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1958 DIGILAW 97 (ALL)

Sugar Dealers v. Sita Ram Sri Gopal

1958-03-24

V.D.BHARGAVA

body1958
JUDGMENT V.D. Bhargava, J. - This is a first appeal from an order passed Under Section 34 of the Indian Arbitration Act. 2. The Plaintiff brought a suit on the basis of an agreement between the parties by which the Defendant agreed to supply sugar to the Plaintiff. A certain sum of money is alleged to have been paid as advance. The Defendant, according to the allegation in the plaint, failed to supply sugar and, therefore, this suit has been filed for the refund of the amount. 3. When summonses were received by the Defendants they filed an application Under Section 34 of the Arbitration Act for the stay of proceeding on the ground that there had been an agreement for reference to arbitration. This plea did not find favour with the learned Additional Civil Judge, Kanpur who heard the case and he came to the conclusion that there was no agreement at all in writing to refer the matter to arbitration and, therefore, section 34 of the Arbitration Act did not apply. Secondly he held that even if there be an agreement, the provisions of section 34 of the Arbitration Act were not mandatory and in the present case he did not see his way to stay the proceedings as the matter involved was purely a question of Law. Aggrieved with that decision the Defendants have come to this Court Under Section 39 of the Arbitration Act. 4. The facts of the case as they appear are that the Plaintiff had placed certain orders with the Defendants for supply of sugar and had paid some money. On what grounds the supply was not made is not clear nor the suit has proceeded any further. But it was alleged that there was no oral agreement between the parties to abide by the general conditions of the contract of Begg Sutherland & Company, and one of the conditions of the said agreement was that if there was any dispute between the parties it would be referred to arbitration. It was further alleged that in the contract itself it was mentioned "Begg Sutherland Conditions" and therefore, in any event, the addition of those words made all the conditions of the agreement of Begg Sutherland applicable to the present case. I am unable to agree with the contention of Learned Counsel for the Appellant. 5. It was further alleged that in the contract itself it was mentioned "Begg Sutherland Conditions" and therefore, in any event, the addition of those words made all the conditions of the agreement of Begg Sutherland applicable to the present case. I am unable to agree with the contention of Learned Counsel for the Appellant. 5. According to section 2(a) of the Arbitration agreement to submit present or future differences to arbitration whether an arbitrator is named therein or not." The first essential ingredient of an "arbitration agreement" is, therefore that it should be in writing. Unless it is in writing it cannot amount to an agreement to refer to arbitration under the present law. 6. Learned Counsel for the Appellant relied on an observation made in Halsbury's Laws of England Vol. II, 3rd End p. 4, where it is mentioned: "An arbitration agreement need not, it seems, be signed by the parties, it being sufficient that a party adopted and acted on the agreement, although he may not have signed it." 7. I am doubtful whether this will apply to the present definition of the Arbitration Act. But even if it does, the signature may not be there, but the agreement itself must be in writing. Here it is the admitted case of the parties that it was not a specific agreement in writing, but there was only an oral agreement; and if that oral agreement has not been believed by the trial court, which has given ample reasons for not believing it I see no reason to differ from the trial court on that point. 8. On behalf of the Respondents reliance has been placed on Narain Das Balak Ram (Firm) through Durga Prasad Tiwari v. Bhagwan Das Kedar Nath, 1951 ALJR 161 wherein it was laid down: "In the case in appeal the arbitration clause did not form part of any written contract signed by the parties or signed by one of them and accepted by the other. The oral acceptance of the rules and bye-laws of a Chamber of Commerce of which the opposite party was a member and the applicants were not, could not, in the circumstances of the case, amount to a written agreement within the meaning of section 2 of the Arbitration Act. The oral acceptance of the rules and bye-laws of a Chamber of Commerce of which the opposite party was a member and the applicants were not, could not, in the circumstances of the case, amount to a written agreement within the meaning of section 2 of the Arbitration Act. There being no written agreement to refer the dispute to arbitration, there could be no valid reference to arbitration and no decree could be passed in terms of the award made in pursuance of that reference." Further reliance was placed on London Sack & Beg Company, Ltd. v. Dix & Lugton Ltd., 1943 (12) AER 763 There also it was laid down that: "The arbitration clause must be in written submission. It cannot be that there is a written agreement to arbitration unless there is clear reference in the written contract between the parties to the alleged arbitration clause and that reference must amount an incorporation of it." 9. I think in the present case there has been no agreement at all; in any event, no written agreement to refer the dispute to arbitration and in the circumstances section 34 has no application. The appeal is accordingly dismissed with costs. 10. Let the record be sent back to the lower court so that the case may be disposed of as expeditiously as possible.