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Koegler and ors. Vs. the Coringa Oil Company, Limited - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata
Decided On
Judge
Reported in(1876)ILR1Cal466
AppellantKoegler and ors.
RespondentThe Coringa Oil Company, Limited
Cases Referred and Tredwen v. Holman
Excerpt:
contract act (ix of 1872), section 28 - agreement to refer to arbitration--suit for damages for breah of contract--suit for specific performance of contract to refer. - .....any remedy whatever. happily for the interests of justice in the present case, we think it quite clear that phear, j. is right, and that the contract is not one of those described in the 28th section of the contract act.3. that section does not apply to contracts which merely contain a provision for referring disputes to arbitration, but to those which wholly or partially prohibit the parties from having recourse to a court of law. if, for instance, a contract were to contain a stipulation, that no action should be brought upon it, that stipulation would, under the first part of section 28, be void, because it would restrict both parties from enforcing their rights under the contract in the ordinary legal tribunals; and so, if a contract were to contain a double stipulation, that any.....
Judgment:

Richard Garth, C.J.

1. The first point which we have to decide is that which was argued before Phear, J. in the Court below, and his judgment upon which is reported in the January number of the Indian Law Reports I.L.R. 1 Cal page 47.

2. The defendant contends, that the contract upon which this suit is founded is one of the class described in the 1st Exception of Section 28 of the Contract Act, and, consequently, that as the dispute which has arisen between him and the plaintiffs remains undecided by arbitration, no suit can be brought upon it, except for a specific performance of the agreement to refer. Certainly, as Phear, J. very truly observes, the plaintiffs, if this were so, would be in an unfortunate position, because the defendant has distinctly refused to refer the dispute to arbitration; and, as according to the present law, no suit will lie to compel him to refer, the defendant, if he is right in his contention, may, by his own breach of the contract, deprive the plaintiffs of any remedy whatever. Happily for the interests of justice in the present case, we think it quite clear that Phear, J. is right, and that the contract is not one of those described in the 28th Section of the Contract Act.

3. That section does not apply to contracts which merely contain a provision for referring disputes to arbitration, but to those which wholly or partially prohibit the parties from having recourse to a Court of Law. If, for instance, a contract were to contain a stipulation, that no action should be brought upon it, that stipulation would, under the first part of Section 28, be void, because it would restrict both parties from enforcing their rights under the contract in the ordinary legal tribunals; and so, if a contract were to contain a double stipulation, that any dispute between the parties should be settled by arbitration, and that neither party should enforce their rights under it in a Court of Law, that would be a valid stipulation, so far as regards its first branch; viz., that all disputes between the parties should be referred to arbitration, because that of itself would not have the effect of ousting the jurisdiction of the Courts; but the latter branch of the stipulation would be void, because by that the jurisdiction of the Court would be necessarily excluded.

4. Then the 1st exception in the 28th section applies only to a class of contracts where as in the cases of Scott v. Avery 5 H.L.C 811 and Tredwen v. Holman 8 Jur. N.S. 1080 : S.C. 1 H. & C. 72, cited by Phear, J. the parties have agreed that no action shall be brought until some question of amount has first been decided by a reference; as, for instance, the amount of damage which the assured has sustained in a marine or fire policy. Such an agreement does not exclude the jurisdiction of the Courts; it only stays the plaintiff's hand till some particular amount of money has been first ascertained by reference.

5. Now it is clear that in this case the contract does not exclude the jurisdiction of the Courts at all; it merely provides, as hundreds of commercial contracts provide, for a reference of disputes to arbitration, and it is perfectly clear law that such a clause does not oust the jurisdiction of the Courts.

6. This appeal will, therefore, be dismissed with costs on scale No. 2.

Macpherson, J.

7. I see no reason to differ from Phear, J., in the conclusions he arrived at on the point of law, and I agree in thinking the appeal should be dismissed with costs.


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