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Baij Nath Vs. Mansukraj Panna Lall - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in49Ind.Cas.988
AppellantBaij Nath
RespondentMansukraj Panna Lall
Cases ReferredKitts v. Moore
Excerpt:
arbitration - gambling and wagering contracts--bait to restrain proceedings, maintainability of--equity. - .....were well acquainted with the fact that i am the proprietor of the defendant firm and also of the broker firm of pannalal & co. and that accordingly myself and my firm are entitled and justified to require performance of the said contracts.' in his affidavit in reply the plaintiff says this, with reference to paragraphs 5 and 6 of the said affidavit i say that the denials therein contained are untrue and i repeat the statements made in my plaint and petition as representing the true facts.' i think that is a very un-satisfactory way to meet the plain allegation in paragraph 6 in the defendant's affidavit, in which he said that the plaintiff was fully aware of the position of pannalal murarka at the time the contracts were entered into if there had been any substance in this point i feel.....
Judgment:

Lancelot Sanderson, C.J.

1. This is an appeal from the judgment; of my learned brother Mr. Justice Greaves. The plaintiff and the defendants entered into three contracts (the dates of which I need not mention), which purported to be in respect of the purchase of a considerable number of yards of Hessian cloth. These contracts, were followed by what have been called settlement contracts, one dated the 14th of May 1917 and another dated the 23rd of May 1917, and a dispute arose between the parties whereby the defendants were claiming from the plaintiff the sum of Rs. 41,655, and in respect of that they claimed to go to arbitration under the arbitration clause which is contained in the contracts. They communicated with the Chamber, we are informed, on the 6th of September, bat it was not until the 1st of December that the Registrar of the Bengal Chamber of Commerce gave notice to the plaintiff of the defendants' claim to go to arbitration and this suit was brought on the 19th of December 1917.

2. The suit was brought claiming a declaration that the three contracts in question were illegal, inoperative, and unenforaeable against the plaintiff; secondly, that the defendant firm should be ordered to deliver up the said contracts, including the settlement contracts, for cancellation and that the same might be adjudged void and be cancelled, and, thirdly, that an injunction might be granted restraining the defendant firm, its servants and agents from enforcing or attempting to enforce the said contracts or any of them or any alleged rights thereunder and in particular from proceeding or attempting to proceed with the arbitration before the Tribunal of the Bengal Chamber of Commerce.

3. A Rule was granted, as we are informed, by my learned brother Mr. Justice Greaves calling upon the defendants (I have not the terms of the Rule before me but 1 assume them to be to this effect) to show cause why the arbitration proceedings - should not be stayed. On the hearing of that Rule, the learned Judge dismissed it: and it is from that judgment that this appeal has been laid.

4. Now, the two grounds upon which Sir Benode relied were, first, that the plaintiff's claim was based upon an allegation that these contracts were of a gambling and wagering nature and consequently under the Contract Act they were void, and that, therefore, the plaintiff was impeaching the con-traefcs under which the arbitration was claimed and consequently that point ought to be decided in the suit before the matter went to arbitration. The second ground was that one Pannalal Mnrarka was purporting to be the broker in the transaction and that as a matter of fact he was not the broker but was the proprietor of the defendant firm.

5. I propose to deal with the second ground first.

6. Sir Benode argued that this case came within the decision which my learned brother Mr. Justice Woodroffe and I gave a short time ago in Gajanand Mashara v. Shaik Taleb Jalaluddin 46 Ind. Cas. 173 : 22 C.W.N. 535. In that case the allegation was 'that the plaintiffs were unaware, at the time the contract was passed between them and the firm of Kaluram-Nundlal, that the defendant Ghoneshyam Das Kazriwalla, who was the sole proprietor of the firm of Ghoneshyam Das & Co., brokers in the matter of the said contract, was a partner in the firm of Kaluram-Nundlal nor were the plaintiffs made acquainted of the said fact, as they submitted it should have been, by the said defendant until the 22nd day of January 1917 when they came to know of the same for the first time.' Therefore, there was a clear allegation made upon oath in that case that at the time the plaintiffs entered into the contract they were unaware of the connection between the broker and the firm and they set it up, as appears from the correspondence, at the first opportunity. In this case I find that the plaintiff makes no such allegation; he does not, in his plaint or in his petition, allege that at the time of the contracts he was unaware that Pannalal Murarka was connected with the defendant firm: and, when I look at the defendant's affidavit, paragraph 6, I see that the defendant has sworn to this effect 'With reference to the allegations made in paragraph 5 of the plaint, I admit having passed the contract as a broker in my firm of Pannalal and Co. I further state that the plaintiff and his firm of Bissendoyal Baijnath were well acquainted with the fact that I am the proprietor of the defendant firm and also of the broker firm of Pannalal & Co. and that accordingly myself and my firm are entitled and justified to require performance of the said contracts.' In his affidavit in reply the plaintiff says this, with reference to paragraphs 5 and 6 of the said affidavit I say that the denials therein contained are untrue and I repeat the statements made in my plaint and petition as representing the true facts.' I think that is a very un-satisfactory way to meet the plain allegation in paragraph 6 in the defendant's affidavit, in which he said that the plaintiff was fully aware of the position of Pannalal Murarka at the time the contracts were entered into If there had been any substance in this point I feel certain that the plaintiff would have said in so many words that he was unaware at the time the contracts were the position of Pannalal Muraka. I think that is an entirely unr-JtbrtantiBl ground, as is shown by the paragraphs in the affidavits to which I have referred. This case differs in a material respect from the case which my learned brother and I decided in December last.

7. Then comes the other ground, namely, that these contracts were gambling and wagering contracts and consequently void. We are asked to say that this matter also comes within our judgment to which I have referred. Our judgment was based upon the decision in Kitts v. Moore (1895) 1 Q.B.D. 253 : 64 L.J.Ch. 152 : 12 R. 43 : 71 L.T. 676 : 43 W.R. 84, the head-note in which is as follows: The Court has jurisdiction to interfere by injunction, on equitable grounds, to restrain the defendant from proceeding to arbitration where an action has bean brought impeaching the instrument containing the agreement for reference': and Lord Justice Lindley who gave the first judgment said: ' Under those circumstances, the plaintiff brings an action for an ordinary partnership account and asks for an injunction to restrain the arbitration proceedings, and he does so upon the footing that the agreement which contains the arbitration clause is, for some reason, not binding, whether for fraud, or mistake, or surprise, or for some other reason, I do not say, because the statement of claim has not been launched: but his equity is to impeach that agreement.' Acting upon that judgment we came to the conclusion that in the previous case to which I have referred, there was an equity in the plaintiff to impeach the contract, inasmuch as he alleged and there was reasonable cause for believing that that was a bonafide and substantial allegation that at the time the contract was entered into, the plaintiff did not know the real position of the alleged broker. The case which is now before us to my mind comes directly within the decision in the case of M, Harg v. Universal Stock Exchange (1895) 11 T.L.R. 409. That decision was given in the following, year in 1895, whereas the other one in Kitts v. Moore (1895) 1 Q.B.D. 253 : 64 L.J.Ch. 152 : 12 R. 43 : 71 L.T. 676 : 43 W.R. 84 was given in 1894--Lord Justice Smith was a party to both the decisions, it appears from that decision that the Court of Appeal declined to exercise its jurisdiction and stay arbitration proceedings. I am of opinion that we ought to do the same in this case. The learned Judge has exercised his discretion and has refused to grant an injunction 'restraining the arbitration proceedings, and I see no reason far interfering with that decision. For my part, I do not see that the plaintiff has any equity in this case which would entitle him to ask for an injunction restraining the arbitration proceedings. I express no opinion at the present moment whether the transactions were gambling or wagering contracts or bona fide sales, but it is clear that the plaintiff knew exactly what the transactions really were, and that he was not taken by surprise, nor has it been suggested that there was any fraud. He has himself chosen the tribunal which was to decide any dispute arising in respect of the contracts, viz., the Bengal Chamber of Commerce, and I do not think that it would be equitable under the circumstances of this case for this Court to restrain the proceedings before the tribunal which he himself has chosen with full knowledge of all the circumstances of the case,

8. For these reasons I think that the appeal should be dismissed with costs.

John Woodroffe, J.

9. I agree.


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