JUDGMENT In July, 1980, Indian Oil Corporation (hereinafter described to as ‘I.O.C.’ entered into two contracts with Premier Road Carriers (Hereinafter referred to as the Carrier) for carriage of mobil oil to different destinations and pursuant to the said contracts, I.O.C. entrusted to the carrier diverse quantities of mobil oil for transport. The carrier submitted its bills but the correctness of the same were disputed by the I.O.C. It is the I.O.C's case that there were shortages in delivery of the goods and about 546 barrels of goods were contained during transit. It is alleged that on account of the aforesaid facts, the I.O.C. suffered damages to the extent of Rs. 11,81,364.62 besides other claims against the carrier. The carrier also demanded from the I.O.C. Rs. 4,55,868. 75 by letter dated 22.1.80 through its solicitors on account of transport charges. The carrier was also claiming escalation of rates. The I.O.C. by letter dated 27.2.81 demanded payment of damages by the carrier thereafter the carrier instituted a suit against the I.O.C. in this Court being Suit No. 204 of 1981 for recovery of Rs. 6,73,314.91 under agreements dated 22.7.80, 25.7.80 and the standard agreement referred to in the letter dated 22.2.79 and for escalation of rates. The agreement between the parties contained arbitration clauses. Under the circumstances, the I.O.C. took out an application under section 34 of the Arbitration Act being Matter No. 806 of 1981 for stay of the Suit No. 204 of 1981 on the ground that the disputes in suit were covered by the arbitration agreements and that the main dispute to be decided in the suit was the issue of alleged contamination of 546 barrels of mobil oil during transit as would clearly appear from the extracts set out below from the petition under section 34 of the Arbitration Act: "The lubricating oils in not less than 546 barrels out of the said goods of the value of not less than Rs. 11,81,364 82 was found to be contaminated during the transit thereof and the petitioner suffered damages" (Vide pan 4 of section 3 4 application). "By its letter dated 27th February, 1981 written to the respondent by the petitioner's solicitor the petitioner intimated the respondent of its claim which until then could be ascertained to the extent of only Rs. 11,81,364 82 was found to be contaminated during the transit thereof and the petitioner suffered damages" (Vide pan 4 of section 3 4 application). "By its letter dated 27th February, 1981 written to the respondent by the petitioner's solicitor the petitioner intimated the respondent of its claim which until then could be ascertained to the extent of only Rs. 6,04,211 52 in respect of contamination/adulteration during transit by the respondent and stated that the wrongful claim in the said letter dated January 22, 1980 was being verified" (vide para 8 of section 34 application). 2. The only object of moving the Court under section 34 of the Arbitration Act was to have all the disputes including the dispute regarding contamination/adulteration of 546 barrels of goods tried by the Arbitrator. In the affidavit-in-opposition filed by the carrier in section 34 proceeding, the carrier denied and disputed the said allegations in the petition and wanted a trial in open Court on the ground that there was an insinuation of fraud against the carrier by the I.O.C. The relevant pleading is set out below :- "The said alleged damages, if any, (which is disputed) still remain to be ascertained. By alleging shortage and contamination of the goods the petitioner in effect alleges and/or insinuates fraud as against the respondent warranting trill in open Court. The respondent company desires that the said serious allegations should not be tried in a private forum and that too by the Chairman of the petitioner or his subordinate nominees.” 3. The said stay application was disposed of on 11.6.81 holding :- "The respondent carried certain quantities of lubricating oil under the agreements between the parties. The petitioner alleges and the respondent denies that out of those goods certain quantities were contaminated during transit. The respondent's further case is that at the instance of the petitioner, C. B. I. has started proceedings relating to the aforesaid allegations made against the respondent and yet the petitioner has not denied it in its affidavit-in-reply. Substantial questions of law are also involved in the suit as painted out from the plaint by Mr. Gupta. In the premises, it is not a fit ease for exercising the court's discretion under section 34 of the Act. This application is, therefore, dismissed." 4. The I.O.C. preferred an appeal from this order of dismissal being Appeal No. 266 of 1981 which was dismissed on 10.12.81. 5. Gupta. In the premises, it is not a fit ease for exercising the court's discretion under section 34 of the Act. This application is, therefore, dismissed." 4. The I.O.C. preferred an appeal from this order of dismissal being Appeal No. 266 of 1981 which was dismissed on 10.12.81. 5. The I.O.C. moved the Supreme Court and took out a Special Leave Petition No. 2022 of 1982 which also was dismissed on 11.3.82. 6. Thereafter the I.O.C. filed its written statement in Suit No. 204 of 1981 denying the carrier's allegations in the plaint and claiming set off for shortages only. The I.O.C.'s alleged claim for damages for contamination of 546 barrels of mobil oil was not mentioned in this written statement. This claim for damage for contamination was referred to arbitration by the I.O.C. and the Chairman of the I.O.C. appointed one K. K. Ahuja as the sole Arbitrator to adjudicate upon this dispute. This Ahuja by his notice dated 17.4.82 directed the parties to filed their respective pleadings and by his second notice dated 1.6.82 extended the time for filing the pleadings. At this juncture the present petition has been taken out by the carrier under sections 5, 33 and 35 of the Arbitration Act. 7. The Counsel for the I.O.C. submits that the present application is not maintainable. There is no allegation against the Arbitrator, hence the question of revocation of his authority does not arise. Section 5 of Arbitration Act cannot be invoked. He further submits that the petitioner tried to take advantage of section 33 of the Arbitration Act by alleging that there was no agreement dated 22.7.81. In the affidavit-in-opposition, paragraph 7, it has been clearly stated by the I.O.C. that by mistake contract was alleged to be dated 22.7.81 instead of 22.7.80 in the pending reference. This mistake was corrected by the Arbitrator, Ahuja himself in his notice dated 1.6.82 where the date of the agreement was clearly mentioned. A copy of this notice was duly received by the petitioner and the same appears at page 79 of the petition. The admitted position is that the contract was entered into on 22.7.80 and not on 22.7.81. Hence, section 33 of the Arbitration Act has no application. A copy of this notice was duly received by the petitioner and the same appears at page 79 of the petition. The admitted position is that the contract was entered into on 22.7.80 and not on 22.7.81. Hence, section 33 of the Arbitration Act has no application. Section 36 of the Arbitration Act cannot be invoked on the facts and circumstances of this case as the subject-matters of the suit and that of the arbitration are entirely different. This application is, therefore, liable to be dismissed with cost. The petitioner's Counsel Mr. Gupta submits that under sections 5, 20 and 34 of the Arbitration Act, the Court has very wide di8cretion to allow or not to allow a reference to proceed. In this case, the I.O.C. by alleging contamination and/or adulteration of goods during transit, clearly insinuated fraudulent conduct on the part of the carrier. It is a settled law that the charge of fraud should not be tried in a private forum. If the question of fraud is involved in the issue, the arbitration proceeding can be stepped by the Court under section 5 of the Act by revoking the authority of the Arbitrator or under section 20 of the Act by refusing to file the arbitration agreement or under section 34 by refusing to stay the suit. The provisions of these three sections 5, 20 and 34 indicate that Court can stop the proceeding before reference starts or during the pendency of the reference or when a suit is filed at any or every stage. 10 support of his contention he relies on (1) Gopalan v. Commr. H. R. & C. En. Madras AIR 1966 SC 1936, paragraphs 12 and 13 : "Paragraph 12. The difference between an application under section 5 of Arbitration Act and one under section 34 is a difference as to the point of time when the application is made. If proceedings are commenced in Court, application is made under section 34, if proceedings have not been commenced in Court the application made under section 5. The object of both the sections is the same, namely, to prevent arbitration." "Paragraph 13. The grounds on which leave to revoke may be given have been put under five heads: (1) Excess of refusal of jurisdiction by Arbitrator. (2) Misconduct of Arbitrator. (3) Disqualification of Arbitrator. (4) Charges of fraud and (5) Exceptional cases." 8. The object of both the sections is the same, namely, to prevent arbitration." "Paragraph 13. The grounds on which leave to revoke may be given have been put under five heads: (1) Excess of refusal of jurisdiction by Arbitrator. (2) Misconduct of Arbitrator. (3) Disqualification of Arbitrator. (4) Charges of fraud and (5) Exceptional cases." 8. He further sumits that if the reference is allowed to proceed, at the time of deciding this issue of contamination, the Arbitrator is bound to consider the conduct of the carrier. The question of fraud, although not raised by the I.O.C. directly is bound to come up indirectly through evidence during hearing. The pending reference, therefore, must be stopped. He cites (2) Abdul Kadir v. Madhab Prabhakar, AIR 1962 SC 406 and (3) General Enterprises v. Jardine Hunderson Ltd., AIR 1978 Cal 407 in support of his submissions, He invites my attention to the fact that in section 34 application filed by the I.O.C. this issue of contamination and/or adulteration was not allowed to be tried by the Arbitrator by the trial court, the Appeal Court and the Supreme Court. All these three Courts refused to stay the suit. These decisions are binding on the parties to this proceeding, In that view of the matter, the I.O.C. is not entitled to refer this issue for arbitration. The Counsel for the I.O.C. submits that no question of fraud is involved in the reference. Before the arbitration, the I.O.C. has claimed the value of 546 barrels of lubricating oil on the ground that the carrier has failed to deliver 546 barrels of goods in same condition us they were received. There is no charge that the carrier contaminated the goods. In the arbitration proceeding it would not be necessary to decide who contaminated the said goods or how the goods in 546 barrels became contaminated. Under the circumstances, there is no reason why the arbitration should not be allowed to proceed particularly when parties themselves have agreed to have all the disputes decided by the Arbitrator. This agreement is binding on the parties. 9. It should be noted that in the stay petition the I.O.C.'s case was that the main dispute between the parties was its claim for damage for contamination of goods during transit. This agreement is binding on the parties. 9. It should be noted that in the stay petition the I.O.C.'s case was that the main dispute between the parties was its claim for damage for contamination of goods during transit. Against this allegation the carrier submitted before the trial court that there was an insinuation of fraud against them and as such that dispute should be thrashed out in open Court. By refusing to stay the suit, the trial court intended that this issue of contamination should be decided in a public forum. The trial court's decision was upheld in appeal and the Supreme Court allowed the Appeal Court's decision to stand. It should be noted that before Appeal Court, the I.O.C. had contended that in deciding the issue of contamination, the question of fraud would not arise just as has been d me before me in the present case. But the Appeal Court had rejected that contention on the ground that there was a possibility of the question of fraud coming up at the time of giving evidence as will clearly appear from the judgment delivered in that matter. An extract of which is set out below:- "It was contended on behalf of the appellant (I.O.C.) however, that it was not necessary for the appellant to prove the fraud. What was necessary for it was only to prove that the goods delivered were contaminated. And that would require to prove as to how this contamination took place and at whose custody this contamination happened. Therefore, if the learned Judge, in the facts of this case, has taken the view and exercised his discretion on that ground that the charge of fraud was involved against the present respondent and as it wanted a trial in the public forum, we cannot say that the discretion exercised by the learned Judge was improper or without any ground". 10. It is, therefore, quite clear that the question whether the issue of contamination and/or adulteration of goods should be tried in a public forum or in a private forum has already been decided in section 34 application and all the three Courts have held in favour of the trial of this issue in a public forum. 10. It is, therefore, quite clear that the question whether the issue of contamination and/or adulteration of goods should be tried in a public forum or in a private forum has already been decided in section 34 application and all the three Courts have held in favour of the trial of this issue in a public forum. In that view of the matter, in my opinion it was extremely improper on the part of the I.O.C. to refere the same dispute to arbitration and that also on the plea that the question of fraud would not arise at the trial knowing fully well that the same contention was raised by the I.O.C. before the Appeal Court but it was rejected by the Court expressly. In the written notes an argument submitted to me on behalf of the I.O.C. the probable issues to be raised before the Arbitrator have been set out as follows: (i) That the goods were in proper condition at the time of entrustment to the carrier for carriage. (ii) That the goods were delivered in defective condition or not in the same condition as they were received. 11. The two issues apparently look very innocent no doubt, but the defect it the goods cannot develope by magic. Damages to the goods either have been caused deliberately by the carrier or the same could be due to some factors beyond the control of the carrier. It is also to be noted that the whole object of this reference by the I.O.C. is to recover the value of the goods from the carrier. To achieve this end the I.O.C. will have to establish before the Arbitrator that the carrier is responsible for contamination of goods. The carrier in its turn will try to avoid the alleged liability by adducing evidence that it is not so. In the premises, evidences are bound to be adduced by both the parties on following points :- (1) What was the condition of 546 barrels of goods when the same were entrusted to the carrier for carriage. (2) Whether the I.O.C. had taken good care to pack these barrels in a proper manner so as to prevent developing leaks and contamination of goods. (3) Whether 546 barrels were handled by the carrier recklessly resulting in leaks in the barrels and contamination of goods. (2) Whether the I.O.C. had taken good care to pack these barrels in a proper manner so as to prevent developing leaks and contamination of goods. (3) Whether 546 barrels were handled by the carrier recklessly resulting in leaks in the barrels and contamination of goods. (4) Whether the alleged contamination" as possible without any deliberate act on the part of the carrier. (5) Whether alleged contamination can be the result of any outside factor beyond the control of the carrier. 12. Once the trial starts, the evidence on the above points cannot be shut out. There is every possibility that the question of fraud which is not present in the issue directly will creep into the scene indirectly through evidence. On this point I am completely in agreement with the Appeal Court's view in section 34 application. I have no doubt in my mind that although the allegation of fraud has not been expressly made by the I.O.C. in the reference, the question of fraud is involved in the issue to be decided by the Arbitrator. In the case of (4) Amar Chand v. Ambica Jute Mill, AIR 1966 SC 1036 it has been held that the Authority of the Arbitrator can be revoked with the leave of Court if the charge of fraud is involved or if the case is an exceptional one. I also hold that on account of the existing three decisions in section 34 application which are binding on the parties before me, the present case has taken an exceptional character. The issue concerned has been repeatedly held not to be tried by the Arbitrator. In that view of the matter, in my opinion, it is a fit case where leave should be granted to the petitioner to revoke the authority of the Arbitrator to stop the references and such leave is granted. The petitioner will be entitled to the cost of this application from the respondent.