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Kedaranath Babulal Vs. Sumpatram Doogur - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in60Ind.Cas.951
AppellantKedaranath Babulal
RespondentSumpatram Doogur
Cases ReferredBarnes v. Youngs
Excerpt:
arbitration act (ix of 1899), section 19 - stay of proceedings, order for--jurisdiction--discretion--appeal interference in. - .....dear in the case before us, for, it id at lead doubtful whether the arbitration clause in the japanese contract form was or was not incorporated, by reference, as a condition in the contract between the parties. but, let us assume that there was a submission: before an order can be made, the court must be satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the applicant was, at the time when the proceedings were commenced and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration. this is manifestly a matter largely in the discretion of the court, which, no doubt, must be judicially executed. but when the discretion has been exercised by the primary court, a strong.....
Judgment:

Asutosh Mookerjee, J.

1. We are invited in this appeal to consider the propriety of an order made by Mr. Justice Greaves whereby he has refused an application for stay of a suit under Section 19 of the Indian Arbitration Act 1899.

2. On the 8th August 1919 if, the appellants agreed to purchase from the respondents 50 bales of Japanese grey shirting and sheeting. The material portion of the contract provided as follows: All conditions according to bazar (that is, importing 6rm), interest, cooly charges, according to the custom of Bazar, the goods being of Japan Cotton Company's Office.' It has been argued that this implies the incorporation of an arbitration clause contained in the form of contract used by the Japan Cotton Trading Company. That arbitration clause is in these terms: 'Any dispute as to damage, difference, inferiority, short quantity or measure or defeat or amount of allowance to be referred, at seller's option, to the Bengal Chamber of Commerce or two European or Japanese merchants or European or Japanese Assistants in merchantile firms, one to be named by each party; if either party shall fail to nominate an arbitrator within three days after being required to do so, the other party shall be at liberty to appoint both arbitrators or to refer to the Bengal Chamber of Commerce at his discretion.'

3. It is alleged by the appellants that the goods delivered were not in accordance with the contract and were in fact different and defective goods. They accordingly refused to accept delivery, and, on the 13th January 1919, cancelled the contract. The respondents thereupon proceeded 'to resell the goods,' although exception was taken to that course by the appellants on the 2nd May 1919. On the 19th May 1919 the appellants referred the matter to the arbitration of the Bengal Chamber of Commerce on the assumption that the arbitration clause contained in the contract form used by the Japanese Cotton Trading Company had become incorporated in the contract between the parties. On the 28th May 1919 the respondents sellers objected to the arbitration as without jurisdiction, and on the 18th July 1919 they instituted a suit on the Original Side of this Court for the enforcement of their claim. On the 30th July 1919 summonses in the suit were served upon the buyers (now appellants), with the result that, on the 7th August 1919 they made an application under Section 19 of the Indian Arbitration Act for stay of the suit. This application recited the correspondence between the parties and concluded with the following prayer: 'That all proceedings in the aforesaid Suit No. 1808 of 1919 may be stayed until the said Tribunal of Arbitration of the Bengal Chamber of Commerce makes and publishes the award after proceeding with and completing the said arbitration now pending and that the acts of and incidental to this application may be reserved.' This application was beard by Mr. Justice Greaves. He apparently held that, in view of the construction placed by him upon the contract form used by the Japanese Cotton Trading Company in the case of Chandmull Ganeshmull v. Nippon Mankaru Kabusheki Kaisha (Appeal from Order No. 92 of 1919), the application could not be entertained.

4. On the present appeal, the buyers have argued that the construction placed upon the contract cannot be supported. On behalf of the sellers no attempt has bean made to support the order on the ground assigned by the learned Judge, and, in our opinion, it cannot be supported, because toe facts disclosed in the correspondence make it abundantly clear that the events had not taken such a turn that the arbitration clause (assumed to have been incorporated in the contract between the parties), could be utilised by one of them and a reference made thereunder, But the respondents have contended that the order of the learned Judge maybe supported on other grounds, which we now proceed to examine.

5. Section 19 of the Indian Arbitration Act, provides as follows:

Where any party to a submission to which this Act applies, or any person claiming under him, commences any legal proceedings against any other party to the submission, or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before Cling a written statement or taking any other steps in the proceedings, apply to the Court to stay the proceedings; and the Court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.

5. The term 'submission' is defined in Clause (b) of Section 4 to mean a written agreement to submit present or future, differences to arbitration, whether the arbitrator is named therein or not. It is plain that, before the jurisdiction of the Court to make an order for stay under Section 19 can be invoked, it must be established beyond doubt that there is a valid submission. This is by no means dear in the case before us, for, it id at lead doubtful whether the arbitration clause in the Japanese contract form was or was not incorporated, by reference, as a condition in the contract between the parties. But, let us assume that there was a submission: before an order can be made, the Court must be satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the applicant was, at the time when the proceedings were commenced and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration. This is manifestly a matter largely in the discretion of the Court, which, no doubt, must be judicially executed. But when the discretion has been exercised by the primary Court, a strong case must be made out to justify the interference of a Court of Appeal. In this connection, reference may usefully bi made to the observations of Buckley, L.J., in Freeman of Sons v. Chester Rural District, Council (1911) 1 K.B. 783 at p. 791 : 80 L.J.K.B. 695 : 104 L.T. 368 : 75 J.P. 132: 'Section 4 of the Arbitrator Act, 1889,' (which corresponds to Section 19 of the Indian Arbitration Act), 'gives a discretion, and that in two ways, namely (i) the words are permissive, not imperative for the verb is 'may make', not 'shall make', and (ii) the jurisdiction to stay the proceedings arises if the Court is 'satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission.' 'The fast that one member of a Court is of opinion that the matter should not be referred to arbitration is sufficient to enable another member to concur, though the latter is satisfied that there is no sufficient reason why the matter should not be referred and if it had rested with himself alone, would have directed a stay, See also Vawdrey v. Simpson (1896) 1 Ch. 166 at p. 169 : 65 L.J. Ch. 860 : 44 W.R. 123, Barnes v. Youngs (1898) 1 Ch. 414 at p. 417 : 67 L.J. Ch. 263 : 46 W.R. 332. In the case before us, there is not only a substantial dispute as to whether the contract between the parties includes an arbitration clause, there are abundant indications that the appellants initiated the arbitration proceedings in contravention of the term of the alleged arbitration clause. The first choice tested with the respondents sellers, who were not afforded an opportunity to exercise the option. This clearly does not show a readiness and willingness on the part of the appellants to do all things necessary to the proper conduct of the arbitration.

6. In this view the order of Mr. Justice Greaves mutt be confirmed and this appeal dismissed with costs.

Ernest Fletcher, J.

7. I agree.


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