Research › Browse › Judgment

Calcutta High Court · body

1947 DIGILAW 81 (CAL)

Baijnath Narseria v. Chhotulal Sethia

1947-04-22

body1947
JUDGMENT Clough, J. 1. The reliefs sought in this application are an order that Suit No. 232 of 1947 mentioned in the petition, and all proceedings therein be stayed; and that, if necessary, the plaint in that suit be taken off the file. The following are the facts alleged by the Petitioner in support of his application. By two contracts in writing dated the 11th March, 1946, Baijnath Narseria, who is the Respondent to this application and the Plaintiff in the suit just mentioned, sold to the Petitioner Chhotulal Sethia a total quantity of 25,000 mds. of jute of the qualities and at the prices mentioned in the contracts, delivery October and/or November, 1946. The contracts were made through a broker Messrs. Moran & Co., Ltd., by whom Bought and Sold notes evidencing the contracts were sent to the Petitioner and the Respondent respectively. The Bought notes were marked J/6132A--J/6133A respectively. On 1st October the Petitioner gave the Respondent the name of Hastings, a mill for delivery of the goods whereupon the Respondent wrote in reply on 16th October "we are to acknowledge your letter of the 1st instant by registered post advising to deliver jute to Messrs. Hastings Jute Mills. But we are sorry to write that we have no Sauda with you and for which we take no value of your letter under reference." The contracts contained an arbitration clause in a form set out in paragraph 4 of the petition. The Petitioner, claiming that it had suffered a loss of Rs. 4,62,000 damages for wrongful repudiation of the contracts referred the matter to the arbitration of the Bengal Chamber of Commerce. Shortly after this, that is to say, on the 11th November, 1946, the Respondent filed a suit against the Petitioner No. 1669 of 1946 claiming Rs. 50,000 damages for an alleged libel, the allegation being that the Petitioner had falsely and maliciously spoken and published of the Respondent in the way of his trade words to the effect that he had entered into two contracts with the Petitioner for delivery of jute and had wrongfully failed to fulfil the contracts. With this suit on the file the Respondent contended before the Registrar, Tribunal of Arbitration, Bengal Chamber of Commerce, that the Tribunal was not competent to adjudicate on the Petitioner's claim: this contention, however, did not succeed. With this suit on the file the Respondent contended before the Registrar, Tribunal of Arbitration, Bengal Chamber of Commerce, that the Tribunal was not competent to adjudicate on the Petitioner's claim: this contention, however, did not succeed. Thereafter on the 20th January, 1947, the Respondent filed Suit No. 232 of 1947, the suit in respect of which the Petitioner has applied for the orders already mentioned. The Petitioner Chhotulal Sethia was made Defendant in the suit, and the averments in the plaint were that the Defendant is alleging that the Plaintiff entered through a broker Messrs. Moran & Co. into two contracts with him Nos. J/6132A and J/6133A on the 11th March, 1946, for supply of jute when in fact Messrs. Moran & Co., Ltd. were never authorised by the Plaintiff to enter into the said contracts on its behalf and the Defendant never entered into the said contracts with the Plaintiff. The plaint then went on to aver that the Plaintiff denied the existence of the contracts but that the Defendant was wrongfully claiming Rs. 4,62,500 damages, and that this claim, despite the Plaintiff's repudiation of the contract had been wrongfully referred to the Bengal Chamber of Commerce for arbitration, and that the alleged contracts were void as against him. The principal claims made in the plaint are (a) that the Bought notes and/or contracts and each of them be adjudged or declared void, (b) that the instruments or documents or Bought notes and each of them be delivered up and cancelled and (c) a declaration that the Plaintiff is not bound by the said Bought notes or contracts or any of them and that the Defendant is not entitled to make any claim on the basis of any of them. There is also a claim for Rs. 1,100 damages. The support for this is an averment in paragraph 10 of the plaint that in consequence of the Defendant wrongfully asserting the contracts and referring them to the Bengal Chamber of Commerce the Plaintiff has suffered damages in the shape of solicitors' charges) and other legal expenses, which he assesses at this sum. 1,100 damages. The support for this is an averment in paragraph 10 of the plaint that in consequence of the Defendant wrongfully asserting the contracts and referring them to the Bengal Chamber of Commerce the Plaintiff has suffered damages in the shape of solicitors' charges) and other legal expenses, which he assesses at this sum. The Respondent in this application maintains the position previously asserted, namely, that the contracts mentioned in the petition have been falsely set up by the Petitioner, and that in truth and in fact he was never a party to either of the alleged contracts; and that the brokers Messrs. Moran & Co., Ltd. never had any authority to enter into either of them on his behalf.. This application has not been made in Suit No. 232 of 1947, but is instituted in the matter of the Indian Arbitration Act. It purports to be in substance an application under sec. 34 of that Act for stay of the suit; the other relief, the prayer that the plaint in Suit No. 232 be taken off the file being treated in the petition as by way of being ancillary: it is introduced by the words "if necessary." No doubt, as the Respondent suggests, this has been done by advertence, the purpose being to avoid a charge that the Petitioner has taken a step in the proceedings and thereby has prejudiced the stay application. 2. An application for stay under sec. 34 of the Arbitration Act is available when specific conditions obtain; that is to say when a person who is a party to an arbitration agreement commences any legal proceeding against another party to the agreement in respect of any matter agreed to be referred. In such circumstances and if other conditions mentioned in that section are fulfilled the proceedings mentioned may be stayed. In this case it is objected by the Respondent (a) that he is not a party to any arbitration agreement and (b) that the proceedings which are sought to be stayed are not in respect of any matter agreed to be referred. 3. With regard to the first of these objections, Mr. In this case it is objected by the Respondent (a) that he is not a party to any arbitration agreement and (b) that the proceedings which are sought to be stayed are not in respect of any matter agreed to be referred. 3. With regard to the first of these objections, Mr. B.C. Ghose appearing for the Petitioner has urged that the question in issue can and ought to be decided in this application, and that for that purpose oral testimony on that issue should be heard if it is not possible to come to a conclusion on affidavit evidence. He has relied on Bhagwandas Atma Singh v. Atmasingh Jessasingh 47 Bom L.R. 716 (1945) where it was held that there was nothing In sec. 34 to prevent the Court deciding in an application under that section an issue between the parties, if it is raised by the Plaintiff, that there is no agreement for arbitration; and that in some cases it would be proper to do so. In this case, however, it would not, I think, be right to embark on such an enquiry in this application for stay, for in my view the application must in any event fail on the ground that the proceedings which are sought to be stayed are not in respect of a matter agreed to be referred. 4. The plaint in Suit No. 232 of 1947 is what primarily must be referred to for the purpose of ascertaining the nature and scope of the dispute between the parties which is the subject-matter of the proceedings sought to be stayed. As has been pointed out by Das, J., in his judgment in Re. Arbitration and Re. Suit No. 1887 of 1946, Belabux Agarwalla v. Luchminarain Jute Manufacturing Co., Ltd. 51 C.W.N. 863 (1947) and the other matters, delivered on 20th March, 1947 (unreported), the Plaintiff's case there must be taken at its face value; and the Court, though it must ascertain what the case made by the Plaintiff is, must not pre-judge the issues between the parties. No enquiry regarding the prospects of the suit, such, for example, as one whether the suit is maintainable is relevant to this question. 5. No enquiry regarding the prospects of the suit, such, for example, as one whether the suit is maintainable is relevant to this question. 5. The dispute between the parties which is the subject of the suit sought to be stayed by this application is whether the Plaintiff was at all a party to the alleged contracts for the sale of jute set up by the Petitioner. That is to say, whether the alleged contracts which contain the arbitration clauses resorted to by the Petitioner have ever been entered into at all. It is obvious as has been observed by Viscount Simon, L.C. in Heyman v. Davies, Ltd. (1942) A.C. 356 that such a question cannot be referred to arbitration under the clause; and I do not think that the Petitioner has purported to do so. What has been referred by the Petitioner is the claim for damages arising out of the Respondent's repudiation. But if the Petitioner has purported to refer the question whether agreement was ever entered into at all the position will still be the same, that is to say, the application must fail for the arbitration clauses in the contracts obviously do not justify such a reference, and the Petitioner has not asserted any agreement for arbitration other than those contained in the alleged contracts for the purchase of jute. In the circumstances the application for stay must fail on the ground that the Petitioner has not succeeded in showing that the suit which he seeks to stay is in respect of a matter agreed to be referred. 6. In so far as the prayer for the plaint to be taken off the file is a relief asked for in the application under sec. 34, Arbitration Act, or is a substantive relief asked for under another section in an application in the matter of the Arbitration Act, and not in an application made in that suit, the application, in my opinion, is misconceived: and inasmuch as it was with a definite purpose that the Petitioner chose to adopt this course, I cannot treat the application as made in the suit--indeed I have not been asked to do so. 7. An application to take the plaint off the file must, I think, be made in the suit, under the provision of Or. 7. An application to take the plaint off the file must, I think, be made in the suit, under the provision of Or. 7, r. 11, C.P.C If it is to succeed, it will be on the ground either that the plaint does not disclose a cause of action or that the suit appears from the statement in the plaint to be barred by any law. It is contended that the suit is barred by reason of the express provisions of sec. 32, Indian Arbitration Act, which is in the following terms:-- Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall, any arbitration agreement or award be set aside amended or modified or in any way affected otherwise than as provided in this Act. 8. The effect of sec. 32 has been fully discussed by Das, J. in his judgment delivered on 17th April, 1947, in Manicklal Memani v. Shiva Jute Bailing, Ltd. Since reported: 52 C.W.N. 389 (1947). He has pointed out that the way provided in the Act for contesting the existence or validity of an arbitration agreement is by an application under sec. 33 and that such an application is available only to a party to an arbitration agreement. He has pointed also out that a person who alleges that he never entered into an arbitration agreement cannot possibly claim the status of a party to an arbitration agreement. With respect I agree with that conclusion. Counsel for the Petitioner before me has relied on the words of Mr. Justice Kania in Bhagwandas Atma Singh v. Atmasingh Jessasingh 47 Bom. L.R. 716 (1945) that sec. 33 provides for a case when a party wants to obtain the Court's substantive declaration of nonexistence of an agreement for his own use. It is true that this observation was made in a case where the Plaintiff in the suit, who presumably must be included amongst the parties whom Kania, J, had in mind was denying the factum of the arbitration agreement--but I agree with the observation of Das, J., in the case just cited that the point whether such a person's application under sec. 33 would be maintainable was not actually raised or decided. 9. 33 would be maintainable was not actually raised or decided. 9. With respect I agree with the view expressed by Das, J., that sec. 32 does not bar a suit when the issue raised is regarding what he has called the "factual" existence of the arbitration agreement; that sec. 33 proceeds on the basis of a factual or an apparent existence of an arbitration agreement, and that in the circumstances sec. 32 cannot be read so as to refer to cases where the factual existence of the arbitration agreement is in issue; to do so would be to deprive a person in the position of the Respondent in this application of all remedy. Every person has a right to file any suit of a civil nature unless this right is taken away expressly or by necessary implication and reading sec. 32 and sec. 33 of the Arbitration Act together, as I think they must be read, the right to file a suit of a person who denies altogether the fact of agreement has not, I think, been taken away. The reasons for his decision have been very fully expressed by Das, J., in the judgment referred to and it is enough for me to say that with great respect I agree with them and with his conclusion. 10. In view of this it is not necessary for me to deal with such other points as have been raised in this application. 11. Application must be dismissed with costs and I order accordingly. Written statement to be filed next Monday, discovery by Friday following, inspection immediately thereafter, and the suit is to appear in the Prospective List a fortnight hence with liberty to mention for an early hearing. With the consent of the parties the suit is marked as a Commercial Cause.