1974 Supreme(Cal) 124

HIGH COURT OF CALCUTTA
SABYASACHI MUKHERJI
MAHESWARI AND CO. PVT. LTD. - Appellant
Versus
CORPORATION OF CALCUTTA - Respondent
Special 7  Of  1974
Decided On : MAY 14, 1974

The provisions of Section 58 of the Sale of Goods Act, Section 10 of the Specific Relief Act, and the principle of implied negative covenants do not apply to the case of a seller in a contract for the sale of moveables.

Headnote:

ARBITRATION - INJUNCTION - SECTION 20 AND 41 OF ARBITRATION ACT, 1940 - APPLICATION UNDER - MAINTAINABILITY - SECTION 58 OF SALE OF GOODS ACT - APPLICABILITY - SECTION 10 OF SPECIFIC RELIEF ACT - APPLICABILITY - NEGATIVE COVENANT - IMPLICATION.

Fact of the Case:

The petitioner, a company incorporated under the Companies Act, 1956, submitted rates to the defendant Corporation of Calcutta for the supply of R. C. C. Spun Pipes and Collars. The defendant requested the petitioner for the execution of the agreement after deposit of 5% security money. The petitioner wrote to the defendant recording that the contract papers had not yet been sent by the defendant and as such the security money could not be deposited, but offers were made for delivery immediately because stocks were ready. Thereafter, there was a request for deposit of security of Rs. 6020/- on the 21st May. 1973 by the defendant to the plaintiff. On 7th June, 1973 there was an indent for stores from the defendant to the plaintiff requesting supply and delivery of the pipes and collars at site as directed by the defendant. The defendant wrote to the plaintiff in continuation of the earlier letter dated 16th July, 1973 directing removal of rejected pipes within a week. The plaintiff replied stating that the goods had been manufactured as per ISS 458 of 1956 specification and the plaintiff was ready to replace the damaged pipes and collars but before doing so a joint inspection was asked for. The defendant reiterated rejection of the goods and requesting removal thereof within a week. In default, it was stated, that purchase would be made at the risk and cost of the plaintiff. The plaintiff appointed its Arbitrator and forwarded its claim to the said Arbitrator. On 24th January 1974 there was an advertisement in the press by the defendant calling for tenders for supply of 70 pipes on or before 5th February, 1974. Thereupon on 25th January 1974 the plaintiff gave notice to the defendant under Section 9 (b) of the Arbitration Act, 1940 regarding the appointment of the sole Arbitrator on or before 5th February 1974, and on 30th January 1974 the defendant nominated its Arbitrator. On 5th February 1974 two applications were made, one under Section 20 of the Arbitration Act, 1940 and another under Section 41 of the said Act and the second application has come up for hearing before me.

Finding of the Court:

1. The application under Section 20 of the Arbitration Act, 1940 was not misconceived and the application for interim relief under Section 41 was maintainable. 2. The provisions of Section 58 of the Sale of Goods Act do not apply to the case of a seller. 3. The provisions of Section 10 of the Specific Relief Act do not apply to the case of a seller. 4. A negative covenant cannot be implied in a contract of this nature on a transaction of moveables of this nature by two contracting parties.

Issues: 1. Whether the application under Section 20 of the Arbitration Act, 1940 was misconceived and the application for interim relief under Section 41 was maintainable? 2. Whether the provisions of Section 58 of the Sale of Goods Act apply to the case of a seller? 3. Whether the provisions of Section 10 of the Specific Relief Act apply to the case of a seller? 4. Whether a negative covenant can be implied in a contract of this nature on a transaction of moveables of this nature by two contracting parties?

Ratio Decidendi: 1. Section 20 of the Arbitration Act, 1940 gives an option to the parties to either proceed with the arbitration as contemplated by the agreement and proceed to nominate arbitrators as indicated in the agreement or in the alternative to come to Court to have the arbitration agreement filed and ask for certain consequential orders as to the further prosecution of the arbitration reference. Sub-section (1) of Section 20 clearly gives that option to the parties. But Sub-section (1) of Section 20 of the Arbitration Act, 1940, in my opinion, does not exclude operation of the other provisions of Section 20 in so far as these are applicable even in a case where parties have chosen to make a reference and proceed with arbitration under Chapter II of the Arbitration Act, 1940. Sub-section (4) of Section 20, in my opinion, is clear indication of the fact that where arbitration agreement is filed the Court can and has a right to make either an order directing the arbitration to proceed in accordance with the arbitration agreement by the parties or appoint an arbitrator directly which is a consequential order following from the filing of the arbitration agreement. Chapter II of the Arbitration Act, 1940 does not deal with filing of arbitration agreement. Therefore, in so far as Section 20 in its substantive provision deals with rights of the parties for filing of arbitration agreement, there is no parallel provision in Chapter II of the Arbitration Act, 1940. In such a situation, no question of having exercised option by the parties in my opinion arises. 2. Section 58 of the Sale of Goods Act deals with the converse case, that is to say it deals with a case of purchaser of specific goods in respect of a contract to deliver specific and ascertained goods. In my opinion, the applicant is not entitled to draw support from the provisions of Section 58 of the Sale of Goods Act, firstly, because on principle the position of purchaser of certain goods was entirely different to that of a seller in respect of these goods. Secondly, the statute in expressed terms deals with the case of a purchaser and does not provide the case of a seller. It would not be proper where the statute did not cover the case of a seller to read into Section 58 that the case of a seller was also intended to be covered by it. 3. The provisions of Section 10 of the Specific Relief Act, 1963, and Clause (ii) of Explanation of Section 10 of the Specific Relief Act and Clause (a) of the said Section apply mainly in the case of a purchaser. Secondly, I am not quite that sure when the Sub-clause (a) speaks of 'property which is not an ordinary article of commerce' it did not contemplate an article manufactured or prepared at the instance or specification of a contracting party. But it really meant or spoke of certain rare things which could not be produced or manufactured even at the specification or at the behest of the party in question. 4. A negative covenant would depend upon the terms of the contract express or implied. In this case it is admitted that there was no such negative covenant expressly. It is argued from the facts of this case a negative covenant should be implied. I see no justification, in view of the nature of controversy as indicated before, to imply a negative covenant in a contract of this nature on a transaction of moveables of this nature by two contracting parties.

Final Decision: The application fails and is accordingly dismissed. Costs of this application will be cost in the arbitration proceeding.