Skip to content


Arvind Exports Private Ltd. Vs. Kamani Engineering Corporation Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberSuit No. 331 of 1978
Judge
Reported inAIR1979Cal109
ActsArbitration Act, 1940 - Section 34
AppellantArvind Exports Private Ltd.
RespondentKamani Engineering Corporation Ltd.
Appellant AdvocateTagore, Adv.
Respondent AdvocateAnindya Mitra and ;P. Chatterjee, Advs.
DispositionPetition allowed
Cases ReferredJohurmull Parasram v. Louis Dreyfus Co. Ltd.
Excerpt:
- .....dated jan, 13, 1978 specifically asked the petitioner whether the petitioner wanted to refer the matter to arbitration and also to send in that event name of the petitioner's nominee as arbitrator and intimated that if nothing was heard from the petitioner within 10 days it would be assumed that the petitioner was not willing to settle the disputes through arbitration. the said letter dated jan. 13, 1978 was sent to the petitioner by registered post with acknowledgment due and was duly received by the petitioner. a copy of the said letter dated jan. 13, 1978 along with the acknowledgment receipt is annexed hereto and marked with the letter 'a'. thereafter formal letter of demand was sent by respondent's advocate's letter dated jan. 18, 1978. the respondent waited till the 2nd of jan......
Judgment:
ORDER

Sabyasachi Mukharji, J.

1. This is an application for stay of suit No, 130 of 1978. There was an arbitration clause in the contract dated the 22nd Sept. 1972. The said arbitration clause was as follows:--

'10. In the event of any dispute or differences arising between us during the continuance of this agreement or thereafter, the same shall be decided by Arbitration in Bombay in accordance with the provisions of the Arbitration Act, 1940 or any statutory modification thereof in force for the time being.'

2. The plaintiff has instituted this suit on the 3rd Feb. 1978 alleging that by and under an agreement dated the 22nd Sept. 1972, namely the agreement which contained the arbitration clause, the plaintiff agreed to render its services as mentioned in the said agreement. Thereafter the plaintiff has set out the terms and conditions to the said agreement and the plaintiff has further alleged that in pursuance of the said agreement the plaintiff had duly started rendering services and that the plaintiff had maintained a separate account of the transactions under the agreement. The plaintiff has thereafter alleged that in or about July, 1974 the defendant through its directors and executive officers, viz., Shri A. P. Kamani, Shri R. M. Neb-hani and Shri D, G. Shah had made representations to the plaintiff which have been set out in para 6 of the plaint. It is the allegation of the plaintiff that upon the representations being made on behalf of the defendant, the plaintiff was induced to reduce the rate of commission and the representations were made falsely and fraudulently and the plaintiff has stated that on the basis of the aforesaid representations there was an agreement to modify clause 6 of the original agreement and certain reduced sum was made payable to the plaintiff. The plaintiff has challenged the alleged modifications by the agreement dated 12th Sept, 1974. The plaintiff alleges that the said representations were false and the plaintiff was induced to enter into the agreement dated 12th Sept 1974 by reason of fraud and misrepresentation. The allegations of fraud have been set out in para 19 of the plaint. But the said allegations relate to the alleged agreement dated 12th Sept. 1974. The plaintiff thereupon bases its claim upon the agreement dated 9th Sept. 1972 unmodified by the agreement of Sept. 1974, and the plaintiff has claimed a sum of Rs. 8,72,289.59, Indisputably the claims made in the suit are cover-ed by the arbitration clause mentioned hereinbefore. In the affidavit-in-opposition several grounds have been taken on the issue why the suit should not be stayed. In paragraph 10 the said grounds are tabulated. But before me mainly two grounds were urged which are as follows:--

'(c) The suit involves serious questions of fraud and misrepresentation which should not be left to be decided through arbitration.' and

' (e) The petitioner was not at the time of institution of the suit or at any point of time ready and willing to go to arbitration. The respondent by its letter dated Jan, 13, 1978 specifically asked the petitioner whether the petitioner wanted to refer the matter to arbitration and also to send in that event name of the petitioner's nominee as Arbitrator and intimated that if nothing was heard from the petitioner within 10 days it would be assumed that the petitioner was not willing to settle the disputes through arbitration. The said letter dated Jan. 13, 1978 was sent to the petitioner by registered post with acknowledgment due and was duly received by the petitioner. A copy of the said letter dated Jan. 13, 1978 along with the acknowledgment receipt is annexed hereto and marked with the letter 'A'. Thereafter formal letter of demand was sent by respondent's Advocate's letter dated Jan. 18, 1978. The respondent waited till the 2nd of Jan. 1978. But no reply to the letter of Jan. 13, 1978 was received from the petitioner nor did the petitioner send any name of Arbitrator or express its willingness to go to arbitration in any manner whatsoever. The suit was filed on Feb. 3, 1978. It is significant that the petitioner in its reply to the letter dated Jan. 18, 1978 did not express any desire to refer the disputes to arbitration.'

3. The basis upon which the plaintiff resists the stay is that there is allegation of fraud and the formation of the contract dated Sept. 1974 has been challenged as being not an arbitrable subject and therefore there should not be any stay. Reliance in this connection was placed on certain observations of mine in the case of Arbitration General Enterprises v. Jardine Handerson reported in : AIR1978Cal407 wherein I had held that where the very formation of the contract which contained the arbitration clause, was under challenge in a suit that could not be the subject-matter of arbitration. I had also held that it even a party against whom allegations of fraud have been made does want a stay, the Court has a discretion in an appropriate case to refuse stay. In this case allegations of fraud have been made against the present petitioner. The petitioner does not want the suit to be proceeded with. But that is only a factor and that factor must be taken in the background of the nature of the allegations made. It has further to be borne in mind that in this case unlike the aforesaid decision referred to hereinbefore, the contract which contained the arbitration clause has not been challenged as having been entered on fraudulent basis and a rescission of that contract has not been asked for. On the other hand, the claims of the plaintiff have been based on the contract dated the 9th September, 1972, which contained the arbitration clause. Therefore, the facts of this case are distinctively dissimilar to the facts of the case referred to hereinbefore. Similar is the position with the case of Johurmull Parasram v. Louis Dreyfus Co. Ltd., AIR 1949 Cal 179. Here the contract which contained the arbitration clause has no! been challenged in the plaint as being void,

4. It is, then, contended that the was delay. It is true that on the 13th Jan. 1978 the plaintiff wrote to the defendant to intimate whether the defendant was willing to go to arbitration. The letter was sent by registered post. On the 18th Jan. 1978 another letter was sent demanding certain sums of money. In that letter no claim for arbitration had been made. On 3rd February, 1978 the present suit was filed. Therefore, it was urged on the basis of the authority of the Supreme Court in the case of Food Corpn. of India v. M/s. Thakur Shipping Co., : [1975]3SCR146 , that there was failure on the part of the defendant to take steps for referring the matter to arbitration in spite of being repeatedly urged to do so by the plaintiff. It is true that failing to act when a party is called upon to do so is a positive gesture signifying unwillingness or want of readiness to go to arbitration. But whether in a particular case a party was ready and willing to go to arbitration is a question of fact. The facts in that case, where inaction on the part of a party was treated as unwillingness by the Supreme Court, were entirely different Here the defendant hardly got an opportunity before the institution of the suit to refer the matter to arbitration. In that view of the matter I cannot construe inaction in this case as unwillingness on the part of the present petitioner to go to arbitration in view of the definite averment that it was ready and willing to go to arbitration. In the aforesaid view of the matter, I am of the opinion, that the two factors relied upon on behalf of the respondent are not sufficient to include me to exercise my discretion against the grant of stay in respect of the suit, the subject-matter of which is covered by the arbitration agreement

5. There will, therefore, be an order in terms of prayer (a) of the petition. Costs, cost in the arbitration proceedings, if any.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //