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Koppers India Pvt. Ltd. Vs. Bal Raj Chawla and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAppeal No. 77 of 1975
Judge
Reported inAIR1980Cal173
ActsArbitration Act, 1940 - Section 34
AppellantKoppers India Pvt. Ltd.
RespondentBal Raj Chawla and ors.
DispositionAppeal allowed
Cases ReferredAsiatic Shipping Co. (P.) Ltd. v. P. N. Djakarta Lloyd
Excerpt:
- .....mukharji, j. passed in an application under section 34 of the arbitration act, 1940. the learned judge has by an order stayed the suit, being suit no. 530 of 1970 filed by the appellant herein, in terms of prayer (a) of the petition. regarding the defendants nos. 2 and 3 the learned judge ordered that the stay, as against the said defendants 2 and 3 was to be operative only during the pendency of the arbitration proceeding between the petitioner and the respondent no. 1 and it was only after the completion of the said arbitration proceeding that the respondent no. 1 would be at liberty to proceed with the suit herein being no. 530 of 1970 as against the said two defendants.2. the matter arises out of a sub-contract which was sought to be given in favour of the respondent no. 1.....
Judgment:

Ramendra Mohan Datta, J.

1. This appeal arises from the judgment and order dated 23rd August, 1974 of Sabyasachi Mukharji, J. passed in an application under Section 34 of the Arbitration Act, 1940. The learned Judge has by an order stayed the suit, being Suit No. 530 of 1970 filed by the appellant herein, in terms of prayer (a) of the petition. Regarding the defendants Nos. 2 and 3 the learned Judge ordered that the stay, as against the said defendants 2 and 3 was to be operative only during the pendency of the arbitration proceeding between the petitioner and the respondent No. 1 and it was only after the completion of the said arbitration proceeding that the respondent No. 1 would be at liberty to proceed with the suit herein being No. 530 of 1970 as against the said two defendants.

2. The matter arises out of a sub-contract which was sought to be given in favour of the respondent No. 1 Balraj Chawla by and on behalf of the appellant herein. There were two contracts and the second contract provided the following arbitration clause :

'In the event of any dispute or difference at any time arising between us, on any matter concerning the execution of this work, such dispute or difference shall be submitted to and be decided by the arbitration of two arbitrators, one to be appointed by each party to the dispute or difference. The arbitrators shall appoint an umpire before taking upon themselves the burden of the reference. This is subject to 'Indian Arbitration Act, 1940'.'

3. By their letter dated 24th September, 1969 Messrs. Orr, Dignam & Co., wrote to Messrs. P. K. Deb & Co. that their clients the appellants herein nominated an arbitrator to arbitrate 'Upon all disputes between your client and our clients under the agreement dated 29th October, 1968 and 30th December, 1968 and otherwise.'

4. The question for consideration here is about the scope and ambit of the arbitration agreement in relation to the disputes as raised in the plaint filed on behalf of the appellant. We have considered the plaint very carefully and to our mind, the disputes raised therein are not covered by the arbitration clause contained in the contract. The disputes raised in the plaint relate to the validity and the existence of the contract itself. That can certainly not come within the scope of the arbitration clause agreed to by and between the parties herein. It is not so wide as to cover the disputes as raised in the plaint.

5. The learned Judge of the Court below has gone into the merits of the case to find out if the case in the plaint is a bona fide one. The learned Judge has not considered the decision in the case of Johurmull Parasram v. Louis Drevfus & Co. Ltd., AIR 1949 Cal 179. The question which arose there was whether the claim as pleaded was a claim under the contract containing an arbitration clause. There it was held that the claim was wholly independent of the contract and under such circumstances, the court could not stay the suit although it was satisfied that the frame of the suit was merely a means of avoiding the consequences of alleging the true nature of the claim. In our opinion, the principles laid down in that case applies to the facts of the case before us and on that ground alone the suit shouid not be stayed. It is too early to presume that at the trial the plaintiff's case in the plaint would be found to be totally un-meritorious. It might very well be that the plaintiff might succeed in establishing the allegations made in the plaint, Be that as it may, it is not for the court, dealing with an application under Section 34 of the Arbitration Act, 1940, to go into the merits of the allegations made therein which on the face of it are outside the ambit of the arbitration clause.

6. There are two other parties who have been impleaded in the suit but they are not parties to the arbitration agreement. That being so, there is possibility of multiplicity of proceedings as against such parties.

7. There is yet another point which has been raised by Mr. Chakravartty appearing on behalf of the appellant herein. At the time the matter was called on, the learned Advocate on Record appearing on behalf of the respondents mentioned that he had no instructions to proceed in the matter on behalf of his clients who were respondents herein. He asked for leave to retire and leave was granted and he retired from the proceeding. Mr. Chahravartty contends on the basis thereof that the conduct of the respondents in not giving instructions to the Advocate on Record to proceed with the matter, would indicate that they are not ready and willing at all to go to arbitration at this stage. In any event, the respondent No. 1 who is bound by the arbitration agreement is not ready and willing to go to arbitration. That being so, the stay already granted should be vacated and the matter should be proceeded in court. It is contended that one of the conditions for grant of stay is that the party who is asking for slay must be ready and willing to go to arbitration not only at the lime of making the application but also up to the date of hearing of the matter. The appeal being the continuation of the original proceedings, the respondent No. 1 must be ready and willing to go to arbitration even up to this stage and if the court is satisfied that the respondent No. 1 is not ready and willing to do so, then the court should vacate the order for stay on that ground alone.

8. Mr. Chakravartty has relied on a decision in the case of Asiatic Shipping Co. (P.) Ltd. v. P. N. Djakarta Lloyd, : AIR1969Cal374 . In our opinion, in view of our decision on the previous point that the disputes mentioned in the plaint are not covered by the arbitration clause and the stay already granted by the Court below is liable to be vacated on that ground alone, it is not necessary to go into this question and we leave the matter open, so that the same might be decided in a suitable action in future. That being the position, we hold that the learned Judge was not right in coming to his finding by exercising his discretion in favour of granting the stay. The learned Judge also went into the question of allegations of fraud in the plaint and considered the question of granting of stay in that connection. It is not necessary also to decide that point here.

9. We, accordingly, hold that the appeal must be and is hereby allowed and the stay granted, as aforesaid, by the Court below is set aside. The suit shall proceed accordingly.

10. In the facts and circumstances of this case, there would be no order as to costs.

Bimal Chandra Basak, J.

11. I agree.


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