JUDGMENT Janarthanam, J. - Loyal Textile Mills Limited (in short 'Indian Company') is registered under the Companies Act, having its office located at No. 855, Anna Salai, Madras-600002. It is engaged inter alia in the manufacture of textiles. It imports cotton from foreign countries, including United States of America, African countries and Pakistan, for the manufacture of textiles. It negotiated for the purchase of foreign cotton with one M/s. Gill & Co. Pvt. Ltd., Bombay (negotiator). 2. Allenberg Cotton Company (in short 'American Company') and Esteve Bros. Co., Inc. are the two companies located at United States of America engaged in the sale of American cotton. The negotiator, purporting to be the agent of the said two American Companies, started negotiating with the Indian Company as respects the purchase of American Cotton. In the course of negotiations, the negotiator forwarded the terms of contract, purporting to be from American Company. Subsequently, negotiations between them continued mainly over telephone. 3. In the process of such negotiation, the Indian Company opened Letters of Credit for the purchase of cotton from the two American Companies. M/s. Esteve Bros. Co., Inc. supplied the requisite cotton on the Letters of Credit as per the understanding. However, the American Company wanted certain amendments to the terms of the Letters of Credit before ever cotton was to be supplied. The amendments, as suggested were not acceptable to the Indian Company. Consequently, the American Company treated the Indian Company as having committed breach of the contract and thereafter, sought to refer the matter for arbitration, pursuant to a clause in the terms of the contract. 4. The American Company is a member of the Liverpool Cotton Association Limited (in short 'the Association') situate at 620, Cotton Exchange Building, Edmund Street, Liverpool L3 9LH, England. Under the Rules prescribed, the Association purported to conduct arbitration under its auspices at the instance of the American Company. Mr. R. B. Davies of England had been appointed by the American Company as their Arbitrator while R. J. Anderson of England had been appointed by the Association as the Arbitrator for the Indian Company, which is not its member. 5. The arbitration clause in the terms of the contract provided for the jurisdiction of English Courts and application of English Law. 5. The arbitration clause in the terms of the contract provided for the jurisdiction of English Courts and application of English Law. On receipt of a message from the Association as to arbitration proceedings, the Indian Company sent a reply message informing Association that the Indian Company had not signed any contract to buy cotton from the American Company and therefore, it was not subjected to arbitration. 6. The Indian Company thereafter filed O.P. No. 373 of 1988 on the file of this court under Section 33 of the Arbitration Act, impleading the American Company, the Association and the arbitrators, namely, R. B. Davies and R. J. Anderson of England respectively as respondents 1 to 4, seeking the relief of declaration that there is no arbitration agreement between the Indian Company and the American Company and that the arbitration proceedings initiated are clearly without jurisdiction, illegal, ab-initio void and non-est and for the consequential relief of permanent injunction, besides filing an application in Application No. 4719 of 1988 for the relief of ad interim injunction, raising inter alia the following contentions : (1) There is no concluded contract between the parties and in such a contingency, the question of placing reliance by reference to arbitration clause in the terms of the contract can, by no stretch of imagination, be stated to arise for consideration. (2) Even otherwise, the arbitration clause in the terms of the contract, cannot at all be construed as an 'arbitration agreement' under the salient provisions adumbrated under Section 2(a) of the Arbitration Act. (3) The conferring of jurisdiction of such an 'arbitration agreement' on a court in England, which had no jurisdiction otherwise, could never be construed as legal and binding on the parties. (4) No part of cause of action had arisen at all in England, inasmuch as the parties to the terms of the contract are admittedly residents of either India or United States of America, where the entire cause of action for the subject matter of the purported arbitration could, if at all, be stated to have arisen. (5) To require the Indian Company to participate in an arbitration in Liverpool in England is quite unjust, inequitable opposed to all canons of justice and balance of convenience. 7. (5) To require the Indian Company to participate in an arbitration in Liverpool in England is quite unjust, inequitable opposed to all canons of justice and balance of convenience. 7. The American Company alone entered appearance through a counsel of its choice and resisted the said petition by repelling every one of the contentions raised therein. 8. It appears that when the application for ad interim injunction came up for orders before learned single Judge, it was agreed to by learned counsel on both sides that the main original petition itself could be disposed of, as it is a matter, which largely depends upon the correspondence available, on record and consequently, the Original Petition itself was taken up for disposal. 9. Learned counsel for the Indian Company, it appears, ventured to make his submissions before learned single Judge, by placing reliance on the correspondence available and also sought permission to let in oral evidence, in proof of the projection of the claim of the Indian Company as to the nonexistence or the validity or otherwise of the so-called arbitration agreement and such submission of learned counsel, as had been penned down in the order of learned single Judge, is to the following effect : "Lastly, it was argued that the petitioner should be allowed to let in oral evidence to prove the agreed terms between the petitioner and M/s. Gill & Co., as the contract was entirely negotiated and agreed only between the petitioner on one hand and M/s. Gill & Co. on the other and that there was no contract between the petitioner and the first respondent." 10. Learned single Judge negatived the permission so sought for to let in oral evidence and the rationale for such a course adopted is reflected in the order as below : "After going through the entire correspondence placed before me by both sides, I am of the view that there is no necessity for letting in any oral evidence in this case. The documents available on record prove beyond doubt that there has been an agreement for reference to arbitration as contended by the first respondent." 11. The documents available on record prove beyond doubt that there has been an agreement for reference to arbitration as contended by the first respondent." 11. The terms of the contract had been established, as learned single Judge would say, by the plethora of correspondence that got exchanged between the parties and therefore, in such a contingency, it would be plain that the terms of the contract, as stated to have been established, cannot be expected to contain the signatures of the parties. The moot question, in such circumstances, that would arise for consideration is as to whether the terms of such an agreement, not containing the signatures of the parties would, in law, constitute an arbitration agreement, in terms of the provisions of the Arbitration Act. In answering such a moot question, learned single Judge, of course, placing reliance on the rulings-three emerging from the apex of the judicial administration of this country and one from the High Court of Judicature, Allahabad, namely Jugal Kishore v. Goolbai ( AIR 1955 SC 812 ); Banarsi Das v. Cane Commissioner, U.P. (AIR 1963 SC 1695); Gaddarmal v. C. Agarwal & Co. ( AIR 1963 SC 1417 ); Union writing it is not necessary that it should be signed by the parties and it is sufficient if the terms are reduced into writing and the agreement of the parties thereto established. 12. After having held so, learned Judge said in paragraph 14 of this order thus : "Applying the above principles, it is clear that in the present case the petitioner not having returned the contract forms sent to him after duly signing the same cannot take advantage of his own lapse and contend that there was no agreement for arbitration." 13. With reference to the contention of the Indian Company as to the incalculable hardship and inconvenience that would be caused, if the arbitration is referred to in a foreign country, learned Judge would say in paragraph 15 thus : "It is not possible to accept the contention of learned counsel for the petitioner that his client would be put to great hardship if an arbitration is referred to in a foreign country. That argument is not available in a petition under Section 33 of the Arbitration Act." 14. That argument is not available in a petition under Section 33 of the Arbitration Act." 14. In meeting the contention of the Indian Company as to the implausibility of its being subjected to arbitration by an arbitrator appointed by the Association, learned single Judge stated in paragraph 16 thus : "It is next contended by learned counsel for the petitioner that his client is not a member of the Liverpool Cotton Association Limited and therefore he cannot be subjected to arbitration by an arbitrator appointed by the said Association. In view of the clear terms of the agreement, this contention is not available to the petitioner. "Further, learned counsel for the first respondent has produced before me the By-laws of the Liverpool Cotton Association Limited. The relevant portion of By-law reads as follows : "Notwithstanding that a contract may incorporate the By-laws and Rules of the Liverpool Association and/or refer disputes to settlement by Arbitration by the Liverpool Cotton Association, the Association will not recognise or extend its Arbitration or other facilities to the parties to the contract unless : (a) at the date when the contract is entered into a least one of the parties is registered in the Register. Registered Firms, provided that the Directors may in the absolute discretion, and subject to such conditions, if any, to the registration of either such party or as to other matter such as the Association may, in its absolute discretion, formally impose, waive this sub-paragraph (a) in those cases where they consider it appropriate to do so." "There is no dispute that the first respondent is a member of the Liverpool Cotton Association. Even if both the parties are not members, Clause 4 referred to above gives a discretion to the Association in the matter of reference to arbitration. Hence this contention of learned counsel for the petitioner has to fail." 15. After recording the findings as above on all the contentions urged, learned single Judge, dismissed the Original Petition as well as the Application, without costs, giving rise to the present action by the Indian Company. 16. Mr. Hence this contention of learned counsel for the petitioner has to fail." 15. After recording the findings as above on all the contentions urged, learned single Judge, dismissed the Original Petition as well as the Application, without costs, giving rise to the present action by the Indian Company. 16. Mr. C. A. Sundaram, learned counsel for the appellant-Indian Company, would submit that learned single Judge failed to approach the respective contentions projected by the parties in giving a legal fitment, in the light of the salient provisions adumbrated under Section 33 of the Arbitration Act which resulted in causing prejudice to the cause of justice, in the sense of dismissal of the Original Petition and therefore, he would say that he would not feel reluctant in reiterating before this Bench, the very same contentions, as urged by him in the petition and argued before the learned single Judge - de hors the contention and projection of a submission therefor, a relatable to the subscribing of the signatures of the parties to the terms of the contract containing the arbitration clause by giving a fresh look to them, in the light of the pronouncements of superior courts of jurisdiction, in the shape of decisions emerging from this court, other High Courts and the apex of the judicial administration of this country as well, to which course, Mr. R. Krishnamoorthy, learned Senior Counsel appearing for the first respondent-American company would however express very strong disapproval, in the sense of supporting the impugned order. 17. The terms of the contract, as adverted to earlier, admittedly though had been reduced into writing were however, not signed by the parties. But, none-the-less, the terms of the contract are sought to be established by the American Company by the materials available on record, in the shape of correspondence that were exchanged between them. The Indian Company on their part, would contend that the materials available on record, if properly scanned, in the broad spectrum analysis, could by ne stretch of imagination, be stated to establish the subsisting nature of a contract. Of course true it is, the Indian Company filed and affidavit denying the entering into of any contract with the American company and what all took place between them is nothing but the process of negotiation for the culmination of a contract through the medium of the negotiator. 18. Of course true it is, the Indian Company filed and affidavit denying the entering into of any contract with the American company and what all took place between them is nothing but the process of negotiation for the culmination of a contract through the medium of the negotiator. 18. The American Company, on their part, filed an affidavit categorically asserting the coming into existence of the contract with the Indian Company through the medium of the negotiator and the Indian Company, on their part committing a breach of a contract, necessitating them to refer the dispute to arbitration by the invocation of the arbitration clause contained in the terms of the contract. Thus, as to the issue of a fact relatable to the existence of a contract, there is assertion by the American Company and flat denial by the Indian Company by incorporating necessary averments therefor in the respective affidavits filed by them. In such a contingency, it is rather difficult and remote, if not impossible, to decide the truth or validity or otherwise of the existence of the contract between them, and the court, in such a situation, would be rather pushed to the necessity of taking evidence, oral and documentary, to determine the truth, validity or otherwise of the existence of such a contract. 19. In the instant case, learned single judge had not decided such a vexed question by taking into consideration the affidavits alone filed therefor and the methodology adopted was to take into consideration the documentary evidence also, in the shape of correspondence exchanged between them. It is not as if the parties consented for the determination of the question exclusively or solely on consideration of the documentary evidence alone, that are available on record. The Indian Company, in fact, sought permission for adduction of oral evidence, as revealed by the projection of the argument of their learned counsel and such permission, in fact, had not been granted, as revealed from the extract of the impugned order as had been done earlier. It is in this context, the statutory provision, as adumbrated under Section 33 of the Arbitration Act, dealing with the arbitration agreement or award to be contested by application calls for consideration to decide the question as to whether the refusal of the permission for adduction of oral evidence by learned single Judge is justifiable. The section reads thus : "33. The section reads thus : "33. Arbitration agreement or award to be contested by application : Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the court and the court shall decide the question on affidavits : Provided that where the court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit." 20. The section, as extracted above, in simple words may mean that the court shall decide the existence or validity of an arbitration agreement on affidavits or may in appropriate cases whenever it deems just and expedient, set down an application for hearing on other evidence also and it may pass such orders for discovery and particulars, as if it may pass in a suit. It is in the discretion of the court to set down the application for being decided on evidence. Having once exercised its powers under the proviso, it goes without saying that such a discretionary power, if at all, has to be exercised not partially, but wholly on well recognised judicial principles and guidelines and not in an arbitrary, capricious, whimsical or fanciful manner. 21. Once learned single judge has elected or opted to exercise the discretionary power under the proviso, he ought not to have shut in evidence, either oral or documentary, other than the correspondence as available on record, in proof of the existence or validity or otherwise of the arbitration agreement by the affected parties, when especially the success or dismal failure depended upon the establishment of the existence or otherwise of such an agreement. 22. From the narration of the incorporation of the averments made by the parties in their respective affidavits as to the existence or otherwise of the terms of the contract containing an arbitration clause, it is patent enough, as stated earlier, that the parties have joined issues on certain facts, with regard to the existence or otherwise of the arbitration agreement. Whenever there is an issue of fact, the fact to be asserted or denied in the answer to such issue is a fact in issue (per Section 3 of the Evidence Act). Whenever there is an issue of fact, the fact to be asserted or denied in the answer to such issue is a fact in issue (per Section 3 of the Evidence Act). It is the right of the parties to give evidence of the existence or non-existence of every fact in issue and such other facts as are declared in the Evidence Act as 'relevant facts' (vide Section 5 of the Evidence Act). The laws of evidence as to what is receivable or not are sounded on a compound consideration of what abstractedly considered, is calculated to throw light on the subject in dispute, and of what is practicable. The object of a trial in every case is to ascertain the truth in respect of the matter. For this purpose it is necessary that the court should be in a position to estimate, at its true worth, the evidence given by each witness. Proof, logically defined, is sufficient reason for assignment to a proposition as true (per Wharton). Practically considered, it is the establishment of facts in issue by proper legal means to the satisfaction of the court (Best on Evidence). This is done by the production of evidence, the law relating to which is to all legal principles what logic is to reasoning, whatever subject it may be concerned about. Proof is the effect or result of evidence, while evidence is the medium of proof. Benthem used the word 'evidence' in its broadest sense : "Any matter of fact, the effect, tendency or design of which is to produce in the mind a persuation, affirmative or disaffirmative of the existence of some other matter of fact." 23. It seems properly from Section 3 of the Evidence Act that 'proof' means anything which serves, either immediately or mediately, to convince the mind of the truth or falsehood of a factor proposition and as truths differ, the proof adapted to them also differ. Thus, as regards quid probandum, it is incontestable that the Indian Company has a right to prove the fact in issue and the facts relevant to it. 24. Thus, as regards quid probandum, it is incontestable that the Indian Company has a right to prove the fact in issue and the facts relevant to it. 24. A learned judge of this court in A. Sankarasadasivam v. A. Kumaravel ( AIR 1977 Mad 259 = 90 L.W. 77), said in paragraph 10 thus : "The contention of the learned counsel for the appellants is that in the event of the court not accepting the affidavits filed by them to prove the existence of the agreement, they must be given an opportunity to establish the existence of the agreement by other evidence, oral and documentary, but that the lower Court has not granted any opportunity to the appellants to establish the existence of the agreement. Perhaps, the lower court proceeded on the basis that the question as to the existence of the arbitration agreement has to be decided only on affidavits in view of Section 33. It is true that Section 33 says that the court shall decide the question as to the existence or validity of the arbitration agreement on the basis of affidavits. But the proviso to that section, enables the court, when it deems just and necessary, to take further evidence. If the lower court felt that no decision could be rendered on the basis of the affidavits or the affidavits filed are quite inconclusive on the question in dispute, it could call upon the parties to substantiate their case by adducing further evidence. In view of the above provisions, the lower court should have granted an opportunity to both sides to prove or disprove the existence of an agreement, as the case may be." 25. In this view of the matter, we are rather constrained to feel and say that the refusal of learned single Judge in permitting the adduction of other evidence, oral and documentary, as prayed for by the Indian Company, caused immeasurable prejudice to them, in the eye of law, in the sense of depriving them of their very valuable right of possible proof of their case. 26. As regards the stipulation as to the choice of foreign tribunal, learned counsel appearing for the Indian Company drew our attention to a catena of decisions, which may fall for consideration one by one in the arena of discussion. (i) Messrs Black Sea State Steamship Line represented by its Agents D. M. Madan & Co. 26. As regards the stipulation as to the choice of foreign tribunal, learned counsel appearing for the Indian Company drew our attention to a catena of decisions, which may fall for consideration one by one in the arena of discussion. (i) Messrs Black Sea State Steamship Line represented by its Agents D. M. Madan & Co. v. The Minerals and Metal's Trading Corporation of India Ltd. (1970 I.M.L.J. 548 = 83 L.W. 56). In view of the foreign jurisdiction clause contained in a bill of lading, the petitioner, a Russian Steamship concern, objected to the jurisdiction of the court of Small Causes at Madras to try the suit brought by the respondent for damages for short delivery. That Court, however, in the first instance, by one of its Judges overruled the preliminary objection and with this conclusion, the New Trial Judges, functioning under the procedure provided under the provisions of the Presidency Small Cause Courts Act, concurred. The defendant canvassed the correctness of the view before this Court. Veeraswami, C.J. who happened to decide the case said : "I have no doubt that, on the facts of this case, the only conclusion the courts below could rightly arrive at, in the circumstances, is the one which they did." and consequently dismissed the petition with costs. For reaching such a conclusion, learned Chief Justice happened to consider the effect of the two stipulations found printed on the back of the bill of lading pertaining to foreign jurisdiction clause. The stipulations were to the following effects : "26. All claims and disputes arising under and in connection with this bill of lading shall be judged in the U.S.S.R. 27. The stipulations were to the following effects : "26. All claims and disputes arising under and in connection with this bill of lading shall be judged in the U.S.S.R. 27. All questions and disputes not mentioned in this bill of lading shall be determined according to the Merchant Shipping Code of the U.S.S.R." In considering and interpreting the aforesaid two clauses, learned Chief Justice said : "So, it is clear that the parties entered into a binding contract as between them that the Russian Courts should adjudicate the disputes arising under and in connection with the bill of lading and that the questions and disputes not mentioned in the bill of lading should be determined according to the Merchant Shipping Code of the U.S.S.R. At the moment this court is not so much concerned with the law that should govern the contract but with the jurisdiction of the Small Cause Court at Madras ... The parties who made their choice of the Tribunal should normally be bound by their contract. That should especially be the case as to the choice of the law applicable to the contract. But it seems to me that enforcement by the Indian courts of the choice of a foreign tribunal cannot be ruled as imperative; but it should depend on the balance of convenience in particular circumstances and the exigencies of lattice". After having so stated, learned Chief Justice would at this juncture refer to a passage by Cheshire in his Private International Law, 6th Edition, page 222 thus : "As distinct from the express or implied choice of the proper law, the express choice of a foreign tribunal is not absolutely binding. In accordance with the excellent principle that a contractual undertaking should be honoured, there is indeed a prima facie rule that an action brought in England in defiance of an agreement to submit to arbitration abroad will be stayed. The Cap Blanco (1913 p. 130), Austrian Lloyd Steamship Co. In accordance with the excellent principle that a contractual undertaking should be honoured, there is indeed a prima facie rule that an action brought in England in defiance of an agreement to submit to arbitration abroad will be stayed. The Cap Blanco (1913 p. 130), Austrian Lloyd Steamship Co. v. Gresham Life Assurance Society Ltd. (L.R. (1903) 1 K.B. 249) but nevertheless the court has a discretion in the matter and where the parties are amenable to the jurisdiction, as for example, where the defendant is present in England, it will allow the English action to continue if it considers that the ends of justice will be better served by a trial in this country (The Athanee ((1922) 11 L.I R. 6), The Fehmarn ((1958) 1 W.L.R. 159))." Learned Chief Justice in furtherance of highlighting the points, observed thus : "In a case of foreign jurisdiction clause, the question is not so much of freedom of contract and the parties being bound by their choice as of expediency in the light of what may be called the rule of balance of convenience and the ends of justice in the case on hand. Referring to The Athanee (supra), The Fehmarn (supra), Cheshire seems to apprehend that unless the discretion of the court in favour of allowing the English action to continue is exercised sparingly, there is a danger that foreign merchants will lose faith in the efficacy of arbitration clauses. It may be that, according to Cheshire, that case went to the verge of the law. While courts are certainly expected to use their discretion judicially and on proper grounds keeping in view the balance of convenience and the ends of justice, the exercise cannot be guided by the prospect of the danger apprehended by Cheshire. The consideration is more from the stand point of justice than to ignore the necessity to hold the parties to the contract as to the forum for adjudication. The Fehmarn case (supra) is nearer to this case, for, it was concerned with a foreign jurisdiction clause identical to what appears in this case. It applied the rule of ends of justice to sustain an English action notwithstanding the foreign jurisdiction clause binding between the parties to the dispute. The view was also based on the balance of convenience. The Court of Appeal in Mackender v. Feldia, A.G. ((1967) 2 W.L.R. 119) declined the English jurisdiction. It applied the rule of ends of justice to sustain an English action notwithstanding the foreign jurisdiction clause binding between the parties to the dispute. The view was also based on the balance of convenience. The Court of Appeal in Mackender v. Feldia, A.G. ((1967) 2 W.L.R. 119) declined the English jurisdiction. But in doing so, it was obviously led by the peculiar facts of the case. The defendant there had already started proceedings in accordance with the foreign jurisdiction clause which did not appear to be unjust or inconvenient to the parties and the stakes involved were considerable unlike in this case. Lord Denning, M.R. however recognised. But although there is jurisdiction to give leave, it is a matter of discretion as to whether it should be granted." He also says later on in his judgment : "The foreign jurisdiction clause is a positive agreement by the underwriters that policy is governed exclusively by the Belgian law. Any dispute under it is to be exclusively subject to Belgian jurisdiction. That clause still stands and is a strong ground why discretion should be exercised against leave to serve out of the jurisdiction." This observation taken by itself may possibly give the impression that his decision was solely rested on it. But obviously the observation was made in the course of repelling an argument that certain non-disclosure on the part of the assured struck out the whole contract. I should think rather that the decision of the Master of Rolls was induced not solely by the consideration of giving respect to the contract entered into by the parties but also the other circumstances, particularly the pendency of the defendant's suit in the Belgian Court and also the fact that a large stake was involved in the dispute. It did not also appear that there were circumstances which would make it unfair or inconvenient to the plaintiffs in England to face the Belgian Court. It did not also appear that there were circumstances which would make it unfair or inconvenient to the plaintiffs in England to face the Belgian Court. Diplock, L.J., in dealing with the question whether an agreement which would be illegal under the English law is void under the contract observed : "The prima facie rule of English Conflict of Laws, more liberal in this respect than many continental systems, is that the proper law of a contract is that system of law which the parties themselves agreed shall regulate the legally enforceable rights and duties to which their agreement gives rise." But having said that, he went on to say : "The Belgian Courts are not only a convenient forum for its resolution; they are the forum to which both parties agreed to submit." That gives the basis of his decision. In my view Mackender v. Feldia, A.G. (supra), is not against the proposition that local enforcement of a foreign jurisdiction clause is discretionary. The Court of Appeal in that case definitely found the Belgian Courts were the convenient forums for the parties. Reference was made before me to M/s. L.T. Societies v. M/s. Lakshminarayan ( AIR 1959 Cal 669 ), Lakshminarayan v. G.G.D. Esportazions ( AIR 1960 Cal 545 ) and N.G. Insurance Co. of India v. A. S. A. Kampagni ( AIR 1964 Bom 71 ), but each of them decided on its facts relating to the balance of convenience and ends of justice. These cases have all kept in view that proposition in approaching the particular circumstances and in giving effect to or not the foreign jurisdiction clause." (ii) Far East Steamship Line, Vladivostok, U.S.S.R. v. The Union of India ( AIR 1973 Mad 169 = (1972) 85 LW 807 ) : The question in the civil revision petition was whether the Union of India should be compelled to have recourse to the Russian Courts in view of the foreign jurisdiction clause in the contract entered into between the Union and the petitioners, Far East Steamship Line, Vladivostok, Black Sea Steamship Line Odesa. It was a Russian ship which when called at the Nagapattinam port, made a short delivery. The Union brought the suit in the court of the District Munsif of Nagapattinam. It was a Russian ship which when called at the Nagapattinam port, made a short delivery. The Union brought the suit in the court of the District Munsif of Nagapattinam. The suit was resisted by the Russian shipping company on ground, inter alia, that the foreign jurisdiction clause in the contract excluded jurisdiction of that court to try the suit. The Munsif did not accept that view, and went upon consideration of Sections 19 and 20, Civil Procedure Code. Doubting that the cause of action arose at Nagapattinam, he directed that the plaint should be returned for presentation to the City Civil Court, Madras, within whose jurisdiction the defendants reside, including the clearing agent. The Civil revision petition against that petition was, in the first instance, before Kailasam, J., (as he then was), who, after taking notice of the decision in Black Sea Steamship Line v. Minerals and Metals Trading Corporation of India Ltd. ( (1970) 1 MLJ 548 = 83 LW 56), referred the matter to the Division Bench for giving a fresh look in view of the Eliftheria (P.D.A) ((1969) 2 WLR 1073) and Unterweser Reederel, C.M.B.H. v. Zapatta Off Shore Co. (The Chapparral) ((1968) 2 Lloyd's Rep. 158). In doing so, learned Judge observed that while balance of convenience was a matter to be taken into consideration, the effect on international trade was also very important and that some of the leading shipping and air companies, if the clause in the bill of lading was not given effect to, might no choose to have business at any of the Indian ports. The reference came before a Division Bench of this court, consisting of Veeraswami, C.J. and Raghavan, J. The Division Bench considered the reference from the angles so focussed by learned single Judge making the reference. While doing so, the Bench referred to what the Probate Court pointed out in the Eleftheria (P.D.A.) (supra), namely, while exercising the discretion, the court should take into consideration all the circumstances of the particular case, and then proceeded to say : "In particular, but without prejudice to taking into account all the circumstances of the particular case, the following matters, where they arise, may properly be regarded. (i) in what country the evidence on the issues fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts; (ii) whether the law of the foreign court applies, and, if so, whether it differs from English law in any material respects; (iii) with what country either party is connected and how closely; (iv) whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages; (v) whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would (a) be deprived of security for that claim, (b) be voidable to enforce any judgment obtained, (c) be faced with a time-bar not applicable in England, or (d) for political, racial, religious or other reasons be unlikely to get a fair trial." After extracting the aforesaid principles, the Bench further said : "In the view of that court, therefore, the situation in the conflict of laws and jurisdictions does not demand that a foreign jurisdiction clause should invariably be enforced as always binding on the parties thereto. We do not think that such a view may necessarily hamper or obstruct or impede international trade." (iii) Messrs Lakshminarayan Ramniwas v. Lloyed Triestino Societa per Azimi Di Navigaziene Sede In Triesta ( AIR 1960 Cal 155 ). The plaintiff is an Indian merchant. He placed an order for certain bundles of Mild Steel Round bars with certain Italian shippers. The Italian shippers shipped those goods under three bills of lading. The goods were shipped by S. S. Alga, a steamship belonging to the first defendant Messrs Lloyd Triestino Societa per Azimi Di Navigazione Sede In Triesta. The goods were to be conveyed from Italy to the port of Calcutta. The steamship S. S. Alga duly arrived at the port of Calcutta. The plaintiff alleged that 22 bundles of the goods were short-landed. In support of its contention, it relied on a short-landing certificate issued by the Commissioner for the port of Calcutta. The plaintiff as a holder of the three bills of lading instituted a suit against the steamship company, defendant No. 1, as also its agents, Messrs Turner Morrison & Co. Private Ltd., defendant No. 2, for short-landing. The Commissioners for the port of Calcutta have also been impleaded as defendants to the suit. The plaintiff as a holder of the three bills of lading instituted a suit against the steamship company, defendant No. 1, as also its agents, Messrs Turner Morrison & Co. Private Ltd., defendant No. 2, for short-landing. The Commissioners for the port of Calcutta have also been impleaded as defendants to the suit. Clause 31 of each Bill of lading contained the following terms : "All requests for compensation in respect of damage, shortage, deterioration, loss of goods loaded shall be submitted for friendly statement to the agencies of the shipping company at the place of discharge, failing a friendly agreement, both the shipper and the receiver as well as any other party interested in the cargo, if intending to take legal steps against the company for the above mentioned causes and in general for whatsoever other causes may summon them before Judicial Authorities of Triesta or Genoa hereby expressly renouncing the competence of any other Judicial Authorities. No exception must be made to this exclusive competence even if the company is sued party (defendant) by reason of connection or contingency of the law suits." On the strength of this clause, the defendants applied to the Original side of the High Court of Calcutta for an order staying all further proceedings in the suit. G. K. Mitter, J, made the order prayed for. The plaintiff has preferred an appeal from that order. On behalf of the plaintiff it was argued that the several contracts contained in the bills of lading were hit by the provisions of Section 28 of the Indian Contract Act. The Division Bench consisting of S. C. Lahiri, C.J., and R. S. Bachawat, J., considered and met that a argument thus : "The essential validity of the contracts will have to be judged and determined by the proper law of the contracts namely the Italian law. There is neither any allegation nor any proof that the Italian law in any way renders Clause 31 invalid. Section 28 of the Indian Contract Act cannot and does not render invalid a contract entered into in Italy between two Italian subjects for the carriage of goods from Italy to India on board a steamer flying the Italian Flag. Though Cl. Section 28 of the Indian Contract Act cannot and does not render invalid a contract entered into in Italy between two Italian subjects for the carriage of goods from Italy to India on board a steamer flying the Italian Flag. Though Cl. 31 contained in those several contracts are valid, they cannot be pleaded as a bar to the jurisdiction of an Indian Court which otherwise has jurisdiction to try a suit instituted before it. The suit was instituted on the Original Side of this court upon the allegation, inter alia, that a part of the cause of action arose in Calcutta. Leave under cl. 12 of the Letters Patent to institute the suit was duly obtained and court be had undoubted jurisdiction to try the suit. The jurisdiction of the court to try such a suit is vested in it by the Letters Patent and by the Constitution. Parties cannot by a private agreement, whether such agreement has been entered into in India or outside India, take away a jurisdiction which is vested in this court to try the suit just as the parties could not by such agreement confer upon it jurisdiction to try. Clause 31 of the contract remains valid as a contractual stipulation, but it cannot be pleaded as a bar to the jurisdiction of the court. When the attention of the court in which the suit is instituted is drawn to a contractual stipulation of this kind, the court may in the exercise of its discretion stay its hands and refuse to try the suit until the competent judicial authority to whose decision the parties have agreed to submit their disputes has pronounced its decision. The court acts upon the principle that in general the court will competent the parties to abide by their contracts. Instead of driving the defendant to a separate suit to enforce the covenant, the court may for the purpose of preventing multiplicity of litigation enforce the contract summarily on an application made to it in the suit instituted before it. The prima facie leaning of the court is that the contract should be enforced and the parties should be kept to their bargain. Subject to this prima facie leaning, the discretion of the court is guided by consideration of justice. The prima facie leaning of the court is that the contract should be enforced and the parties should be kept to their bargain. Subject to this prima facie leaning, the discretion of the court is guided by consideration of justice. The balance of convenience, the nature of claim and of the defence, the history of the case, the proper law which governs the contract, the connection of the dispute with the several countries and the facilities for obtaining even handed justice from the foreign Tribunal are all material and relevant considerations. If on a consideration of all the circumstances of the case the court comes to the conclusion that it will be unjust or unfair to stay the suit, court may refuse to grant the stay asked for. On review of all the circumstances which were placed before him, G. K. Mitter, J. in the excise of his discretionary power has granted a stay of the suit. There have been lengthy arguments before us and we have been taken through the entire record. I have come to the conclusion that G. K. Mitter, J. has come to a correct decision." (iv) Venkatasamiappa v. Srinidhi Ltd. (1950 I.M.L.J. 709 = 63 L.W. 468). The respondent is a limited company with its office at Madras (and also a subsidiary office at Bangalore where the payments were made) carried out various works in Bangalore for the Public Works Department of the Government of India. The appellant, a resident of Bangalore was a sub-contractor supplying at the outset labour and subsequently various materials for the work which the respondent was executing in Bangalore. The appellant claimed that in respect of his dealings with the respondent he was entitled to be paid a sum of about Rs. 36,000/-. The respondent however asserted that if the account between the parties were looked into it would be found that far from their owing any money to the appellant, he would be found liable to pay them large sums of money. The disputes were referred to arbitration by an agreement apparently executed at Madras and the arbitrators were all residents of Madras. The arbitrators gave an award where under they directed the appellant to pay the respondent the sum of Rs. 22,346/-. The disputes were referred to arbitration by an agreement apparently executed at Madras and the arbitrators were all residents of Madras. The arbitrators gave an award where under they directed the appellant to pay the respondent the sum of Rs. 22,346/-. The arbitrators then filed a petition under Section 14(2) of the Arbitration Act on the Original Side of this Court praying for the award being received, notice of filing of the award being sent to the parties and a decree in terms of the award being passed. In the context of the facts, though the judgment in that case had been delivered by Balakrishna Ayyar, J., yet Horwill, J., concurring with his brother Judge, minuted his view, which may usefully be referred to here : "I have had the advantage of reading the judgment that my learned brother is about to deliver and respectfully agree with its reasoning. It seems to me that much of the difficulty that has arisen in this and similar cases is due to the overlooking of the fact that Section 2(c) of the Act merely defines that word "court" and that if one has to decide which of the courts satisfying the definitions of the word "court", in Section 2(c) is the court in which the award has to be filed, one must look to Section 31(I) and that Section alone. Section 2(c) does not purport to prescribe the court in which the award should be filed. It restricts the meaning of the word "court" to the class of civil courts that can decide the questions forming the subject-matter of the reference if they had arisen in a suit properly before the court. The difficulty in the construction of this section arises only from the circumstance that the word "court" would have meanings which would vary with the subject-matter of the reference. In the present case, for example, District Munsif's courts would not be courts within the definition. If now we have regard to Section 31(1) to ascertain in which court, as the word is defined in Section 2(c), the award has to be filed, we find that it is the court that has jurisdiction over the subject-matter of the award, the omission of any reference to residence being presumably for the reason that in filing an award there is no plaintiff and no defendant. If the subject-matter of the reference alone determines jurisdiction, then admittedly this appeal will have to be allowed." Balakrishna Ayyar, J., after quoting the provisions of Sections 2(c) and 31(1) of the Indian Arbitration Act, aired his views on the combined effect of those provisions as : "In order to determine which is the Court having jurisdiction in the matter, you should first of all ascertain what the questions are, which form the subject matter of the reference to arbitration. You then proceed to ask; supposing these questions had arisen in a suit, which is the Court which would have jurisdiction to entertain the suit ? That Court would be the court having jurisdiction under the Arbitration Act also. It was admitted before us that in the present case the contract between the appellant and the respondent was entered into in Bangalore. The appellant supplied the labour and the materials in Bangalore; the respondent had also a subsidiary office in Bangalore and the payments made were also at Bangalore. The questions between the parties arose out of this contract and what the arbitration had to determine was how much on a settlement of the accounts was due to one side or the other. Obviously, if these questions had arisen in a suit, the Court, which would ordinarily have had jurisdiction in the matter is not this Court, but the court of Bangalore. That result cannot be avoided if the jurisdiction of the Court were made dependent on the subject-matter of the action." (v) Hakam Singh v. M/s. Gammon (India) Ltd. ( (1971) 3 SCR 314 = (1972) 85 LW 20 SN)). The appellant agreed to do certain construction work for the respondent a company registered under the Indian Companies Act and having its principal place of business at Bombay on the terms and conditions of a written tender. Clause 12 of the tender provided for arbitration in case of dispute. Clause 13 provided that notwithstanding the place where the work under the contract was to be executed, the contract shall be deemed to have been entered into by the parties at Bombay and the Court at Bombay alone shall have jurisdiction to adjudicate thereon. Clause 12 of the tender provided for arbitration in case of dispute. Clause 13 provided that notwithstanding the place where the work under the contract was to be executed, the contract shall be deemed to have been entered into by the parties at Bombay and the Court at Bombay alone shall have jurisdiction to adjudicate thereon. On disputes arising between the parties the appellant submitted a petition to the court at Varanasi for an order under Section 20 of the Arbitration Act, 1940 that the agreement be filed an order of reference be made to an Arbitrator or arbitrators appointed by the court. The respondent contended that in view of clause 13 of the arbitration agreement only the Courts at Bombay had jurisdiction. The trial court held that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the courts of Bombay which they did not otherwise possess. The High Court at Allahabad in exercise of its revisional jurisdiction held that the courts at Bombay had jurisdiction under the general law and hence could entertain the petition. It further held that in view of clause 13 of the arbitration agreement, the petition could not be entertained at Varanasi. Against the order of the High Court directing the petition to the returned for presentation to the proper court, the appellant appealed to the Supreme Court by Special Leave. The questions that fell for consideration were : (i) whether the courts at Bombay alone had jurisdiction over the dispute; (ii) whether Explanation II to Section 20(a) of the Code of Civil Procedure refers only to Government corporations and not to companies registered under the Indian Companies Act. The Supreme Court, on consideration of those two questions, expressed that the Code of Civil Procedure in its entirety applies to proceedings under the Arbitration Act by virtue of Section 41 of the latter Act. The jurisdiction of the courts under the Arbitration Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. By the terms of Section 20(a) of the Code of Civil Procedure read with Explanation II thereto, the respondent company which had its principal place of business at Bombay, was liable to be sued at Bombay. By the terms of Section 20(a) of the Code of Civil Procedure read with Explanation II thereto, the respondent company which had its principal place of business at Bombay, was liable to be sued at Bombay. It in not open to the parties by agreement to confer jurisdiction on any court which it did not otherwise possess under the Code. But, where two courts have under the Code of Civil Procedure jurisdiction to try a suit or proceeding, an agreement between the parties that the dispute between them shall be tried in one of such courts is not contrary to public policy. Such an agreement does not contravene Section 28 of the Contract Act. Since in the present case the courts at Bombay had jurisdiction under the Code of Civil Procedure the agreement between the parties that the courts in Bombay alone shall have jurisdiction to try the proceedings relating to arbitration was binding between them. Order 29 of the Code of Civil Procedure deals with suits by or against a corporation and there is nothing in the Code to support the contention that a Corporation referred to under Section 20 means only a statutory corporation and not a company registered under the Indian Companies Act. 27. Order 29 of the Code of Civil Procedure deals with suits by or against a corporation and there is nothing in the Code to support the contention that a Corporation referred to under Section 20 means only a statutory corporation and not a company registered under the Indian Companies Act. 27. In the light of what we have discussed and stated as above, it goes without saying that learned single Judge had not at all considered the sanguine provisions adumbrated under Section 33 of the Arbitration Act in the proper perspective and provided adequacy of opportunity to the parties, especially Indian Company in the matter of the placing of evidence before Court as respects the existence, validity or otherwise, of the contract containing arbitration clause, which is the pivot or fulcrum, on which the other questions of balance of convenience and jurisdiction of foreign court or tribunal which has otherwise no jurisdiction hinge or rotate and even on the assumption that there was a contract containing an arbitration clause, as stated by the American Company, there is emergence of non-application of mind in all splendours on all those aspects of the matter and in such state of affairs, the best course to be adopted is to remit the matter back to learned single Judge to consider afresh the whole matter, by giving adequacy of opportunities to the parties to let in evidence, oral and documentary, as respects the proof or otherwise of the existence or validity of the contract containing arbitration clause and other matters involving balance of convenience of parties and jurisdiction of foreign court or tribunal and arrive at a decision in the light of the principles evolved by various judicial pronouncements referred to above and other precedents, if any, that could be relied upon by the parties before him. 28. In fine, the appeal is allowed; the order of learned single Judge is set aside and the case shall go back to him for fresh decision, after giving adequacy of opportunities to the parties to adduce evidence, oral and documentary and in the light of the principles evolved by judicial pronouncements as indicated in this judgment as well as some other precedents, if any, that may be relied upon by the parties before him. Costs of this appeal shall abide by the fresh result of the petition.