1950 Supreme(SC) 41

SUPREME COURT OF INDIA
 30th November 1950
FAZL ALI, PATANJALI SASTRI AND MAHAJAN JJ.
A. M. Hair and Co. - Appellants
Versus
Gordhandas Sagarmull - Respondents.
Appeal No. 42 of 1950.
Advocates appeared
Shri N. C. Chatterjee, Senior Advocate (Shri B. Sen, Advocate, with him) instructed by Shri P. K. Chatterjee, Agent - for Appellants ; Shri A. N. Grover, Advocate, instructed by Shri B. N. Sachethey, Agent, for Shri M. G. Poddar, Agent- for Respondents.

Headnote:Hindu Law-Widow-Surrender in favour of next heir and stranger.

       Held: The doctrine of surrender or relinquishment by the widow of her interest in the husbands estate which has the effect of accelerating" the inheritance in favour of the next heir of her husband is now a well-settled doctrine of Hindu Law which has been established by a long series of judicial decisions. The basis of the doctrine is the effacement of the widows estate and not the ex-facie transfer by which such effacement is brought about. The result merely is that the next heir of the husband steps into the succession in the widows place. This effacement may be effected by any process and it is not necessary that any particular form should be employed. All that is required is that there should be a bona fide and total renunciation of the widows right to hold the property and the surrender should not be a mere device to divide the estate with the reversioners (vide Rangasami Goundan v. Nachippa Goundan, 46 Ind. App. 72). It would be clear from the principle underlying the doctrine of surrender that no surrender and consequent acceleration of estate can possibly be made in favour of anybody except the next heir of the husband. It is true that no acceptance or act of consent on the part of the reversioner is necessary in order that the estate might vest in him; vesting takes place under operation of law. But it is not possible for the widow to say that she is withdrawing herself from her husbands estate in order that it might vest in somebody other than the next heir of the husband. In favour of a stranger there can be an act of transfer but not one of renunciation. The position is not materially altered if, as has happened in the present case, the surrender is made in favour of the next heir with whom a stranger is associated and the widow purports to relinquish the estate in order that it might vest in both of them. So far as the next heir is concerned, there cannot be in such a case a surrender of the totality of interest which the widow had, for she actually directs that a portion of it should be held or enjoyed by somebody else other than the husbands heir. As regards the stranger, there can be no question of renunciation; the transaction at the most may be evidence of an intention to confer a bounty on him, though such intention is not clothed in proper legal form.1

       Arbitration Act, J940-Arbitration clause in a contract of sale-Disputes under or arising out of contract- Tests-Dispute within scope of arbitration clause-Jurisdiction of court.

       A entered into a contract with B for the sale of 5,000 maunds of jute, which was evidenced by a "sold note" addressed by A to B and a "bought note" addrested by A to the Bengal Jute Mill Company signed by A as brokers. Para II of the "sold note" provided:

       "All matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection and/or in consequence of or relating to this contract whether or not obligations of either or both parties under this contract be subsisting at the time of such disputes and whether or not this contract has been terminated or purported to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted."

       1. Kishan Lal and another v. Bhanwar Lal, (1955) 1 S. C. R. 439.

       2. Promotha Nath v. Batliwala of Karani, A. I .R. 1942 Born. 224 approved.

       3. See also under Bombay Securities Contracts Control Act, 1925.

       Dispute having arisen between the parties relating to this contract, A claimed arbitration under the said para. of the "sold note" and submitted the dispute to the Bengal Chamber of Commerce, and on 6th February, 1947, the Tribunal of Arbitration made their award. On 19th February, 1949, a petition was presented by B under the Arbitration Act, 1940, to the High Court at Calcutta, in its ordinary original civil jurisdiction, praying inter alia that the award may be adjudged to be without jurisdiction and void and not binding on B, and that it may be set aside.

       The main point raised by B in the petition was that it was not open to A to invoke the arbitration clause, as the Bengal Jute Mill Company and not A were the real party to the contract and A had acted as mere brokers. A asserted in reply that the allegations made by B in regard to there being no privity between A and B was wrong, and that according to the custom or usage or practice of the trade, they had the right to enforce the terms of the said contract. The application was dismissed by a Single Judge of the High Court but on further appeal by B a Division Bench of the High Court held that having regard to the fact that As own contention was that he had entered into the contract as broker and was entitled to enforce its terms by reason of the usage or custom of the trade, it was not open to the Judge to treat him as principal, and that the award was liable to be set aside on• the ground that the arbitration tribunal had no jurisdiction to make an award at the instance of a person who was not a principal party to the contract. A after obtaining a certificate from the High Court appealed to the Supreme Court against that decision of the High Court.

       Held: (1) The principal dispute raised in the case was whether the extension of time for delivery was granted within the time limited in the contract. That dispute was certainly covered by the arbitration clause. The further dispute that the brokers (A) were not parties to the contract in their own right as principals but entered into the contract only on behalf of the Jute Mill Company did not appear to have been raised until the matter went to the arbitrators. Assuming that at that stage it was open to B to raise such an objection, after the other dispute which clearly fell within the arbitration clause was referred to the arbitrators, this further dispute was also one which turned upon the true interpretation of the contract, and therefore would also seem to be a dispute, under or arising out of or concerning the contract.1

       (2) Once the dispute is found to be within the scope of the arbitration clause, it is no part of the province of the Court to enter into the merits of the dispute.