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Hindustan Copper Ltd. Vs. Assam Bearing Agencies - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCivil Revision Appeal No. 731 of 1979
Judge
Reported inAIR1980Delhi238; 17(1980)DLT279
ActsArbitration Act, 1940 - Sections 34
AppellantHindustan Copper Ltd.
RespondentAssam Bearing Agencies
Cases ReferredUnion of India v. Birla Cotton Spinning
Excerpt:
an application was filed by the defendant under section 34 of the arbitration act, 1940, for the stay of the suit - it was stated that non-payment of the price of the goods did not raise any dispute between the parties in contract - it was stated that in order to stay the suit, the defendant must specify the disputes - he should also show that the defendant was always ready and willing to refer the dispute for the arbitration - it was observed that the petitioner was silent in regard to the said matter - thereforee, it was held that the suit was not liable to be stayed - - this is a well-settled legal proposition......as has been held in that decision. (3) the claim of the plaintiff in the suit is for payment of price of goods. admittedly, prior to the filing of the suit, a legal notice dated october 23, 1978 calling upon the defendant to pay the amount of rs. 4,414.80 p. as the price of goods together with interest, had been served on the defendant. mr. grover's case is that the said notice itself alleges that the defendant, a government company, had vrithheld the payment on the pretext of risk- purchase. he concedes, however, that no reply to this notice was given to the plaintiff and that the defendant had taken no steps to refer the dispute or that difference to the arbitrator. (4) the contention is that even without specifying the ground on which the price or goods is not being paid in the.....
Judgment:

Charanjit Talwar, J.

(1) The petitioner, who is a defendant in the suit) had filed an application under Section 34 of the Arbitration Act seeking the stay of the suit on the ground that the contract between the parties provided for the disputes and differences arising out of that contract to be referred to arbitration. The learned trial court dismissed the application by its order dated May 26, 1979 mainly on the ground that the dispute or the difference, which was sought to be referred to arbitration, has not been alleged in the application and as such the suit could not be stayed. Reliance was placed on an authority of this Court reported in M/s. Pearl Hosiery Mills, Ludhiana v. Union of India and another, : AIR1979Delhi64 . The appeal filed by the defendant under Section 39 of the Arbitration Act challenging the said order was also dismissed. The first appellate Court while affirming the findings also held that as the dispute had not been specified in the application, the law laid down in Pearl Hosiery Mills.' case (supra) was fully applicable and, thereforee, the suit was not liable to be stayed.

(2) Mr. Ashok Grover, learned counsel for the petitioner, submitted .that. the courts below have not correctly followed the law laid down in Pearl. Hosiery Mills' case (supra). According to him, the existence of the dispute between the parties was proved from the documentary material filed by the plaintiff and, thereforee, the Courts below ought to have come to the -finding that a dispute existed under the arbitration clause which required reference to arbitration. Alternatively, he urged that the said decision in Pearl Hosiery Mills' case (supra) required reconsideration as, according to him. Section 34 of the Arbitration Act does not mandatorily lay down that the dispute or the difference between the parties must be spelled out in the application seeking stay of the suit as has been held in that decision.

(3) The claim of the plaintiff in the suit is for payment of price of goods. Admittedly, prior to the filing of the suit, a legal notice dated October 23, 1978 calling upon the defendant to pay the amount of Rs. 4,414.80 P. as the price of goods together with interest, had been served on the defendant. Mr. Grover's case is that the said notice itself alleges that the defendant, a Government Company, had vrithheld the payment on the pretext of risk- purchase. He concedes, however, that no reply to this notice was given to the plaintiff and that the defendant had taken no steps to refer the dispute or that difference to the arbitrator.

(4) The contention is that even without specifying the ground on which the price or goods is not being paid in the application, as long as there is some documentary material referring to the ground of non-payment, entitles the defendant to seek stay of the suit. I am afraid I do not agree. Nonpayment of price of goods is not a dispute under or arising out of a contract. This is a well-settled legal proposition. Dalip K. Kapur, J. in the said decision of Pearl Hosiery Mills (supra) after noticing the judgment of the Supreme Court in Union of India v. Birla Cotton Spinning and. Weaving Mills, Ltd., : [1964]2SCR599 , observed thus :

'WITH regard to the question whether a dispute of this type, i.e., non-payment of price of goods is a referable dispute, the judgment of Shah, J., as he then was in the Supreme Court in the case just cited above, is very plain and states that the non-payment of price is not a dispute under or arising out of a contract. As I have said a dispute or difference requires the statement of a proposition and a denial thereof by the other side. As the existence of such a dispute or difference is not alleged or proved or even pointed out from any documentary material or contemporary dealings between the parties, I come to the conclusion that this suit cannot be stayed and I accordingly reject the application for stay with costs.'

(5) In the case before me also no dispute or difference is alleged or proved, the suit is not, thereforee, liable to be stayed. The legal notice, referred to by the learned counsel, cannot be made the basis for coming to the finding that there is any dispute or difference between the parties as to the nonpayment of the price of goods. The learned counsel's contention that a reference to the risk-purchase of the goods by the defendant in that notice ought to have been taken as a plea of set off of the price of goods claimed by the plaintiff, is misconceived. As I have noticed above, no reply was given to this legal notice nor was any action initiated to refer this matter to the arbitrator. Mr. Grover agrees that it was open for the defendant at the stage to take such a step. As held by the Supreme Court in State of Punjab v. M/s Geeta Iron & Brass Works Ltd., : [1978]1SCR746 , 'One weighty factor obviously is to find out whether the party who invokes the arbitration clause has expressed his readiness to rely on it at the earliest stage,' the silence on behalf of the applicant is a factor which the Court cannot ignore while considering the application under Section 34 of the Arbitration Act.

(6) In the facts and circumstances of this case I find that the law laid down in Pearl Hosiery Mills' case (supra) has been correctly followed by the Courts below. The defendant by merely referring to arbitration clause and nothing more in a suit for non-payment of price of goods, which had been filed after the service of legal notice, could not point out from the material on record that there existed any dispute or difference between the parties which was referable to arbitration. The allegations in the legal notice, in my view, cannot be read to show that a plea of set off had been either raised by the defendant or was available to it to seek stay of the suit.

(7) The alternative argument that the above-said decision of Dalip K. Kapur, J. needs reconsideration, is deyoid of merit. In the absence of the allegation made in the application under Section 34 of the Arbitration Act regarding the dispute or difference between the parties arising out of or in connection with the contract or in relation to any matter connected therewith, it is not for the Court to ask the defendant to spell them. It is the defendant to allege specifically the dispute or difference. One of the ingredients of Section 34 of the Arbitration Act is that the defendant must show that it was everready and willing to do every thing necessary for the proper conduct of the arbitration. Without specifying the dispute, it cannot be said in the present case that the defendant was eveready or was willing to do everything necessary to refer the said dispute to arbitration. Silence on the part of the petitioner-defendant, after the receipt of the legal notice, also shows its unwillingness. In the present case I hold that the dispute or the difference was neither obvious nor was it apparent from the application which was rightly rejected. The suit was, thereforee) not liable to be stayed.

(8) In the resalt, the revision-petition fails and is dismissed. As the respondent was unrepresentetd at the time of final hearing, I award no costs.


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