Skip to content


Raliance Investment Co. Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward No. 387 of 1954
Judge
Reported inAIR1957Cal151
ActsArbitration Act, 1940 - Section 5
AppellantRaliance Investment Co. Ltd.
RespondentUnion of India (Uoi)
DispositionApplication dismissed
Cases ReferredSee Bhuwalka Brothers v. Fatehchand Murlidhar
Excerpt:
- .....holding the rank of district judge, in the arbitration proceedings the government filed its state of facts and the petitioner its counter state of facts. thereafter, by leave of the arbitrators, the government filed an additional state of facts supplementing their original case. the petitioner also filed another counter state of facts in answer to the additional state of facts filed.4. two points were made out by the government in the additional state of facts and two paragraphs of this additional state of facts have been referred to by mr. deb, learned counsel appearing for the petitioner before me these paragraphs are paragraphs 4 and 8 of the additional state of facts filed by the government which is annexure d to the petition:'para. 4 -- at all material times it was understood.....
Judgment:
ORDER

Mallick, J.

1. This is an application for leave to revoke a submission. The language of paragraph (a) of the notice of motion is not really happy and Mr. Deb rightly pointed out that the only order that can be passed is granting leave to the petitioner to revoke the submission.

2. The parties hereto entered into a contract whereby the petitioner was to manufacture and supply packing boxes to the respondent at a particular price. The respondent was under obligation to arrange for the release of timber and from materials required for the fabrication of the packing boxes. The contract is evidenced by the acceptance of tender as is usual in the case of Government contracts and it contains the usual condition to be found in government contracts in what is known as form No. WSB133. The obligation of the Government to release and supply timber and iron materials required for the purpose of fabrication of boxes is evidenced by a letter dated September 6, 1944. The schedule to the acceptance of tender expressly states that the acceptance confirms the said letter dated September 6, 1944. The contract contains an arbitration clause.

3. Pursuant to the above contract the Government released and supplied' timber and iron materials required for the fabrication of packing boxes and the petitioner manufactured and delivered to the Government the contract goods. The petitioner was fully paid the price of the goods in terms of the contract even though the Government, in its turn, was not paid for the timber and iron materials supplied from the manufacture of the goods. The Government subsequently made a demand on the petitioner to pay the value of the timber and iron materials supplied as aforesaid, A dispute thereupon arose between the parties for non-payment whereupon the Government invoked the arbitration clause in the contract and made a reference. Two arbitrators were appointed one by each party. The petitioner appointed Mr. M.L. Khemka, an experienced attorney of this Court', whereas the Government appointed Mr. Sri Gopal Singh an experienced judicial officer holding the rank of District Judge, in the arbitration proceedings the Government filed its state of facts and the petitioner its counter state of facts. Thereafter, by leave of the arbitrators, the Government filed an additional state of facts supplementing their original case. The petitioner also filed another counter state of facts in answer to the additional state of facts filed.

4. Two points were made out by the Government in the additional state of facts and two paragraphs of this additional state of facts have been referred to by Mr. Deb, learned counsel appearing for the petitioner before me These paragraphs are paragraphs 4 and 8 of the additional state of facts filed by the Government which is annexure D to the petition:

'Para. 4 -- At all material times it was understood by and between the parties to the said contract that the respondent would pay the price and the transport charges of the said timber and iron materials the release whereof would be arranged by the claimant from appropriate sources. The issue supply and distribution of the said materials was at all relevant times controlled.'

'Para. 8. -- In any event, the claimant lawfully delivered the said materials to the respondent not intending to do so gratuitously and the respondent enjoyed the benefit thereof and is now bound to make compensation to the claimant in respect of such deliveries. The claimant assesses such compensation to be Rs. 1,30,844/- on a fair and reasonable basis.'

5. After this state of fact was filed, on September 7, 1953, the petitioner took a notice of motion under Section 33 of the Indian Arbitration Act. Paragraphs (a) and (d) of the notice are relevant;

(a) That this Hon'ble Court should decide and/or adjudicate upon the existence, effect and validity of the arbitration agreement herein.

(d) For a declaration, if necessary, that the said arbitrators had no jurisdiction to try and entertain the said disputes in respect of the alleged claim of the Union of India.'

6. It was alleged in the petition that the contract was void on the ground that it did not comply with the formalities prescribed in the case of Government contracts by Section 175(3) of the Government of India Act. The jurisdiction of the arbitrators to entertain the dispute as made out in the additional state of fact was challenged in paragraph 19 of the petition which reads as follows:--

'The respondent in its said amended petition of fact has purported to claim the said sum of Rs. 1,30,844/- on the basis of compensation for goods alleged to have been lawfully delivered toyour petitioner by the respondent not intending to do so gratuitously as stated hereinbefore. Your petitioner submits that the said claim is outside the said arbitration clause and the said arbitrators have in any event no jurisdiction to entertain and decide any dispute with regard to the respondent's claim on the basis.'

7. This application was heard by Sarkar, J. By his judgment dated January 25, 1954, in arbitration suit No. 341 of 1953, Sarkar J. dismissed the said application on the rinding that the contract did comply with the formalities prescribed by Section 175(3) of the Government of India Act and that the supply of timber and iron materials by the Government must be deemed to be included in the contract. Sarkar, J. came to this finding on the basis of this fact that the acceptance of tender expressly confirms the letter dated 6-9-44 Wherein the Government was under an obligation to supply timber and iron materials for the fabrication of the packing boxes.

8. Having failed in their first attempt to get out of the arbitration, the next move on the part of the petitioner was to ask the arbitrators to state a special case for the opinion of the Court on certain questions of law which were stated to be difficult and important. The petition before the learned arbitrators for stating a special case to this Court is to be found in the annexure to the affidavit of S.N. Niyogi filed for and on behalf of the Government. It appears from the said papers that Mr. Gouri Mitter appearing for the petitioner before the learned arbitrator made an application on September 11, 1954, asking the arbitrators to state case for the opinion of the Court on the question of law involved in this case & specified in the said application. On looking to the petition I find as many as ten points of law were raised by Mr. Gouri Mitter including questions under Section 175(3) of the Government of India Act, Section 92 of the Evidence Act, Section 65 & Section 70 of the Contract Act & Section 28 of the Limitation Act, as also questioning the legality of Section 28 of the Limitation Act. The learned Arbitrators who are trained in law gave a patient hearing to Mr. Gouri Mitter and were of opinion that they were competent to decide the question of law raised and did not, in their discretion, state a special case to this Court. Thereupon the present notice has been taken out by the petitioner to revoke the submission under Section 5 of the Indian Arbitration Act.

9. The substantial ground on which the submission is sought to be revoked is the refusal on the part of the arbitrators to state a special-case. Mr. Deb appearing for the petitioner argued that the case made by the Government in their additional state of facts is not covered by the arbitration clause in as much as the claim for compensation for goods supplied to the petitioner by the Government is de hors the contract and as such the arbitrators had no jurisdiction to decide this dispute. It is submitted that the arbitrators are not competent in law to decide their own jurisdiction and hence the arbitrators should have stated a special case to this Court so that this Court might have adjudicated on the jurisdiction of the arbitrators to decide the dispute. Though the argument was presented to this Court in a very attractive manner, it does not bear scrutiny. As I have indicated before, the petitioner already raised a point previously and expressly invoked the Court to decide whether the dispute raised by the Government in its additional state of facts is covered by the arbitration clause. Special reference is to be made to clause (d) of the notice taken out on the 4th of September 1953. It is to the following effect:

'For a declaration, if necessary, that the said arbitrators have no jurisdiction to try and entertain the said dispute in respect of the alleged claim of the Union of India.'

It is to be noted that the Union of India have already filed their additional state of facts and the case made by the Union of India in the additional state of facts was in controversy before Sarkar, J. Sarkar. J. by his judgment previously referred to has held that the supply of timber and iron materials by the Government is within the contract and hence within the ambit of the arbitration clause. Once it is held that the supply of timber and iron materials is within the contract and within the ambit of the arbitration clause, all question including the question of compensation claimed, on whatever ground, must necessarily come within the arbitration clause. I have not the slightest hesitation, therefore in holding that the learned arbitrator had full jurisdiction to entertain the disputes raised before them by the additional state of facts. The most substantial ground on which a good deal of emphasis was made by Mr. Deb cannot therefore be sustained. All other questions of law raised and alleged to be intricate and difficult are, in my judgment, certainly not too difficult for two trained lawyers to decide. As I have stated already, one of the arbitrators is an experienced judicial officer holding the rank of District Judge and another is an experienced attorney and in my judgment they are quite competent to decide the question of law that was raised by the parties. As I have indicated, many of the questions of law that are sought to be raised now were expressly raised before Sarkar, J. For instance, the question under Section 175(3) of the Government of India Act was expressly raised before . Sarkar J. The attempt to raise once again the same questions as was raised before and decided toy Sarkar, J. convinces me that the present application is not a bona fide application. The present application is another attempt to hold up arbitration proceedings so that the' payment of the Government's due can be delayed as long as possible. Goods were supplied more than ten years ago and the petitioners have successfully withheld payment up till now. On these facts should I exercise my discretion in favour of the petitioner and grant him leave to revoke the submission? Section 5, under which this application has been made, gives authority to the Court to grant leave to the parties to revoke a submission. It has been held by this Court that there are two limits Within which the discretion of the Court in revoking the submission is to be exercised; one, the court should not lightly release the parties from their bargain that follows from the sanctity the Court attaches to contracts; the other, that the Court should be satisfied that substantial miscarriage of justice will take place in the event of its refusal to grant leave. See Bhuwalka Brothers v. Fatehchand Murlidhar, : : AIR1952Cal294 (A). In the instant case, I am not at all satisfied that there would be any miscarriage of justice if I allow the arbitration to proceed. In fact, in my opinion, absolutely no case has been made out for revocation of submission. The arbitrators had full discretion to state a special case for the opinion of the Court whenever they feel that the question of law raised are too difficult for them. But if, as in the instant case, the arbitrators, who are trained lawyers, consider that the questions of law that are raised can very well be adjudicated by them, there was nothing wrong in their part not to state a special case. Therefore, | the only ground that hat, been taken for,' revocation of submission in my opinion, is not sufficient to enable me to exercise my discretion in favour of the petitioner and revoke' the submission. I have already held that the arbitrators had full Jurisdiction to decide the questions raised by the Government in its additional state of' facts. In that view of the matter, the main argument of Mr. Deo on behalf of the petitioner fails. In my Judgment, there is absolutely no merit in the application and it would be exceedingly improper for me to exercise my discretion and grant leave to the petitioner to revoke the submission.

10. In the result the application is dismissed with costs.

11. I am informed by the solicitor for theGovernment that because of the pendency of thisapplication, the arbitrators could not proceed withthe matter and the arbitration proceedings havebeen held up and the award could not be filedwithin Lime. I therefore extend the time for making the award by the 2nd of January, 1957.


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