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Champa Pictures Vs. Md. Ibrahim Chamoo - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberMatter No. 156 of 1980
Judge
Reported inAIR1981Cal89
ActsArbitration Act, 1940 - Section 34
AppellantChampa Pictures
RespondentMd. Ibrahim Chamoo
Appellant AdvocateS.B. Mukherjee, ;Ajit Panja and ;Swapan Garai, Advs.
Respondent AdvocateP.K. Das, ;Bhaskar Sen and ;Bhaskar Roy, Advs.
DispositionApplication allowed
Cases ReferredJawaharlal Burman v. Union of India
Excerpt:
- .....j. 1. this is an application under section 34 of the arbitration act, 1940, for stay of a suit being suit no. 1004 of 1979 (md, allias chamoo v. m/s. champa pictures). 2. the admitted facts are that the respondent is a lessee of national talkies situated at no. 12/3, watgang street, kidderpore, calcutta. the petitioner had transactions with the respondent by which it advanced loans to the respondent from time to time pursuant to an agreement dated the 1st of feb., 1966. it appears that up to 30th of jan., 1970, a sum of rs 1,69,452.26 p. became due and payable by the respondent to the petitioner. thereafter, by an agreement dated the 4th of feb., 1970, the petitioner entered into an agreement with the respondent by which the respondent irrevocably agreed to give the petitioner.....
Judgment:
ORDER

Salil K. Roy Chowdhury, J.

1. This is an application under Section 34 of the Arbitration Act, 1940, for stay of a suit being Suit No. 1004 of 1979 (Md, Allias Chamoo v. M/s. Champa Pictures).

2. The admitted facts are that the respondent is a lessee of National Talkies situated at No. 12/3, Watgang Street, Kidderpore, Calcutta. The petitioner had transactions with the respondent by which it advanced loans to the respondent from time to time pursuant to an agreement dated the 1st of Feb., 1966. It appears that up to 30th of Jan., 1970, a sum of Rs 1,69,452.26 p. became due and payable by the respondent to the petitioner. Thereafter, by an agreement dated the 4th of Feb., 1970, the petitioner entered into an agreement with the respondent by which the respondent irrevocably agreed to give the petitioner exclusively business of supplying and exhibiting sound motion pictures at the said cinema house of the respondent with effect from 1st of Feb., 1970, for and during the entire period of the lease between the respondent and his lesson. The said agreement between the petitioner and the respondent contained various terms and a copy of it is annexed to the petition being annexure 'A'. It appears that pursuant to the said agreement between the respondent and the petitioner dated 4th of Feb., 1970, the petitioner paid the monthly amounts specified therein for the periods and the petitioner would be in sole charge of the box office collection of the said cinema house and shall have the exclusive right to receive the same with the assistance of such staff as be found necessary by the petitioner and collections and receipts from the said box office of the said cinema housefrom whatever source shall be received and taken by the petitioner. The said agreementwas worked out for about last ten years and the petitioner also submitted the statements to the respondent, copies of which the respondent duly accepted without any objection by signing a copy of the same with the rubber stamp of his cinema house. It appears that such statement was submitted up to Sep., 1978, and originals of the same were produced before the Court. It further appears that the said agreement dated the 4th of Feb.. 1.970, under which the parties had dealings and transactions was duly signed by the respondent in English and attested by five persons and the document itself appears, to be drafted by lawyer and carefully drawn with all the conditions agreed to between the parties. Further it now appears that the respondent filed the said suit being Suit No. 1004 of 1979 on or about 24th of Dec., 1979, and it appears that the respondent also filed an application under Section 20 of the Arbitration Act, 1940, on the 25th of Feb., 1980 in the first sitting 'of the Court and on the very same day, that is, 25th of Feb., 1980, a notice of motion was served by the respondent on the petitioner at about 3.30 p. in making an application in the said suit tiled by the respondent which was made returnable on the 26th of Feb., 1980. Thereafter, on the 27th of Feb., 1980, the present application was moved and an interim order was passed in the presence of the respondent and directions for filing affidavits were given.

3. From a copy of the plaint filed by the respondent which was handed over in court, it appears that the said suit is based on the agreement dated the 4th of Feb., 1970, between the parties which contained a wide and all pervasive arbitration clause. I have carefully analysed the plaint from which it appears and in fact Mr. P. K. Das, appearing for the respondent, admitted that up to paragraphs 16 the disputes raised are in respect of the agreement dated 4th of Feb., 1970, and it may be said to be covered by the arbitration clause in the agreement but the rest of the said plaint which alleges undue influence, misrepresentation etc. are dehors the said agreement dated the 4th of Feb., 1970 and as such outside the scope of the said arbitration clause. In my view after careful consideration of the plaint as a whole looking at its substance and not the form it appears that the whole disputes raised in the plaint are covered by the arbitration agreement, although it is vaguely suggested by adding few paragraphs that theagreement which has been given effect for about ten years, is now sought to be avoided on the grounds of undue influence, or unconscionable bargain or subsequent impossibility of performance. But if the plaint is read as a whole with the prayers it leaves no doubt in my mind that the entire subject-matter of the suit is covered by the arbitration agreement and all the conditions under Section 34 of the Arbitration Act, 1940 are being satisfied in this case.

4. Mr. S. B. Mukherjee, appearing with Mr. Ajit Panja and Mr. Swapan Garai for the petitioner placed the entire plaint and the agreement dated the 4th of Feb., 1970, and particularly the arbitration clause and the nature of dispute between the parlies and submitted that the entire dispute which is the subject-matter of the suit is covered by the arbitration clause and all the conditions under Section 34 of the Arbitration Act, 1940, are satisfied. Therefore, stay should be granted.

5. Mr. P. K. Das, appearing with Mr. Bhaskar Sen and Mr. Bhaskar Roy, for the respondent, submitted that admittedly up to paragraph 16 of the plaint the disputes are covered by the arbitration clause but the rest of the allegations in the plaint are dehors the contract and he cited a Bombay decision in A. E. G. India Electric Co. Ltd. v. General Electric Trading Co., AIR 1929 Bom 242 and the Supreme Court decision in Gaya Electric, : [1953]4SCR572 in which the well-known English decision in Monro v. Bognor, U. D. C, (1915) 3 KB 167, is referred to and submitted that the said allegations are dehors the contract and therefore, the discretion to stay the suit should not be exercised as part of the suit is covered by the arbitration clause and part is dehors the contract and partial stay will cause inconvenience and injustice and conflict of decision and, therefore, stay should be refused.

6. After careful consideration of the respective contentions and the facts of this case I am of the view that this is a fit case where the suit should be stayed as the conduct of the respondent is not only lacking in commercial morality but after ten years of working out of the said contract and taking advantage from the petitioner without any objection by accepting the statement submitted by the petitioner and signing the same in acknowledgment of the prima facie correctness of the said statements it is now too late in the day to challenge the said agreement on the ground of undue influence, unequal position and ana-logous grounds etc. by art of pleading which appears to be a very fertile ground for complicating the matter if possible in a suit so as to avoid the consequence of the arbitration clause and stay under Section 34 of the Arbitration Act. The principles are so well settled that the Court will see whether the suit is under the contract containing the arbitration clause and the arbitration clause is wide enough to cover the disputes which are the subject-matter of the suit In my view, reading the plaint as a whole and the prayers, the substance is that an implied contract or term is sought to be introduced in the said agreement dated the 4th of Feb., 1970, that by payment at one time of a specified sum the agreement will stand cancelled. The prayers also indicate the same. Only by embellishment certain other paragraphs with an attempt to confuse the real issue and mix it up with extraneous matters some highly improbable and unreal pleadings have been introduced to allege domination by the petitioner of the respondent, taking advantage of his financial weakness and inducing the respondent to enter into the said agreement. It appears that the respondent is a very artful and clever person who has tiled the suit in Dec., 1979, but did not cause the writ of summons to be served on the petitioner and only caused a notice of motion to be served on the very same day in the afternoon as soon as the Section 20 application was filed on the 25th of Feb., 1980. Therefore, the facts in the case of Gaya Electric or the Monro v. Bognor and the Bombay case were quite different from the present case where in my view there is no difficulty in holding that the entire disputes which are the subject-matter of the suit are covered by the arbitration clause although only a few paragraphs have been added to give a colour that the said allegations are dehors the contract and which appears to be an afterthought and subsequent events. Therefore, in the present case for the time being I have no hesitation to say the entire suit as admittedly the allegations up to paragraph 16 and the prayers arc entirely related to and arise out of the contract dated 4th of Feb., 1970, and the rest of the allegations are immaterial for the purpose of deciding the main dispute between the parties and appear to be only added to avoid the arbitration clause, if possible. The principles laid down in Jawaharlal Burman v. Union of India, : [1962]3SCR769 and also the summary in Russel 19th Bdn. at page 202 and Halsbury's Laws of England, 4th Edn., Vol. 2, para 566 andSarkar on Law of Arbitration in British India pages 308-312, all the relevant principles and the decisions have been discussed from which it clearly appears that on the facts of this case the discretion in favour of the stay must be exercised as the substance of the plaint makes it quite clear that the entire subject-matter of the suit is covered by the arbitration clause in the contract and arises out of the contract between the par-ties and further, in my view, the arbitration clause is wide enough to decide the disputes which are the subject-matter in the suit. In these circumstances I have no hesitation in staying the suit.

7. I am making it clear that I am not going into the merits of the allegations in the plaint so far as to the undue influence and unconscionable bargain making the contract voidable although prima facie in the background and the facts of this case and taking the plaint as a whole the said allegations prima facie seem to be set up for the purpose of taking a part of the plaint out of the arbitration clause, if possible. On a practical view of the matter, as the substance and not the form of the plaint read with the prayers are clearly within the scope of the arbitration clause and therefore, the suit should be stayed. I am also making it clear that this will not prevent the respondent to proceed with the said allegations of unconscionable bargain and undue influence on the part of the petitioner made in the plaint if so advised after the arbitration is over in terms of the arbitration clause in respect of the admitted portion of the plaint which are the subject-matter covered by the arbitration clause in the agreement between the parties dated the 4th of Feb., 1970. The prayers in the petition seem to be equally applicable to the portion within the scope of the arbitration clause and also avoidance of the contract on the alleged ground of undue influence and unconscionable bargain. In that view of the matter it is a fit and proper case where the suit should be stayed at this stage until the reference to arbitration under the arbitration clause in the contract is concluded by determination of the disputes which are the subject-matter of the present suit as admitted by Mr. P. K. Das and the arbitration clause is so wide and comprehensive that it can include the entire subject-matter of the suit.

8. In the result, there will be an. order in terms of prayer (a). The respondent to pay the costs of this application.


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