be appointed as an arbitrator by us. We have not felt inclined to accept this submission, because arbitration clause states categorically that the difference/dispute shall be referred "to an arbitrator appointed by the Chairman and Managing Director of IPDL" (Indian Drugs & Pharmaceutical Limited) who is the appellant. This provision in the arbitration clause cannot be given a go-bye merely at the askance of the respondent unless he challenged its binding nature in an appropriate proceeding which he did not do. Allow the appeal and leave the appointed arbitrator to deal with difference/dispute in accordance with law. - C.A. 10275 OF 1995 - - - Dated:- 14-11-1995 - B.L. HANSARIA AND K. RAMASWAMY, JJ. JUDGMENT Special leave granted. 2. The appellant entered into an agreement with respondent No.2 (which was subsequently amalgamated with the first respondent and became one of its division) on 13.8.1982 whereunder the respondent was to undertake filling of vials with medicines. The agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... views on the four questions in the order noted by us. 5. Whether the arbitration clause remained in existence by 1988 when the arbitrator was appointed on the face of termination of the agreement by the appellant with effect from 1.4.1984? This is the real bone of the contention between the parties. Shri Desai, duly assisted by Ms. Indu Malhotra, strenuously urged that as the appellant itself had terminated the agreement with effect from 1.4.1984, the arbitration clause, which is a part of the agreement, had ceased to be operative after 1.4.1984. This contention is seriously disputed by the learned Attorney General appearing for the appellant. 6. To decide this dispute between the parties, it would be enough to note clauses 17 and 19 of the agreement which read as below : 17. The agreement will be for the period from 1.4.1982 to 31.3.1984 subject to renewal by mutual agreement thereafter. The agreement is subject to termination by either party by giving three months notice to other party. 19. Any dispute regarding the interpretation or application of this agreement and any difference about the quality of the material shall be referred to an arbitrator appointed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on termination of the contract, but the same remains in existence for certain purposes in respect of disputes arising under it or in connection with it. It was, therefore, stated under this point that as the contract subsist for certain purposes, the arbitration clause operates in respect of these purposes. 9. Shri Desai, appearing for the respondents, has not disputed that the law laid down in Kishorilal Gupta's case is still good law, which is apparent from what was stated by a two-Judge Bench in Damodar Valley Corporation vs. K.K. Kar, 1974 (2) SCR 240, which decision Shri Desai seeks to rely in support of his submission. The learned counsel read out to us that portion of the judgment which finds place at pages 243 to 244, which is as below : As the contract is an outcome of the agreement between the parties it is equally open to the parties thereto to agree to bring it to an end or to treat it as if it never existed. It may also be open to the parties to terminate the previous contract and substitute in its place a new contract or alter the original contract in such a way that it cannot subsist. In all these cases, since the entire contract is put an end to, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbatore, the court there had jurisdiction. This has really put section 20 of the Code of Civil Procedure on its head, as it permits assumption of jurisdiction by that court where the opposite party carries on business, and not the petitioner or plaintiff. The other point urged to sustain jurisdiction was that the respondent's letter dated 27.11.1987 had been issued from Coimbatore. This fact could not have conferred jurisdiction because the fact of mere reply to the notice of the appellant did not give rise to any part of cause of action within the jurisdiction of Coimbatore court. We are, therefore, of the view that Coimbatore court had no jurisdiction. 13. Was the reference to the arbitrator barred by limitation ? The plea of limitation had not been urged earlier. That, however, is not material as a plea of limitation can be raised virtually at any point of time because it is relatable to jurisdiction to entertain a matter. According to Shri Desai as the appellant had for the first time required the respondent to reimburse the supposed loss by its letter of 10.11.1987, which was after about 4 years of the supply, the invocation of arbitration clause was apparently ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointment of arbitrator in May, 1988. The arbitration was thus not manifestly barred as contended by Shri Desai. We do not propose to say anything more on this aspect at this stage. 16. In the aforesaid premises, we do not find any threshold infirmity in the invocation of clause 19 and to the reference of the dispute to respondent No.3. Shri Desai submits that respondent No.3 may not be required to arbitrate inasmuch as he being an appointee of the Chairman and Managing Director of the appellant himself, respondents' case may not be fairly examined. He prays that any retired High Court Judge may be appointed as an arbitrator by us. We have not felt inclined to accept this submission, because arbitration clause states categorically that the difference/dispute shall be referred to an arbitrator appointed by the Chairman and Managing Director of IPDL (Indian Drugs Pharmaceutical Limited) who is the appellant. This provision in the arbitration clause cannot be given a go-bye merely at the askance of the respondent unless he challenged its binding nature in an appropriate proceeding which he did not do. 17. In the result, we allow the appeal and leave the appointed arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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