C.M. Nayar, Chairman
1. The applicant/complainant has filed an application under Section 13(2) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the Act) for review of the order dated 7th January, 2002 which may be referred as below :
"The present complaint/petition has been made under Sections 36B(d), 10(a)(iv) read with Sections 36A and 2(o)(ii) and 37 of the MRTP Act, 1969 (hereinafter referred to as the Act) charging the respondents with adoption of and indulgence in unfair and restrictive trade practices. An application under Section 12A has also been filed seeking ex parte injunction against invocation and encashment of the bank guarantee furnished by the applicant/complainant in favour of the respondents.
2. It appears that the applicant/ complainant was appointed as a dealer by the respondents for the sale of their car 'Uno' and a dealership agreement was entered into between them on 2.2.1999 in terms of which the applicant/complainant was required to furnish a bank guarantee of Rs. 150 lakhs. It transpires from the reply filed on behalf of the respondents that bank guarantee was invoked by the respondents in order to recover the amounts which were collected by the applicant/complainant from the buyers of Uno cars but were not paid to the respondents. It has been further contended in the reply that the applicant/ complainant defaulted in making the payments and the total outstanding amount due from the applicant/ complainant totalled Rs. 1,97,27,000/- and as a result, the dealership agreement was terminated and the bank guarantee was invoked as per the terms of the dealership agreement. It has been further pointed out that according to Clause 17 of the dealership agreement, all disputes between the parties relating to this agreement are to be resolved and settled in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 and pursuant thereto, arbitration proceedings have already been set in motion by the applicant/complainant and Mr. Justice S.C. Pratap, a retired Chief Justice of Andhra Pradesh High Court has also been nominated as an Arbitrator by the applicant/complainant. In view of the fact that a dispute has arisen between the parties over the invocation and revocation of the bank guarantee and an alternative remedy of arbitration is available as envisaged in Clause 17 of the dealership agreement and is being availed of by the applicant/complainant, there are no grounds to entertain the present complaint/petition and the interim relief application which are accordingly dismissed. This Commission has taken this view in CW No. 65/2001/IA No. 54/ 2001, Village Cable Network v. Hathway Cable and Datacom Pvt. Ltd. and Ors. and the Commission's order of 8th June, 2001 was affirmed by the Hon'ble Supreme Court and the Civil Appeal No. 6341 of 2001 preferred by Village Cable Network was dismissed.
3. In view of the above, we do not propose to go into the merits of complaint. The complaint/petition and the interim relief application are disposed of accordingly, with no order as to costs on the facts and in the circumstances of the case."
2. The facts as incorporated above will indicate that the applicant/complainant was appointed as a dealer by the respondent for the sale of their Uno car and a dealership agreement was entered into between them on 2nd February, 1999 and consequent thereto the applicant/ complainant furnished a bank guarantee of Rs. 150 lakhs. The agreement admittedly contained Clauses 16 and 17 relating to jurisdiction and arbitration which read as under :
This Agreement shall be construed as having been executed in the City of Mumbai and it is agreed that the rights and liabilities of the Parties hereto their heirs, executors, administrators, successors and assignors in case a dispute arises shall be subject to exclusive jurisdiction of the Courts of Mumbai. It is further agreed that in any event, service of any process shall only be effected against the Company, if made at the Registered Office of the Company at Mumbai and to the attention of the person as aforesaid,
Any dispute, controversy or claim arising out of or relating to this Agreement or any related agreement or other document, that is or may be executed in pursuance hereof or the validity, interpretation, breach or termination thereof (A "Dispute") including claims seeking redress or asserting rights under applicable law, shall, subject to the provisions of this Section 17 be resolved and finally settled in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 as may be amended from time-to-time or its enactment (the "Arbitration Act"). The parties consent to a single, consolidated arbitration for all disputes that may at the time exist. In connection with any dispute, the parties expressly waive and forego any right, to the extent otherwise applicable, to punitive, exemplary, statutorily enhanced or similar damages.
The Arbitral Tribunal shall be composed of one Arbitrator selected by mutual agreement of the parties/or in the absence of such an agreement within 30 days after a party first proposes an Arbitrator, the arbitral Tribunal shall be composed of three Arbitrators, one of whom shall be appointed by each party within 30 days after expiry of the first 30 days' period. The third Arbitrator shall be selected by the mutual agreement of the first two Arbitrators within 30 days, after the last of the first two Arbitrators has been appointed. In the event that the initial two Arbitrators fail to agree on a third Arbitrator shall be chosen by the President/Chairman of the Indian Chamber of Commerce.
The arbitration proceedings shall be conducted in the English language and any document not in English submitted by any party shall be accompanied by an English translation. The arbitration shall be conducted in Mumbai. The Indian Evidence Act, 1972 shall apply to the proceedings. A written transcript of the proceedings shall be made and furnished to the parties. The Arbitral Tribunal shall not appoint any experts under Section 26 ,of the Arbitration Act. The parties agree to be bound by any award or order resulting from any arbitration conducted hereunder and further agree that:
(i) in the context of any attempt by either party to enforce an arbitral award or order, any defences relating to the parties capacity or the validity of this Agreement are hereby waived ; and
(ii) judgment on any award or order resulting from an arbitration conducted hereunder may be entered and enforced in any Court, in any country, having jurisdiction thereof having jurisdiction over any of the parties or any their assets.
The prevailing party in any arbitration conducted hereunder shall be entitled to recover from the other party (as part of the arbitral award or order) its attorneys' fees and other costs of arbitration."
3. The order which is sought to be reviewed disposed the complaint of the applicant/complainant on the short ground that consequent to the termination of the dealership agreement and invocation of bank guarantee the parties chose the remedy of arbitration and pursuant thereto arbitration proceedings have already been set in motion by the applicant and Mr. Justice S.C. Pratap, retired Chief Justice of Andhra Pradesh High Court has been nominated as an Arbitrator. The interim application for revocation of bank guarantee in this view of the matter had already become infructuous when the matter was disposed of.
4. Learned Counsel for the applicant/ complainant now submits that the impugned order has been passed without affording reasonable opportunity and fair hearing to the applicant/complainant. Reliance is placed on the judgments reported as :
(1) I (2001) SLT 163=2001 (1) SCC 610 in the matter of State Government Houseless Harijan Employees' Association v. State of Karnataka.
(2) 1970 (2) SCC 458 in the matter of Union of India v. Col. J.N, Sinha.
(3) 1985(3) SCC 545 in the matter of Olga Tellis v. Bombay Municipal Corporation.
(4) 1993 (1) SCC 78 in the matter of C.B. Gautam v. Union of India.
(5) III (1998) SLT 583=1998 (4) SCC 387 in the matter of Larsen & Tonbro v. State of Gujarat.
(6) I (1998) SLT 324=1998 (1) SCC 591 in the matter of Amarnath Ashram Trust Society v. Governor of U.P.
(7) 1969 (2) SCC 262 in the matter of A.K. Kraipak v. Union of India.
(8) VII (2000) SLT 647=2001 (1) SCC 596 in the matter of Manish Dixit v. State of Rajasthan.
(9) I (2001) SLT 682=2001 (2) SCC 577 in the matter of Shamnsaheb M. Multtani v. State of Karanataka.
5. The second contention which is sought to be raised is that an arbitration clause does not take away the jurisdiction of the MRTP Act which is in the nature of an additional remedy. Reliance is placed on the judgments of Supreme Court reported as III (1996) CPJ 1 (SC) in the matter of Fair Air Engineers (P) Limited v. N.K. Modi, and IV (2000) SLT 495=(2000) 5 Supreme Court Cases 294 in the matter of Skypak Couriers Ltd. v. Tata Chemicals Ltd.
6. We have heard learned Counsel for the applicant/complainant at length and examined the pleas as referred to above. We do not find any reason to disagree with the first contention that the impugned order is required to be passed after affording reasonable opportunity and fair hearing to the applicant/complainant. Therefore we need not refer to the judgments as cited by the applicant/complainant in this regard.
7. The main plea which is now pressed is that the remedy of arbitration does not take away the rights of the party to take recourse to a remedy as provided under the Monopolies and Restrictive Trade Practices Act 1969. The first judgment which has been relied upon is in the case of Fair Air Engineers (P) Limited v. N.K. Modi (supra) which was decided while interpreting the powers vested under the Consumer Protection Act, 1986. The Court held that the provisions of the Act are to be construed widely to give effect to the object and purpose of the Act and on that basis it is contended that the provisions of the MRTP Act provides an additional remedy and there is no bar to take recourse to the same even though arbitration is available to adjudicate disputes between the parties. Paragraphs 13 and 14 of this judgment may be referred to as below :
"13. Accordingly, it must be held that the provisions of the Act are to be construed widely to give effect to the object and purpose of the Act. It is seen that Section 3 envisages that the provisions of the Act are in addition to and are not in derogation of any other law in force. It is true, as rightly contended by Mr. Suri, that the words "in derogation of the provisions of any other law for the time being in force" would be given proper meaning and effect and if the complaint is not stayed and the parties are not relegated to the arbitration, the Act purports to operate in derogation of the provisions of the Arbitration Act, prima facie, the contention appears to be plausible but on construction and conspectus of the provisions of the Act we think that the contention is not well-founded. The Parliament is aware of the provisions of the Arbitration Act and the Contract Act and the consequential remedy available under Section 9 of the Code of Civil Procedure, i.e., to avail of right of civil action in a competent Court of civil jurisdiction; nonetheless, the Act provides the additional remedy.
14. It would, therefore, be clear that the Legislature intended to provide a remedy in addition to the consentient arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure. Thereby, as seen, Section 34 of the Act does not confer an automatic right nor create an automatic embargo on the exercise of the power by the judicial authority under the Act. It is a matter of discretion. Considered from this perspective, we hold that though the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these Forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the Forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate Forum for adjudication of the disputes would be otherwise those given in the Act."
8. The view as stated above has been upheld in the judgment reported as Skypak Couriers Ltd. v. Tata Chemicals Ltd. (supra). This judgment was also rendered to interpret the provisions of the Consumer Protection Act, 1986. The Court has accepted that even if there was an arbitration clause in the agreement it is in addition to any other law for the time being in force. It is also stated in the following paragraph :
"Even if there exists an arbitration clause in an agreement and a complaint is made by the consumer, in relation to certain deficiency of service, then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the Redressal Agency, constituted under the Consumer Protection Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force."
9. We may however also refer to paragraphs 5, 6 and 7 as follows :
"5. Section 22 of the Consumer Protection Act provides that the Commission shall have the powers of a Court. These powers would include the power to call for documents and take evidence either by itself or on Commission. However, the final adjudication has to be by the Commission. For purposes of this order we will presume, without laying down any law in this behalf, that the Commission may even refer disputes to arbitration/conciliation. However, such reference to arbitration could only be under the provisions of the Arbitration Act, 1940 or the Arbitration and Conciliation Act, 1996. There is no provision in law and we consider it an unhealthy practice for Courts/ Commission/Tribunal to abdicate their duties and functions and to delegate adjudications of disputes before them to third parties. The adjudication can only be by the concerned Court/Commission/ Tribunal. For an effective adjudication the Commission/Court must address itself to the evidence, documents, respective case of the parties, including submission on their behalf and then give a finding on that basis. Facts set out hereafter show/suggest that has not happened.
6. In all these matters awards have been given by the persons to whom the matters were referred. In some of these matters one or other of the parties filed objections to the award. In some cases objections were not filed and/or were not allowed to be filed. In all these cases the objections have not been considered and the Commission has proceeded to pass orders based on the Award. For sake of convenience the order passed in Civil Appeal No. 2500 of 1994, which is typical of orders, passed, is reproduced hereinbelow :
'The dispute between the parties forming the subject matter of this complaint petition was referred for consensual adjudication to Justice Mr. V.D. Tulzapurkar, former Judge of the Supreme Court of India with the stipulation that the award passed by the Adjudicator will be final and binding as between the parties. The award has been passed by Justice Mr. Tulzapurkar and it has been forwarded to this Commission in accordance with the terms of our order wherein it was stated that after the completion of the adjudication proceedings the award may be forwarded to this Commission for its being incorporated into the order of this Commission. We direct that there will be an order in the original petition in terms of the directions contained in the award.'
7. Mr. Venugopal for the respondent in Civil Appeal No. 2500 of 1994, sought to support this practice. He relied upon certain English authorities (which need not be reproduced) wherein it is held that parties could agree to abide by the decision/adjudication of a third persons and that the opinion of the third person would then be final and binding on the parties. There can be no dispute with such a proposition. However, if a party does not abide by the decision then the only remedy would be to file a suit to enforce the agreement of the parties and the decision. There is no provision in law nor could any authority be shown to us, that adjudication of matters before a Court/Commission/ Tribunal can be entrusted to a third party/ individual and the decision of the third person then made a decree or order of a Court/Commission/Tribunal. Of course, an award made by an Arbitrator can be and is made a decree of a Court. But that is under the provisions of the Arbitration Act and not de hors the Act. As seen above the Commission is referring matters to third persons for consensual adjudication de hors the Arbitration Act. It is then making those awards the Rule of the Court by passing orders based on the award. The Commission is not applying its own mind or adjudication on the disputes. It is merely putting its impremanitive on decisions given by third parties. By doing this it is abdicating its own function and duties. Such a procedure is unwarranted and unjustified. It cannot be allowed to continue. Accordingly the Commission is directed to forthwith discontinue with such a practice."
10. The above judgments relate to totally different facts which are of no relevance to the contention as raised by the learned Counsel for the applicant/complainant. The facts are not in dispute that the parties voluntarily entered into the dealership agreement which was terminated consequent to which bank guarantees were encashed in terms of the agreement. There is no doubt that mere presence of an arbitration clause in agreement will not bar this Commission to entertain a complaint but here in this case the applicant/complainant on its own has taken recourse to remedy of arbitration and is raising all disputes which arise out of or relating to the agreement. In this view of the matter it will not be open to the applicant/complainant to raise the pleas that the respondent has indulged in unfair and restrictive trade practices. The execution of the agreement is a voluntary act of both the parties and no element of public interest arises for consideration in the present proceedings. The judgments cited by the learned Counsel for the applicant/complainant are of no relevance to the facts and circumstances of the present case which will require any further consideration in the present application for review of the order passed on 7.1.2002. It will also not be appropriate to permit parallel proceedings when the Arbitrator is seized of the matter and is examining the issues which are raised by the applicant/complainant in the present case. We therefore do not find any ground to entertain the application as order dated 7.1.2002 does not suffer from any error apparent on the face of the record. The same is accordingly dismissed.