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Hind Mercantile Corporation P. Ltd. Vs. J.H. Rayner and Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtChennai High Court
Decided On
Case NumberApplication No. 1595 of 1969
Judge
Reported in[1971]41CompCas548(Mad)
ActsArbitration Act, 1940 - Sections 34; Companies Act, 1956 - Sections 433
AppellantHind Mercantile Corporation P. Ltd.
RespondentJ.H. Rayner and Co. Ltd.
Appellant AdvocateVedantham Srinivasan, Adv.
Respondent AdvocateAnand, ;Dasgupta and ;Sagar, Advs.
DispositionApplication dismissed
Excerpt:
- .....existence of an award is a condition precedent for any of the parties to the contract to initiate legal proceedings. it is, therefore, contended that the company petition filed for winding up the applicant-company should be stayed. the respondent-company contends that the matter arising for decision in the company petition is not one that arises under the contract and that, therefore, the company petition is not liable to be stayed. 2. the-relevant clause in the agreement providing for arbitration is clause 26. sub-clause (a) of that clause, inter alia, states that all disputes from time to time arising out of or under the contract shall be settled by arbitration in london in accordance with the rules and regulations of the cattle food trade association incorporated which are deemed to.....
Judgment:

Palaniswamy, J.

1. This judge's summons has been taken by the Hind Mercantile Corporation Private Ltd., under Section 34 of the Arbitration Act, for stay of further proceedings in Company Petition No. 47 of 1969. The respondent-company is Rayner and Company Ltd., a company incorporatedin the United Kingdom. The respondent-company, among other things, carries on business as buyers and sellers of Indian groundnut extractions. The applicant and the respondent were having dealings with each other and the terms of the contract are regulated by an agreement dated June 13, 1966. Alleging that in respect of the transactions the applicant-company is indebted to the respondent-company to the tune of Rs. 1,49,512.72 and that the applicant-company, though it admits its liability, was unable to pay the debts, the respondent-company has filed the company petition and prayed for an order of winding up the applicant-company. The applicant-company has taken out this application stating that, under the terms of the contract, there is a clause providing for arbitration, that under the said clause all disputes arising out of or under the contract should be first settled by arbitration as provided therein, and that the existence of an award is a condition precedent for any of the parties to the contract to initiate legal proceedings. It is, therefore, contended that the company petition filed for winding up the applicant-company should be stayed. The respondent-company contends that the matter arising for decision in the company petition is not one that arises under the contract and that, therefore, the company petition is not liable to be stayed.

2. The-relevant clause in the agreement providing for arbitration is Clause 26. Sub-clause (a) of that clause, inter alia, states that all disputes from time to time arising out of or under the contract shall be settled by arbitration in London in accordance with the rules and regulations of the Cattle Food Trade Association Incorporated which are deemed to form part of the contract. Sub-clause (b) of that clause states, inter alia, that in respect of any such dispute neither party thereto shall bring any action or other legal proceedings until such dispute shall first have been heard and determined by the arbitrator and that the obtaining of an award from the arbitrator shall be a condition precedent to the right of either party to bring any action or other legal proceedings against the other in respect of any such dispute. The question is whether the institution of the petition under Section 433(e) of the Companies Act is a proceeding that would come under the said arbitration clause. No doubt, the language employed in Clause 26 of the contract is wide enough to cover any dispute that may arise out of or under the contract. The question for decision in the company petition is not a matter that arises out of or under the contract. The respondent-company has filed the company petition on the allegation that the applicant has admitted its liability for a particular amount. N6 relief is sought as regards any matter that arises out of or under the contract. The point for decision in the company petition is whether the applicant company is unable to pay the debt. If the debt itself is disputed, it would be a matter for consideration in the company petition whether an enquiry into that controversy ispermissible under the provisions of the Companies Act. I do not wish to express any opinion on that question at this stage. Suffice it to note that so far as the relief claimed in the company petition is concerned, I do not think that it can be said to arise out of or under the contract. Under Section 34 of the Arbitration Act if any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may apply therein for stay of the proceedings. It would be seen from the above provision that the legal proceeding which can be stayed should be a proceeding in respect of any matter agreed to be referred. The expression ' any matter agreed to be referred ' makes it clear that, unless the matter has been agreed to be referred, the proceeding cannot be stayed, even though it may incidentally have a bearing upon the contract providing for arbitration. In the instant case, it cannot, by any stretch of reason, be said that the parties contemplated that any reference to arbitration for winding up the applicant-company was possible or could be done by an arbitrator. In that view, I think, the company petition is not liable to be stayed. The application is accordingly dismissed. No order as to costs.


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