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HIGH COURT OF CALCUTTA
S. C. GHOSH
LALCHAND DHARAMCHAND - Appellant
Versus
ALLIANCE JUTE MILLS CO. LTD. - Respondent
Award Matter 106 Of 1969
Decided On : NOVEMBER 10, 1971
ARBITRATION - STAY OF SUIT - ARBITRATION AGREEMENT - NOVATION - TORT CLAIM CONNECTED WITH CONTRACT - WIDE ARBITRATION CLAUSE - STAY OF ENTIRE SUIT.
Fact of the Case:
The petitioner and respondent entered into a contract for the sale and purchase of goods, subject to the terms and conditions of the East India Jute and Hessian Exchange Association Ltd., which included an arbitration clause. A dispute arose between the parties, and the petitioner referred the matter to arbitration. The respondent filed a suit against the petitioner and the broker, seeking a declaration that the petitioner had no claim against the respondent under the contract, cancellation of the contract, and damages for libel. The petitioner applied for a stay of the suit under Section 34 of the Arbitration Act.
Finding of the Court:
The court held that the arbitration agreement was valid and subsisting, and that the novation pleaded by the respondent did not supersede the original contract. The court also held that the claim for damages in tort was inextricably connected with the transaction between the parties and was therefore covered by the arbitration clause. Accordingly, the court stayed the entire suit.
Issues: 1. Whether the arbitration agreement was valid and subsisting. 2. Whether the novation pleaded by the respondent superseded the original contract. 3. Whether the claim for damages in tort was covered by the arbitration clause.
Ratio Decidendi: 1. The arbitration agreement was valid and subsisting because it was contained in a written contract and was not superseded by the novation pleaded by the respondent. 2. The novation pleaded by the respondent did not supersede the original contract because it did not expressly supersede the original contract, did not satisfy or discharge the original contract, and was not binding on the petitioner. 3. The claim for damages in tort was covered by the arbitration clause because it was inextricably connected with the transaction between the parties and concerned or was connected with or was in consequence of or related to the contract between the parties.
Final Decision: The court stayed the entire suit.
( 1 ) THIS application has been made under Section 34 of the Arbitration Act by the petitioner for the stay of the suit No. 448 of 1969 end all proceedings relating thereto and arising therefrom. The facts leading to the making of this application are stated hereunder.
( 2 ) BY exchange of a Bought Note and a corresponding sold note both bearing No. RJ-50521 dated March 16. 1968, through the broker R. L. Saraf and Co. . the petitioner sold to the respondent and the respondent bought from the petitioner 600 Maunds (equivalent to 22394 Kgs.) Agartala Mesta Fibre at the rate of Rs. 38. 50 P. per Maund working out at Rs. 103. 15 P. per quintal delivery on 31st March, 1968, at the buyers' mill siding. The detailed terms and conditions of the said transaction would appear from a copy of the Sold Note annexed as Annexure B to the petition filed herein.
( 3 ) THE said contract between the parties was subject to the terms and conditions of the East India Jute and Has-sian Exchange Association Ltd. relating to contracts for raw jute. All the terms and conditions of the transferable specific delivery contract for raw iute of the East India Jute and Hessian Exchange Association Ltd. , Calcutta, were expressly made applicable to the said contract. The Arbitrator named in the said contract was Bengal Chamber of Commerce and Industry.
( 4 ) THE relevant, bye-law of the said Association containing the said arbitration clause contained in Rule 17 of Chapter IX applicable to the contract in the instant case provides as follows, to wit :--"17. All matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract including matters relating to insurance and demurrage whether or not the obligations of either or both parties under this contract be subsisting at the time of such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be referred to the arbitration in accordance with the provisions for reference to arbitration contained in these bye-laws. . . . . "
( 5 ) PURSUANT to the said contract the petitioner delivered certain quantities of goods to the respondent and submitted bills for an aggregate sum of Rs. 20,319. 37p. on account of price thereof through the brokers to the respondent.
( 6 ) ON June 6, 1968, the petitioner demanded payment of the aforesaid price. The contract provided payment of the price against presentation of the shipping documents and insurance cover.
( 7 ) BETWEEN June 6 and August 29, 1968, the petitioner on many occasions demanded payment of the price from the respondent through the broker. The respondent also claimed abatement in price to the extent of an aggregate sum of Rs. 612,96 P. on account of shortage in weight and undercharges and submitted bills in respect thereof to the petitioner. Correspondence passed between the seller, the broker and the buyer between June end October. 1968, with regard to the claim of the seller for the aforesaid price.
( 8 ) ON September 6, 1968, the petitioner wrote to the Forward Market Commission, constituted under Forward Contract Regulations Act, complaining about non-payment of the aforesaid price by the respondent. By the said letter the petitioner requested the said Commission to direct respondent to make payment.
( 9 ) BY letter dated September 18, 1968, written to the said Commission, the petitioner enquired of the said Commission as to whether the said Commission intended to intervene in the matter and if it did not intend to intervene, it must say so.
( 10 ) BY letter dated September 27, 1968, the petitioner demanded payment once again by the respondent within three days and informed the respondent that otherwise it would so to arbitration. I
( 11 ) ON or about October 7, 1968, the petitioner referred its claim for the aforesaid price to the arbitration of the Bengal Chamber of Commerce and Ind
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