Maruti Udyog Ltd v. Classic Motors Ltd. D+

RAJIV SAHAI ENDLAW, J. NOVEMBER 02, 2016 "bs"/pp

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 2nd November, 2016. + CS(OS) 87/1998, IA No.353/1998 (u/O XXXVIII R-5 CPC), IA No.4241/1998 (u/O VI R-17 CPC), IA No.9833/1998 (u/O I R-10 CPC) & IA No.11482/1998 (u/S 8 of Arbitration Act) & IA No.9310/1999 (u/S 151 CPC) MARUTI UDYOG LTD. ..... Plaintiff Through: Mr. Mudit Shrama and Mr. Tanmaya Nirmal, Advs. Versus CLASSIC MOTORS LTD. AND ANR. ..... Defendants Through: Mr. Kanwal Chaudhary, Adv. AND + CS(OS) 74/2016 (earlier OMP No.107 of 1999) & IA No.8518/2008 (u/O VI R-17 CPC) MARUTI UDYOG LTD. ..... Plaintiff Through: Mr. Mudit Shrama and Mr. Tanmaya Nirmal, Advs. Versus CLASSIC MOTORS LTD. ..... Defendant Through: Mr. Kanwal Chaudhary, Adv. CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. CS(OS) No.87/1998 was filed by Maruti Udyog Ltd. (MUL) against Classic Motors Ltd. (CML) and Mr. Narender Anand for recovery of Rs.4,26,93,000/- with interest, pleading: (i) that MUL, had in the year 1983 granted original dealership in favour of Competent Motors, of which Mr. Raj Chopra and Mr. Narender Anand were partners; (ii) that on termination of the original dealership, two separate independent dealerships were granted to the said Mr. Raj Chopra and Mr. Narender Anand in the year 1988, with dealership to Mr. Narender Anand being in the name of CML; (iii) that CML, being one of the authorised dealers of MUL, was required to take bookings of vehicles, customer payments and to provide after sales service in respect of the said vehicles; (iv) that on 31st August, 1994, MUL issued a 90 days notice of termination of dealership of CML and called upon CML to settle the accounts; (v) that CML failed to come forward and instead indulged in prolonged litigation; (vi) that during the course of the said litigation, CML submitted several pending customers/payments list but still failed to settle the accounts and as a result whereof, the liability of CML mounted; (vii) that CML otherwise also had committed serious and persistent violations of the sale policies and procedures of MUL; (viii) that CML, instead of collecting payments from customers in the name of MUL, collected payments in its own name and which were not deposited in the account of MUL; (ix) that this resulted in a shortfall of a large amount which became evident from reconciliation between the bookings reported and the payments actually received in vehicles purchase account; (x) that pursuant to termination of dealership, while MUL was in the process of delivering vehicles to the customers who had booked against advance accounts, CML supplied different lists of pending customers from time to time to MUL, thus making it difficult and almost impossible for MUL to know and settle the claims of customers for purchase of vehicles; (xi) that due to aforesaid breaches by CML, a sum of Rs.4,26,93,000/- was due from CML to MUL. 2. CS(OS) No.87/1998 was entertained and summons thereof issued to the defendants. 3. Before CML or Mr. Narender Anand could file written statement in CS(OS) No.87/1998, MUL filed IAs No.4241/1998 and 9833/1998 for amendment of the plaint and under Order I Rule 10 of Code of Civil Procedure, 1908 (CPC) respectively for impleadment of another director namely Mr. Bobby Anand of CML as defendant No.3 to the suit and for amendment of the plaint inter alia to plead that the corporate veil of CML was liable to be pierced and decree for recovery of money also passed against Mr. Narender Anand as well as Mr. Bobby Anand. 4. CML, before submitting its first statement on the substance of the dispute in CS(OS) No.87/1998, filed IA No.11482/1998 under Section 8 of the Arbitration and Conciliation Act, 1996 (1996 Act) citing the following arbitration clause: "36. ARBITRATION If any difference or dispute shall arise between the parties hereto as to the construction or true intent and meaning of any of the terms and conditions herein contained or as to any payment to be made in pursuance hereof or as to any other matter