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Dawoodbhai Abdulkader Vs. Abdulkader Ismailji - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Reported inAIR1931Bom164
AppellantDawoodbhai Abdulkader
RespondentAbdulkader Ismailji
Excerpt:
.....plaintiff, but that defendant had failed to render an account to the plaintiff. the court must therefore be satisfied that there is some rail point of difference which has to be submitted to arbitration. but he failed to pay. counsel for the defendant argued that the mere fact of calling for an account and failure to pay constituted a difference or dispute, and came within the terms of clause 20 of the agreement. but a failure to pay is not necessarily a difference, and the mere fact that a party could not or would not pay does not in itself amount to a dispute unless the party who chooses not to pay raises a point of controversy regarding, for instance, the basis of payment or the time or manner of payment......that all further proceedings in the suit may be stayed in order to enable the parties to refer the matter in dispute to arbitration according to their agreement. the plaintiff was the sub partner of the defendant in a certain business of manufacturing matches under the terms of a deed of sub-partnership dated 25th may 1925 and the said deed incorporated all. the articles, covenants, conditions and obligations contained in the principal partnership agreement between the defendant and his partner, which were not inconsistent with the terms of the agreement, the agreement between the defendant and his partner was executed immediately before the deed of sub-partnership on the same day, i.e. 25th may 1925 clause 20 of the agreement provides inter alia that any dispute or difference arising.....
Judgment:

Wadia, J.

1. This is a chamber summons taken out by the defendant for an order that all further proceedings in the suit may be stayed in order to enable the parties to refer the matter in dispute to arbitration according to their agreement. The plaintiff was the sub partner of the defendant in a certain business of manufacturing matches under the terms of a deed of sub-partnership dated 25th May 1925 and the said deed incorporated all. The articles, covenants, conditions and obligations contained in the principal partnership agreement between the defendant and his partner, which were not inconsistent with the terms of the agreement, The agreement between the defendant and his partner was executed immediately before the deed of sub-partnership on the same day, i.e. 25th May 1925 Clause 20 of the agreement provides inter alia that any dispute or difference arising between the partners in regard to the construction of any of the articles contained in the agreement or to any division, act or things relating to the said partnership or the affairs thereof shall be referred to arbitration in the manner therein mentioned. The period of duration under the agreement as well as the sub-partnership deed was from 1st April 1925 to 31st March 1927.

2. On 17th April 1930, the plaintiff through his solicitors wrote to the defendant stating that the accounts of the partnership which had been made up to 31st January 1928, showed that a large sum was due by the defendant to the plaintiff, but that defendant had failed to render an account to the plaintiff. The plaintiff called upon the defendant to make up the accounts and to pay to him the amount found due at the foot thereof. The defendant neither sent any reply to the said letter nor made up the account, and the plaintiff thereupon filed this suit on 20th June 1928, praying that the defendant may be ordered to render a true and complete account of the profits earned by the partnership business and of the amount due to the plaintiff, and to pay the same to him. Nearly two months later the defendant by his attorneys' letter dated 18th August 1930, called upon the plaintiffs not to proceed with the suit, and 'to refer the matter in dispute to arbitration' in terms of Clause 20 of the agreement. What the matter in dispute between the parties was has not bean sat out by the defendant; but he took out the chamber summons on 19th August 1930, for the stay of the suit. Even in the affidavit in support of the summons the matter in dispute has not been 19th out, nor explained.

3. It is laid down in Halsbury's Laws of England, Vol. 1, para. 945(at p. 444) that the subject matter of every reference to arbitration by consent out of Court must be some difference or dispute arising between the parties. Section 4, Arbitration Act 1899, defines submission as a written agreement to submit present or future differences to arbitration; and the forms of submission given in Schedule 2 to the Act begin by saying: 'Whereas differences have arisen and are still, subsisting' bet wean the parties. The existence of a difference, or dispute is therefore an essential condition for the arbitrator's jurisdiction: sea the case of Uttam Chand, Saligram v. Jewa Mamooji [1919] 45 Cal. 534. If there is no dispute, there can be no right to demand arbitration. The Court must therefore be satisfied that there is some rail point of difference which has to be submitted to arbitration. In each case the arbitration must be on a point of real difference. In a decision of the House of Lords in L. & N.W. and G.W. Joint Ry. Co. v. J.H. Billington, Ltd. (2) the Railway Act empowered the company to charge a reasonable sum for services rendered to a trader, and enacted that 'any difference arising under this section shill be determined by an arbitrator to be appointed any the lord of Trade.'

4. The company sued the trader for the services rendered. The defendant applied for a stay pending arbitration. It was hold that as there was no difference existing between the parties before the action was brought, the arbitrator had no jurisdiction in the matter. At p. 81 Lord Halsbury observes:

It would be a condition precedent to the arbitrator entering upon any form of inquiry there that the person who insisted that there was a difference should show that the difference had arisen before the submission to arbitration was made. That is a matter which has been repeatedly decided, and I should think that no lawyer would hesitate to say that that is the true condition of the law.

5. There must therefore be a point of difference or dispute between the parties for the decision of the arbitrator: see also Velchand Chhaganlal v. Lieut. Liston [1914] 33 Bom 638. And it is not enough to state what the point of dispute or difference is after the suit has been filed. In the case of Field v. Longden & Sons [1902] 1 K.B. 47. a workman having bean incapacitated from work by an accident received weekly payments by way of compensation from his employers according to Schedule 1, Section 1(b), Workmen's Compensation Act of 1897 (60 & 61 Vic. c. 37). His employers promised to continue to pay him the weekly payments during the period of his incapacity, but the workman nevertheless filed a request for arbitration in the County Court Under Section 1, Sub section (3) of that Act. That subsection provides that if any question arises under any proceedings under the Act regarding the liability to pay compensation, or the amount or duration of compensation, the question, if not settled by agreement, shall be settled by arbitration. The appeal Court held that under the terms of that subsection it was a condition precedent to the right to proceed to arbitration, that a question should have arisen as to compensation, and the question should not have been settled by agreement. Upon the facts of the case it appeared that no question had over arisen, and that there was no subject matter for arbitration, and therefore the County Court Judge had no jurisdiction to make an award. This decision is based upon a particular subsection of the Workmen's Compensation Act, but the principle is nevertheless, the same with regard to any other proceedings in arbitration when a dispute or difference has not arisen between the parties.

6. A dispute implies an assertion of a right by one party and repudiation thereof by another. In the case before me the defendant was called upon to render an account and to pay the amount due by him to the plaintiff, which he was bound to do; but he failed to pay. Counsel for the defendant argued that the mere fact of calling for an account and failure to pay constituted a difference or dispute, and came within the terms of Clause 20 of the agreement. But a failure to pay is not necessarily a difference, and the mere fact that a party could not or would not pay does not in itself amount to a dispute unless the party who chooses not to pay raises a point of controversy regarding, for instance, the basis of payment or the time or manner of payment. An arbitrator is always called upon to settle in a quasi judicial manner he matter in controversy between the parties. But there can be no arbitration where no such controversy in fact exists. In my opinion therefore there was no point for the arbitrator to decide in the case before me, and under the circumstances, Clause 20 does not exclude an action for partnership accounts. The chamber summons must therefore be discharged with costs. I certify counsel.


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