A & B entered into Memorandum of Understanding on Jan-1-2000 which stated that A would finance B for his project and charge him either 30% interest p.a or 10% share in profit in Business whichever higher. The repayment clause is fixed as within 90 days of demand in MOU. MOU has an arbitration clause.
A paid 1 lac by way of cheque no 999 to B.
On the very same day i.e Jan-1-2000 A got a promissory note written from B for this same transaction ad mentioned the same cheque no 999 in the pro-note which stated that interest is chargeable at 24% p.a and repayment of full money on demand.
The terms of lending & repayment are totally different then what was mentioned in MOU.
After this A paid B several amounts by way of cheque and promissory notes were issued by B.
The point to be noted here is that terms of financing & repayment in MOU are fully different than whats mentioned in promissory notes.
THe MOU did not include any point of financing through promissory notes.
Each and every transaction has been done by way of promissory notes only and no reference to MOU was mentioned in the promissory note. Similary the MOU never had scope of lending money through promissory notes.
B could not do his business and closed his shop 9 years ago. In 9 years A never sent even a legal notice not used the arbitraion clause of MOU. A also did not use the promissory notes in his possession for 9 years now.
After 9 years A has filed the copies of MOU as well as the promissory notes and wants to use arbitration clause of MOU to get money paid via promissory notes.
In such case can MOU arbitration clause be used to recover money in a situation where lending was not done as per MOU terms ?
When MOU was never put to use for 9 years can just one arbitration clause written in that be used to recover money paid through promissory notes?