Bombay High Court
LENTIN
Gangaram Ratanlal - Appellant
Versus
Simplex Mills Co.Ltd. - Respondent
Decided On : 04/21/1981
ARBITRATION - JURISDICTION - INCORPORATION OF ARBITRATION CLAUSE - GENERAL CLAUSE - CONSTRUCTION - ARBITRATION CLAUSE IN RESPONDENT'S PRINTED FORM INCORPORATED IN CONTRACTS OF RESPONDENT'S SELLING AGENT BY GENERAL CLAUSE - ARBITRATOR HAD JURISDICTION TO MAKE AWARD.
Fact of the Case:
Petitioner agreed to purchase yarn from respondent's selling agent subject to terms and conditions in respondent's printed form, which included an arbitration clause. Disputes arose and respondent invoked the arbitration clause. Petitioner failed to appoint an arbitrator, so the disputes were referred to respondent's arbitrator as sole arbitrator. Petitioner appeared before the arbitrator and admitted liability, but later challenged the arbitrator's jurisdiction.
Finding of the Court:
The court found that the arbitration clause in the respondent's printed form was directly germane to the subject-matter of the contracts between the petitioner and the respondent's selling agent. The court also found that the general clause in the contracts of the respondent's selling agent, which referred to the terms and conditions contained in the respondent's printed form, was sufficient to incorporate the arbitration clause into the contracts.
Issues: Whether the arbitrator had jurisdiction to make the award.
Ratio Decidendi: The court held that the arbitration clause in the respondent's printed form was incorporated into the contracts of the respondent's selling agent by the general clause in the contracts. The court relied on the principles enumerated by the Calcutta High Court in Abu Road Electricity Co. v. Industrial Cases, AIR 1977 Cat 482, which held that a clause in an earlier contract can be imported into a subsequent contract if the language is appropriate, unambiguous and clear, and there is no inconsistency, vagueness or uncertainty. The court also relied on the decisions in Louis Dreyfus and Co. v. Arunachala Ayya, (1931) 58 Ind App 381: (AIR 1931 PC 289), Vali Mahomed Ayoob v. Shamdeo Gopiram, (1930) 34 Cal WN 447: (AIR 1930 Ca1 774), and Dwarkadas v. Daluram. AIR 1951 Cal 10 (FB), which held that an arbitration clause in one contract can be imported into a subsequent contract provided that when so imported, it is not inconsistent with the terms of the subsequent contract.
Final Decision: The court dismissed the petition to set aside the award, finding that the arbitrator had jurisdiction to make the award.
2. New Textiles Ltd. were the sole selling agent of the respondent. By certain contracts entered into between the petitioner and the respondent's selling agent, the petitioner agreed to purchase certain quantities of yarn of the total value of Rs. 2,40,761.77 subject to the terms and conditions contained in the respondent's printed contract form. Clause 21 in the respondent's printed form provided for reference of disputes to arbitration in the following words: -
"All disputes and questions whatsoever which shall arise between the parties hereto out of or in connection with this agreement or as to the construction or application thereof or the respective rights and obligations of the parties her under or as to any clause or thing herein contained or any account or valuation to be made hereunder as to any other matter in any way relating to these presents shall be referred to arbitration in accordance with the rules of the Millowners' Association, Bombay, for the time being in force regulating arbitration with respect to piece-goods."
However, no such arbitration clause was specifically incorporated in the contracts between the petitioner and the respondent's selling agent. Disputes having arisen between the parties by reason of the petitioner's failure to pay the balance amount of Rs. 2,11,022.63, the respondent invoked the arbitration clause contained in its printed contract form and referred the disputes to the Millowners' Association, which in turn called upon the petitioner to appoint its arbitrator. The petitioner failed to do so, with the result that under the rules of the Association the disputes stood referred to the respondent's arbitrator as sole arbitrator. At the hearing before the arbitrator on 21st Nov., 1979 the respondent appeared through its authorised representative; the petitioner also appeared through its authorised representative, namely, its partner one Bhagwandas. The minutes of the arbitrator of that day reveal that Bhagwandas admitted the petitioner's liability to the respondent in the amount of Rs. 2,11,022.63 and also stated before the arbitrator that the petitioner was not in a position to pay this amount and required time to make payment. Thereupon, the meeting was adjourned by the arbitrator to enable the petitioner to approach the respondent for this purpose. The arbitrator's minutes of the next meeting fixed on 21st Feb., 1980 reveal that the petitioner's partner Bhagwandas did not appear, having informed the arbitrator earlier that "he was preoccupied elsewhere". At the third and final meeting held on 14th Mar., 1980, the petitioner again appeared before the arbitrator thro' its partner Bhagwandas. At this meeting Bhagwandas informed the arbitrator that no useful purpose would be served by the petitioner taking up the matter with the respondent and that the arbitrator should proceed with the reference. The minutes further reveal that after hearing both the parties, the arbitrator concluded the hearing and both parties were informed that the award would be made in due course. For the purpose of this petition, the correctness of the minutes of the meetings before the arbitrator was not disputed by Mr. Tulzapurkar, the learned counsel appearing on behalf of the petitioner. Here it may also be stated that it is not even the petitioner's case that Bhagwandas was not the petitioner's authorised representative or had no authority to represent the petitioner before the arbitrator. Thereafter on 19th Mar., 1980, the arbitrator made his award against the petitioner in the sum of Rs. 2,11,022.63. It is now to set aside this award that the petitioner has filed the present petition.
3. The only ground of challenge to which the petitioner's learned counsel Mr. Tulzapurkar confined himself in inviting me to set aside the award, was that the arbitrator had no jurisdiction to make the award as there was no arbitration agreement between t
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