M/s. Radhika Automobiles Pvt. Ltd v. Maruti Udyog Ltd. & Another

M/s. Radhika Automobiles Pvt. Ltd v. Maruti Udyog Ltd. & Another

(High Court Of Delhi)

Original Miscellaneous Petition No. 242 of 2003 | 09-08-2004

Mukul Mudgal, J.

The facts of the case are briefly stated as under:-

The petitioner, M/s. Radhika Automobiles Limited was a dealer of automobiles manufactured by the respondent No.1, Maruti Udyog Limited (in short the `MUL). The petitioner had been appointed as a dealer by MUL for sale, service and repair of the vehicles manufactured by MUL for Gwalior region and Bareilly in the year 1986. The respondent No.2 is State Bank of India, a nationalized bank, which extends credit facilities and bank guarantees to the petitioner. The petitioner is a company registered under the Companies Act, 1956 and having its registered office at B-38 Greater Kailash, New Delhi. The petitioners case is that it had invested crores of rupees in setting up the showrooms and workshop situated at Agra-Bombay Road at Gwalior and Maharajura as per the specifications made in Maruti Corporate Identity Manual. The petitioner had recruited and trained 70 personnel in its office, show rooms and workshops as per the guidelines issued by the MUL from time to time. The petitioner had raised loans by way of overdraft facilities from the respondent No.2 and other financial institutions to fulfill its obligations laid down by MUL and provided bank guarantees in the sum of Rs.100 lacs as per the performa supplied by MUL towards the sale of all models of Maruti vehicles. The Petitioner contends that it is the policy of the MUL not to grant permission for opening an outlet within a 5 kms radius of an existing outlet. However, the MUL granted a new dealership to M/s Prem Motors at Gwalior adjacent to the petitioners showroom in spite of the petitioners protests and contrary to the assurances of the respondent No.1. The petitioner was continuously discriminated against and suffered huge financial losses. MUL has not released the funds of crores of rupees to the petitioner. Attempts to settle the pending claims have not fructified and the MUL accordingly wrote a letter dated 17th April, 2002 to the SBI, invoking the bank guarantee of Rs.1 crore furnished by the petitioner. Consequently the SBI issued a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 for an alleged outstanding sum of Rs.76,28,805/- to the petitioners as well as the guarantors. The petitioners contention is that the MUL is fully responsible for the loss to the tune of Rs.3 crores approximately suffered by it on this account. Even the dealer reserve fund amounting to Rs.22,84,362 has not been released payable upon the termination of the dealership agreement. The said amounts have not been released to the petitioner in spite of the repeated requests. The petitioner has further averred that it has even ready and willing for resolution of the disputes by way of arbitration under clause 57 of the dealership agreement. In the aforesaid circumstances, the petitioner sent a legal notice dated 26th May, 2003 calling upon the MUL to release all the amounts payable by it to the petitioner with interest @ 24%. However, the MUL failed to release the said amounts to the petitioner. Thus the petitioners case is that the said dealership was illegally, arbitrarily and unilaterally terminated by the MUL by Notice of Termination dated 9th September, 2002 in terms of Clause 45.2 of the Dealership Agreement dated 25th June, 1996 without disclosing any reasons whatsoever.

2. Accordingly the petitioner has approached this Court by filing this petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `Act) with the following prayers:-

(a) Direct the Respondent No.1 to release the security deposit for dealership amounting to Rs.2.5 lacs with interest from the year 2001 forthwith pending the dispute resolution between the Petitioner and the Respondent No.1.

(b) Direct the Respondent No.1 to release the dealer reserve fund amounting to Rs.22,84,362 forthwith pending the dispute resolution between the Petitioner and the Respondent No.1.

(c) Direct the Respondent No.1 to release the old pending claims amounting to Rs.1.88 crores forthwith pending the dispute resolution between the Petitioner and the Respondent No.1.

(d) Direct the Respondent No.1 to secure the Petitioner by way of a bank guarantee of Rs.20 crores pending the dispute resolution between the Petitioner and the Respondent No.1.

(e) Restrain the Respondent No.2 bank from proceeding with any coercive action against the Petitioner for realization of its dues pending the release of funds by MUL.

3. As far as the prayers a to c are concerned, the petitioner seeks the return of money which is disputed by respondent No.1 and cannot therefore be granted as an interim measure under Section 9 of the. As far as the prayer (e) qua respondent No.2, State Bank of India is concerned, it is not even a party to the Dealership Agreement between the petitioner and the respondent No.1. Prayer (e) obviously cannot be granted as no mandatory orders can be passed directing respondent No. 2 to give a bank guarantee to the petitioner. It is not stated anywhere in the petition as to how the respondent No.2 Bank is liable to give a bank guarantee of Rs.20 crores to the petitioner. Consequently since no nexus has been shown in so far as the dealership agreement between the petitioner and the respondent No.2 is concerned, no cause is made out to proceed against the respondent No.2. Since none of the five prayers are sustainable, the petition is accordingly dismissed with no order as to costs.

Advocate List
Bench
  • HON'BLE MR. JUSTICE MUKUL MUDGAL
Eq Citations
  • 2004 (76) DRJ 636
  • 113 (2004) DLT 837
  • LQ/DelHC/2004/809
Head Note

Arbitration and Conciliation Act, 1996 — S. 9 — Interim relief — Prayer for release of money — Held, cannot be granted as it is disputed by respondent No. 1 — Prayer for restraining respondent No. 2 bank from proceeding with any coercive action against petitioner for realization of its dues pending release of funds by MUL — Respondent No. 2, State Bank of India is not even a party to the dealership agreement between petitioner and respondent No. 1 — Consequently, no cause is made out to proceed against respondent No. 2 — Civil Procedure Code, Art. 136