Hitesh Chhabra & Anr. v. Sandeep Chhabra & Ors.

1. The prayer in these OMPs, preferred under Section 9 of the Arbitration and Conciliation Act, 1996 (“the 1996 Act”), is essentially for a direction to Respondent 1 to countersign the cheques issued by the petitioners for making payments to the vendors of M/s Tulip Enterprises and M/s Tulip International, partnership firms of which the petitioners and respondents are partners.

2. This issue had travelled to the Division Bench of this Court in the present proceedings. The Division Bench, by judgment dated 29 November 2023 in FAO (OS) (Comm) 260/2023, put in place the following interim arrangements.

be made to suppliers to Respondent No. 1 and also provide all documents, correspondences and emails in support of the payments to be made covered by the said cheques; and v. Respondents shall verify the said documents and in case of any objection, communicate the objection to Appellants within three days of receipt of the documents. In case there is no objection to any cheques, Respondent No. 1 shall countersign the cheques without any demur; and vi. In case there is any objection with regard to any payment to be made as proposed by Appellants or any unreasonable refusal by Respondent No. 1, it would be open to the parties to approach the learned Single Judge in respect of the said cheque (s). vii. Appellant shall also activate the email addresses sandeep.chhabra@autokame.co.in & sneh.chhabra@autokame.co.in within two days; viii. Respondent No. 1 undertakes that neither he nor his daughter shall use the email addresses for sending any negative communication to any buyer, supplier, vendor, customer or employee of the said partnership firms.”

3. It is clear from a reading of the particulars of the interim arrangement put in place by the Division Bench that there is no absolute directive to Respondent 1 to sign all cheques, which represent payments to be made to vendors. The Division Bench has consciously retained, with Respondent 1, the right to object to the documents related to the said payments, subject to the condition that the objections would be communicated to the petitioner within three days of receipt of the documents, failing which Respondent 1 has necessarily to countersign the cheques.

4. The grievance of the petitioners in IAs 9146/2024 and 9147/2024 filed in these OMPs is that the respondents are unreasonably refusing to sign the cheques, representing payments to make to the vendors. Accordingly, the petitioners have sought permission to unilaterally issue cheques to the vendors without the countersignature of Respondent 1.

5. I suggested to Mr. Saikumar, learned Senior Counsel for the petitioners that as this Court has appointed an Arbitrator to arbitrate on the disputes between the parties today in Arb. P. 1093/2024 and Arb. P. 1107/2024, it would be in the interests of expediency to refer these disputes to the learned Arbitrator to treat these petitions as applications under Section 17 of the 1996 Act and decide them accordingly. Mr. Saikumar, on instructions, submits that, instead of resorting to this recourse, this Court should decide the issue itself.

6. Mr. Saikumar seeks to justify his request on the submission that the refusal on the part of Respondent 1 to countersign the cheques is bringing the petitioners’ business to a grinding halt. He has also sought to place reliance, in this context, on the decision of a learned Single Judge of this Court in Jain Motor Car Company v. Deepti Jain[1].

7. Deciding of the issue would require the Court to examine, for itself, justification of Respondent 1’s refusal to countersign the cheques. I am unable to accede to the said request. ILR (2009) IV Delhi 622

8. Insofar as the decision in Jain Motor Car Company is concerned, para 12 of the said decision is sufficient to distinguish that case from this. Paras 11 to 13 of the decision in Jain Motor Car Company may be reproduced to advantage, thus:

2004 (2) Arb. LR 561 (Allahabad) (DB)

9. Thus, this Court, in Jain Motor Car Company, was concerned with a situation in which there was a complete freeze on the bank account of the petitioners, which had resulted in paralysis of its activities. The petitioners were unable even to pay labour wages, electricity bills, telephone bills, VAT, Central Excise and other Government and public dues.