Skip to content


Bijoy Ballav Kundu and anr. Vs. Tapeti Ranjan Kundu - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 107 of 1964
Judge
Reported inAIR1965Cal628,69CWN309
ActsArbitration Act, 1940 - Section 2
AppellantBijoy Ballav Kundu and anr.
RespondentTapeti Ranjan Kundu
DispositionAppeal dismissed
Cases ReferredJugal Kishore Rameshwardas v. Mrs. Goolbai Hormasji
Excerpt:
- .....july, 1963 the respondent made an application to the court for a declaration that there was no arbitration agreement between the parties, for a declaration that the purported award passed by the arbitrator, kamal kishor khettry, filed on 12th june, 1963 was invalid, improperly procured and void, that the said award should be set aside and for such further or other orders as the court may find fit and proper. this matter came up before the court below and the learned judge has held that there was no arbitration agreement between the parties and he has set aside the award. it is against this order that this appeal has been preferred. the position is as follows: section 2(a) of the arbitration act is in the following terms: 'in this act, unless there is anything repugnant in the subject.....
Judgment:

Sinha, J.

1. This is an appeal against an order of Datta J. dated the 13th December 1963. The facts arc shortly as follows: One Dhanonjoy Kundu was the absolute owner of premises No. 59, Simla Street, Calcutta. He installed a deity in the said premises called Sri Sri Sitalamata. On the 9th July, 1950 he executed a deed of settlement whereby he conveyed and assigned the said premises and a sum of Rs. 500 to trustees, upon certain terms. At the relevant time, the two appellants and the respondent had been acting as trustees. In the deed of settlement, there were various clauses, including Clause 12 which runs as follows:

'12. After the death of the first Trustee Dhanonjoy Kundu, if any dispute or difference arise between the subsequent Trustees who would act under these present concerning the management or administration of the trust hereby created according to the tenor of these present or relating to or affecting the sheba of the Deity in the manner hereby directed then in such case such dispute or difference shall be referred to the sole arbitration of Sri Kamal Kishor Khettry, Solicitor of No. 6, Old Post Office Street, Calcutta, so long as he is alive and is available and is willing to act. If the said Sri Kamal Kishor Khettry be not alive or is not available or is unwilling or incapable to act, such dispute shall be referred to me arbitration of Arbitrators one to be appointed by each Trustee who shall proceed in accordance with the provisions of the Arbitration Act 1940 or any statutory modification thereof.'

2. Two of the trustees, being the appellants before us, considered that a dispute had arisen between the trustees and they referred the matter to the arbitrator in terms of Clause 12. The respondent did not concur in it. The arbitrator gave an award. The respondent received a notice dated 14th June 1963 to the effect that judgment will be passed on the 24th July 1963 in terms of the award filed in this Court on 22nd April, 1963. On or about the 16th July, 1963 the respondent made an application to the court for a declaration that there was no arbitration agreement between the parties, for a declaration that the purported award passed by the arbitrator, Kamal Kishor Khettry, filed on 12th June, 1963 was invalid, improperly procured and void, that the said award should be set aside and for such further or other orders as the Court may find fit and proper. This matter came up before the Court below and the learned Judge has held that there was no arbitration agreement between the parties and he has set aside the award. It is against this order that this appeal has been preferred. The position is as follows: Section 2(a) of the Arbitration Act is in the following terms:

'In this Act, unless there is anything repugnant in the subject or context; (a) 'arbitration agreement' means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not.'

3. In order to constitute an 'agreement' it is not disputed that we must refer to the provisionsof the Indian Contract Act. Section 2 of the said Act defines a 'proposal', a 'promise' and ultimately an 'agreement'. The relevant provisions of Section 2 of the said Act are set out below:

'(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other of such act or abstinence he is said to make a proposal.

(b) When the person to whom the proposal is made signifies his assent thereto the proposal is said to be accepted. A proposal, when accepted, becomes a promise.

(c) The person making the proposal is called the promisor and the person accepting the proposal is called the promisee.

(d) When at the desire of the promisor, the promisee or any other person has done or abstained from doing or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promisee:

(e) Every promise and every set of promises, forming the consideration for each other, is an agreement.'

4. Mr. Basak appearing on behalf of the appellants argues that in this case there is an arbitration agreement between the parties. I have therefore asked him to specify the particulars of that agreement and he has given the following particulars:

1. Parties to the arbitration agreement. The two appellants and the respondent.

2. Date of the agreement.

Between the death of the settlor in November, 1952 and the date of the letter dated 17th August, 1962, being annexure 'B' to the petition (page 10 of the Paper Book). Cannot specify the date more particularly.

3. Is the agreement in writing? Yes.

4. Identify the written agreement.

The written agreement is the arbitration clause in the deed of settlement of 1950. See annexure to the affidavit-in-opposition at page 22 of the Paper Book. This was accepted bythe parties by their conduct.

5. The first thing to be observed is that Mr. Basak has argued that the arbitration agreement is between the three trustees. Therefore, such an agreement must comply with the provisions of Section 2 of the Indian Contract Act. He concedes that there is no written agreement which has been signed by all the three trustees, ft will be observed however that the written agreement, according to him, is the arbitration clause in the deed of settlement. Therefore, the question is whether it is shown that the trustees agreed inter partes amongst themselves to refer their disputes to arbitration and whether the arbitration clause can be said to have reduced this agreement into writing. Mr. Basak argues that the arbitration clause contains the writing and it is not necessary that this writing should be signed by the three trustees or any of themand their conduct in accepting the trust sufficiently establishes that they have agreed between themselves to refer the dispute to arbitration, in terms of the writing contained in the arbitration clause of the deed of settlement. This proposition was not accepted by the court below and I do not think we can accept it, for the following reasons. It is now well established that where the terms of the agreement have been reduced into writing, it is not necessary that all the parties should actually append their signatures to the written document. At one time, it was held that they had to do so. Certain English cases had taken this view and Page J. followed it in the case of John Batt and Co. (London) Ltd. v. Kanoolal and Co AIR 1926 Cal 938. This view was expressly dissented from by a Division Bench of this court, presided over by Rankin, C. J. in Radha Kanta Das v. Baerlein Bros. Ltd : AIR1929Cal97 . The learned Chief Justice held that the Arbitration Act of 1889 and the Indian Arbitration Act do not require that the agreement to submit should be signed by both the parties, although it is necessary that it should be in writing. The same view was followed by a Division Bench of this Court in Ram Chandra Ram Nag Ram Rice and Oil Mills Ltd. v. Howrah Oil Mills Ltd. : AIR1958Cal620 . This view has also been followed in the Allahabad and Patna High Courts and it is unnecessary to refer to these decisions because the matter is concluded by a decision of the Supreme Court in Jugal Kishore Rameshwardas v. Mrs. Goolbai Hormasji, (S) : [1955]2SCR857 . Actually, Mr. Mukharji, appearing on behalf of the respondent, has not contested this proposition. Where it is found that two parties have agreed to refer matters to arbitration and the terms are to be found in writing, it is settled law that it is not further necessary that they should also sign the agreement. The question however in this case is, as to whether the trustees can be said to be a party to any agreement at all for referring their disputes to arbitration. The way Mr. Basak argues is this: He says that the deed of settlement directs that there shall be such a reference to arbitration and the trustees by their conduct in accepting the trusteeship and agreeing to act as trustees must be said to be parties to that agreement or to have become parties to the agreement by their conduct. In other words, once they accept the trust, they must be deemed to be parties to the agreement for reference to arbitration, which according to the learned counsel is contained in the arbitration clause. In my opinion, this contention is not sound. In order to become an agreement there must be a proposal and an acceptance. If we are to hold that the arbitration clause constitutes the written agreement, then we must hold that each trustee has, at some point of time, made a proposal to the other trustee or trustees as to whether the disputes should be referred to arbitration and each of them has accepted the same. In the circumstances of this case, it can never be said that any such incident has ever happened. By accepting a trust, a trustee merely undertakes to carry out the terms of the trust, in so far as the same may be in accordance with law.The reference to arbitration is only one of the many terms of the deed of settlement. There are other directions, for example, directions as to the amount that should be expended upon diverse matters or diverse acts done. It can never be said that in accepting the trust there is any question of the trustees agreeing among themselves that such amount should be expended or such acts done. Being trustees, they are bound to carry out the provisions of the deed of settlement. There can be no question of any agreement amongst themselves; otherwise we are faced with this absurd situation that with regard to every provisions in the deed of trust we have to visualise the trustees agreeing among themselves to carry it out by making a proposal and an acceptance. The learned Judge has pointed out that in order to accept a trust it is not necessary to signify to the other trustees any willingness to do so or to enter into any agreement to do or abstain from doing anything. In other words, no question of any proposal by one trustee or acceptance of the same by another arises. It may be an attractive argument to say that trustees having consented to accept trusteeship under a deed of trust must have agreed to carry out each and every term contained in it. That however is quite different from saying that they have entered into a written agreement amongst themselves to do so. The provision as to reference of disputes to arbitration is a matter that concerns me jurisdiction of courts. Ordinarily, the Courts are zealous of their jurisdiction and can only allow it to be curtailed by some provision of law. The provisions of the Indian Arbitration Act constitute such a law, but the provision must be strictly construed. In order that there may be a reference to arbitration which ousts the jurisdiction of Courts, the parties must enter into an arbitration agreement. That is a matter that must be governed by the law and in a given case it must be shown that the parties have lawfully entered into such an agreement and there is in existence a lawful agreement. Nothing short of it can support such an agreement and any reference to arbitration or an award consequent thereon, in contravention of the provisions of the law cannot be supported and must be declared invalid. In our opinion, the conclusions reached by the learned Judge are correct on that point and must be upheld. In the facts of this case it must be held that there was no arbitration agreement and no valid reference to arbitration. Mr. Basak has pointed out that the learned Judge has considered an argument advanced by Mr. Mukherjee that the award was vague and unenforceable. The learned Judge has held that clause (e) of the award may be somewhat vague by itself but read with the other provisions, the vagueness disappears. The learned Judge has said that if necessary he might have remitted the award. In view of the findings of the Court below and of ourselves upon the main point, it is unnecessary to consider the question as to whether any part of the award is vague or not. The award is invalid and has been rightly set aside.

6. The result is that this appeal fails and must be dismissed. Costs of all parties, both of the Courts below and in this Court of appeal will come out of the estate.

R.N. Dutt, J.

7. I agree.


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