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HIGH COURT OF CALCUTTA
Ramendra Mohan Datta
LACHMINARAIN JUTE MANUFACTURING CO. LTD. - Appellant
Versus
BANGUR BROTHERS LTD. - Respondent
Award 65 Of 1967
Decided On : JUNE 28, 1967
ARBITRATION - STAY OF SUIT - SECTION 34 OF THE ARBITRATION ACT, 1940 - NO EXISTING DISPUTE - CONDUCT OF THE PETITIONER - DISCRETION OF THE COURT - EXERCISE OF - COMPANY IN INVOLVED CIRCUMSTANCES - SPECIAL OFFICER APPOINTED - APPLICATION FOR WINDING UP ADMITTED - STAY OF SUIT VACATED.
Fact of the Case:
The petitioner, Shree Luchminarain Jute Manufacturing Co. Ltd., entered into a contract with the respondent, Bangur Brothers Limited, for the purchase of 40,000 bags of Heavy cees. The contract contained an arbitration clause providing for the arbitration of all disputes arising out of the contract. The petitioner failed to deliver the goods on the due date and the respondent filed a suit for damages. The petitioner then applied for a stay of the suit under Section 34 of the Arbitration Act, 1940.
Finding of the Court:
The court held that there was no existing dispute between the parties which could be referred to arbitration. The court also held that the conduct of the petitioner in flouting the order of the court and obstructing the receiver in obtaining possession of the goods was such that the court should not exercise its discretion in favor of granting a stay of the suit. The court further held that the fact that the petitioner company was in involved circumstances and there was already a special officer appointed over the company by the court taking company matters and an application for winding up had already been presented and admitted by the said court should be taken into consideration in the matter of exercising any discretion.
Issues: 1. Whether there was an existing dispute between the parties which could be referred to arbitration? 2. Whether the conduct of the petitioner was such that the court should not exercise its discretion in favor of granting a stay of the suit? 3. Whether the fact that the petitioner company was in involved circumstances and there was already a special officer appointed over the company by the court taking company matters and an application for winding up had already been presented and admitted by the said court should be taken into consideration in the matter of exercising any discretion?
Ratio Decidendi: 1. There was no existing dispute between the parties which could be referred to arbitration because the goods had been appropriated towards the contract and the property in the goods had passed on to the respondent. 2. The conduct of the petitioner in flouting the order of the court and obstructing the receiver in obtaining possession of the goods was such that the court should not exercise its discretion in favor of granting a stay of the suit. 3. The fact that the petitioner company was in involved circumstances and there was already a special officer appointed over the company by the court taking company matters and an application for winding up had already been presented and admitted by the said court should be taken into consideration in the matter of exercising any discretion.
Final Decision: The application for a stay of the suit was dismissed with costs.
( 1 ) THIS is an application under Section 34 of the Arbitration Act 1940 for stay of the suit filed by the respondent Bangur Brothers Limited against the petitioner Shree Luchminarain Jute Manufacturing Co. Ltd.
( 2 ) THE facts are that by exchange of a bought and a corresponding sold note by the broker a contract was entered into being contract dated February 2, 1967 whereby Bangur Brothers Limited purchased from the petitioner 40,000 bags of Heavy cees of the size, weight and description fully mentioned in the said contract. The said contract inter alia provided the following arbitration clause :--" (a) 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 Transferable Specific Delivery Contracts, including the validity thereof whether or not the obligation 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 arbitration as provided for in the said bye-laws. (b) Arbitration of any claims and disputes whether admitted or not arising out of or relating to all Transferable Specific Delivery Contracts in raw jute and/or jute goods between members or between members and non-members, under the provisions of the said bye laws, shall be referred to the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry or of the Indian Chamber of Commerce, Calcutta, in accordance with the rules framed by the said Chamber, for the purpose of arbitration by its Tribunal from time to time. "
( 3 ) ON or about February 3, 1967 the respondent asked the petitioner to mark the goods as "cal/jp-2/6516-B/bb/102 Heavy Cees Bags 40" x 28" hd. 21/4 lbs. Director of Supply and Transport, N. E. F. A. , Jorhat Airfield Rly. Station, Howrah KGS/grms-39233/39332. " The goods were accordingly marked. The petition issued a Lorry Delivery Order being No. 67/95 dated 15th February. 1967 in respect of a lot of 100 bales of the said goods to the respondent. The said delivery order was issued on the Works Manager of the petitioner and is an admitted document. The said document contains full particulars of the markings of the goods as aforesaid. The respondent made full payment to the extent of Rs. 76,355. 40 P. , and a bill was issued by the petitioner showing such full payment of the price and the excise duty payable thereon. The goods were appropriated towards the contract and the property in the goods passed on to the respondent. The relative cheque was duly encashed by the petitioner.
( 4 ) ON the very same day, the said goods were inspected by the Officer-in-charge T. S. I. D. Hastings, Calcutta on behalf of the Director of Supply and Transport, NEFA. Jorhat Airfield (Assam), at the mill premises of the petitioner.
( 5 ) THE respondent in their turn sold the said goods to the Director of Supply and Transport, NEFA, Jorhat Airfield (Assam ). The said goods were required for defence purposes,
( 6 ) IN spite of repeated promises to deliver, the petitioner failed to deliver the said goods on some pretext or other On March 4, 1967 on one of such occasions, the respondent went to take delivery but the petitioner's representative at the Mill failed to give delivery on the ground that their crane was out of order and a note to that effect was endorsed on the body of the said delivery order
( 7 ) THE respondent through their solicitors Messrs. Khaitan and Co. wrote several letters to the petitioner but without any success. No reply was sent at all.
( 8 ) THEREAFTER the petitioner (sic. respondent) filed this suit on or about March 21, 1967 and on the very same day presented an application in the said suit inter alia for an order for the appointment of a receiver over the said goods. In that application an ad interim order was made by this court appointing the respondent's
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