Skip to content


Sardarmull Jessraj Vs. Agar Chand Mahata and Co. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata
Decided On
Judge
Reported in52Ind.Cas.588
AppellantSardarmull Jessraj
RespondentAgar Chand Mahata and Co.
Cases ReferredHarg v. Universal Stock Exchange
Excerpt:
arbitration - party denying contract, remedy of--procedure--injunction, interlocutory, when can be granted. - .....253 : 64 l.j. ch. 152 : 12 r. 43 : 71 l.t. 676 : 43 w.r. 84 but, i think, meant to impeach the contract on equitable grounds such as fraud, mistake or surprise. to impeach the contract on a ground of equity is quite different from denying the existence of any contract as a matter of fact. in my view the latter case is exactly the same as where the submission is admitted but the allegation is that the matters to be referred are outside it. i think there is no legal injury and no embarrassment in equity if a person who has not made a contract is put into the position of having an arbitration held against him. the question of costs that i have mentioned is then the only embarrassment. these considerations in my judgment take the present case out of the principles of kitts v. moore.....
Judgment:

Rankin, J.

1. In this case the plaintiffs ask for an interlocutory injunction to restrain further proceedings before an Arbitration Tribunal under a commercial contract for the sale of goods. The plaintiffs deny that the alleged written contrast was ever signed by them or on their behalf. The defendants put forward a document and they allege that that document was the document of. the plaintiffs, and in this case as in may others I find there is no possibility of my deciding even provisionally with any certainty as to which of these parties are in the right. Under these circumstances I have to consider whether it is right that an interlocutory injunction should go to restrain the arbitration until this question has been determined. This is a question which has arisen before, but I have not had occasion to decide it before, and I think it desirable that the matter should be decided, so far as I am concerned, for the benefit of future oases that may arise.

2. Now it is to be determined according to the principles which this Court has inherited as part of its inherent jurisdiction from the old Court of Chancery, The special Indian legislation about interlocutory injunctions is contained in the Civil Procedure Code and as regards perpetual injunctions, it is contained in the Specific Relief Act; but I cannot find that there is anything in either of these statutory enactments to assist me as regards this matter. I certainly do not find any power in them which would enable me to grant this injunction, and I have to resort to equitable principles.

3. When one looks at the English oases one finds that they are somewhat burdened by matters with which I am not concerned, namely, by the question whether Section 25 of the Judicature Act has not extended the rights of the Courts in England to grant an injunction where, previous to that Act, the Court of Chancery could not have granted one at all. Cleared of this difficulty the position in my view stands thus.' It is quite clear on the authority of Kitts v. Moore (1895) 1 Q.B. 253 : 64 L.J. Ch. 152 : 12 R. 43 : 71 L.T. 676 : 43 W.R. 84 that where an agreement has been made and where one or other of the parties to that agreement seeks to impeach it upon equitable grounds such as fraud, mistake or surprise, seeks either to have it set aside on equitable grounds or to have it rectified, in these oases the Court will and should restrain the arbitration proceedings until the question of the contract out of which they arise has been determined by the Court. Previous cases are somewhat instructive on this point. There is a care of Maunsell v. Midland G.W. By. (1863) 1 H. & M. 130 : 32 L.J.Ch. 513 : 8 L.T. 826 : 9 Jur. (N.S.) : 660 : 11 W.R. 768 : 71 E.R. 58 : 136 R.R. 54. That was a case where two companies entered into an agreement containing an arbitration clause. The plaintiff was a share-holder in one of the companies and he brought his action on behalf of himself and all the other share holders to have it declared that the agreement was ultra vires of the Director of his own company, and in that case it was decided that the arbitration proceedings should be restrained until that matter had bean determined. Again in the case of Mylne v. Dickinson (1815) G. Cooper 195 : 35 E.R. 528 14 R.R. 243 it was sought to rescind the contract and a suit was brought in equity upon that footing: in the meantime the arbitration under that contrast was restrained. The basis of those decisions is that if the Court of Equity did not interfere there would be a contract which was good in law and that an arbitration held under that contract would be an arbitration to which the parties would have no answer, if it had resulted in an award, when an action at law was brought. In that state of the law undoubtedly it was an embarrassment to a parson who had an equitable right to set aside or rectify the contract that the arbitration should be allowed without that question being determined.

4. There is, however, another principle running parallel with that, which has the authority of the Court of Appeal in the case of North London Railway Company V. Great Northern Railway Company (1883) 11 Q.B.D. 30 : 52 L.J.Q.B. 380 : 48 L.T. 695 : 31 W.R. 490 and also Wood v. Lillies (1892) 61 L.J Ch. 158. These were cases where there was an arbitration clause in an agreement; the plaintiff's case was that the matter sought to be referred was not one within the arbitration clause; and in those cases what the Court held was this, that the proceedings before the arbitrator would be futile and vexatious; the award, if made, would be a nullity; but such an award was no legal injury to the plaintiff; and under these circumstances the Court would not issue an injunction merely because the proceedings were futile and vexations. It is quite clear that in such a case the plaintiff, if he does not attend before the arbitrators, would stand no chance of the award being in his favour. It is also quite clear that in every such case, if he does attend before the arbitrators under protest, there will be no way by which the Court afterwards, if it finds in his favour, can award to him the costs which he incurred before the arbitrator, in spite of these facts the Court of Appeal did decide, and I think in conformity with the previous practice of the Court of Chancery, that where the proceedings would be a nullity and futile although vexatious, it would not grant an interlocutory injunction. The result of the arbitration proceedings would merely be that the successful party would have either to bring an action on the award or else to apply under the Rules of the Supreme Court to get leave to enforce the award as a judgment, and such leave will not be given if there is any case for impeaching the jurisdiction of the arbitrators. In the result, having an award which is invalid is analogous to having a bad cause of action. As there is no means of preventing parties bringing unfounded actions against their neighbours, the Court would not interfere with such an arbitration.

5. I have not found a case where a question arose as to the existence or non-existence of the contract containing the submission. There have been cases where there were admitted contracts but it was contended that the matter referred to was not within the submission. I have noticed in some of the references to Kitts v. Moore (1895) 1 Q.B. 253 : 64 L.J. Ch. 152 : 12 R. 43 : 71 L.T. 676 : 43 W.R. 84 that the matter has been put in this way that if the plaintiff is seeking to impeach the contract he is entitled to restrain the arbitration. The words 'impeach the contract' were used by the Lord Justices in Kitts v. Moore (1895) 1 Q.B. 253 : 64 L.J. Ch. 152 : 12 R. 43 : 71 L.T. 676 : 43 W.R. 84 but, I think, meant to impeach the contract on equitable grounds such as fraud, mistake or surprise. To impeach the contract on a ground of equity is quite different from denying the existence of any contract as a matter of fact. In my view the latter case is exactly the same as where the submission is admitted but the allegation is that the matters to be referred are outside it. I think there is no legal injury and no embarrassment in equity if a person who has not made a contract is put into the position of having an arbitration held against him. The question of costs that I have mentioned is then the only embarrassment. These considerations in my judgment take the present case out of the principles of Kitts v. Moore (1895) 1 Q.B. 253 : 64 L.J. Ch. 152 : 12 R. 43 : 71 L.T. 676 : 43 W.R. 84,

6. I have also considered one matter in which the Indian practice differs from the practice at home, under the Arbitration Act, Section 11, when an award is made then instead of the party who wants to enforce it bringing an action on the award or Applying on summons for leave to enforce the award summarily, the award when filed becomes the subject-matter of execution as though it were a decree of Court and the party prosecuting it does not require to obtain leave or to bring an action. Prima facie, therefore, execution can be levied as though it were a decree of Court the moment it is filed. I have considered whether that difference of practice makes a difference in the application of the principles to which I have referred. I find, however, by the Arbitration Act it is a duty laid upon the arbitrators to give notice to the parties when the award is made. I think it is a matter of procedure and not of substance that the party complaining in such a case would have to apply to the Court to have the document taken off the file, I (Jo not think that I ought to start granting interlocutory injunctions upon novel considerations, and attempt to commence a new system as regards interfering with arbitrators in such matters by reason of this difference in practice between the Indian Arbitration Act and the provisions of the English rules. Therefore the position is simply this, that in all these oases where a man says that he wants to deny the contract altogether, his course is to let the arbitrators do what they like, to wait till there is a question of the award being enforced, and the moment he gets notice that the award is going to be filed or has been filed to object to it. It may be prudent in such a case to inform the arbitrators of the objection to their jurisdiction and that if the award is filed without due notice to the objecting party, such as the law requires, and if, as the result of that, execution is levied, then the arbitrators may make themselves liable in damages if the party is successful when he moves the Court to take the award off the file.

7. I will add a word with regard to the special class of oases which sometimes arises out of commercial contracts for sale containing an arbitration clause, viz., where the contract is attacked on the ground that the transactions are gaming and wagering transactions and that, therefore, the arbitrators have no jurisdiction. In that class of case the law has been settled by the Court of Appeal here, following the case of M'Harg v. Universal Stock Exchange (1895) 11 T.L.R. 409, that it is not a question of attacking the contract upon equitable grounds, and it appears to me that the present practice is not to grant an interlocutory injunction in oases where the contracts are said to be void on other than equitable grounds.

8. In this case the motion for an injunction is refused. As regards the costs I will make them costs in the action.


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