HIGH COURT OF CALCUTTA
P. Chatterjee, A. N. Sen
TEAMCO PRIVATE LTD. - Appellant
Versus
T. M. S. MANI - Respondent
A. F. O. O. 213 Of 1965
Decided On : FEBRUARY 18, 1966
ARBITRATION - VAGUENESS AND UNCERTAINTY - ARBITRATION CLAUSE - INTERPRETATION - ENFORCEABILITY - SECTION 20 OF THE ARBITRATION ACT, 1940.
Fact of the Case:
An arbitration agreement was challenged for being vague and uncertain due to ambiguity in the number of arbitrators to be appointed and the manner of their appointment. The plaintiff, a selling agent, filed a suit under Section 20 of the Arbitration Act to file the agreement in court, while the defendant, the company, contested the suit, arguing that the agreement was unenforceable.
Finding of the Court:
The court held that the arbitration clause was vague and uncertain and did not amount to a valid arbitration agreement. The court found that the language used in the clause, "the matter should be referred to the arbitrators elected by the parties," did not provide any clarity on the number of arbitrators or the method of their appointment.
Issues: 1. Whether the arbitration clause in the agreement was vague and uncertain. 2. Whether the arbitration agreement was enforceable. 3. Whether the suit was maintainable under Section 20 of the Arbitration Act.
Ratio Decidendi: 1. The court interpreted the arbitration clause strictly and found that the language used was ambiguous and did not convey a clear intention regarding the number of arbitrators or the manner of their appointment. 2. The court held that the arbitration clause was unenforceable due to its vagueness and uncertainty, as it failed to satisfy the requirement of certainty under Section 29 of the Indian Contract Act. 3. Since there was no valid arbitration agreement, the court held that the suit under Section 20 of the Arbitration Act was not maintainable.
Final Decision: The court allowed the appeal, set aside the trial court's order, and dismissed the suit. The parties were directed to bear their own costs.
( 1 ) THIS appeal has been preferred against the judgment and decree of the Subordinate Judge, 10th Court, Alipore, whereby the learned Judge has directed the filing of the arbitration agreement in court.
( 2 ) THE facts of the case have been fully set out in the judgment of the court below and it is not necessary to repeat the same. It may only be noted that there is not much of dispute with regard to the facts.
( 3 ) THE facts relevant for the purpose of this appeal may, however, be briefly stated, T. M. S. Mani, the plaintiff in the action and the respondent in this appeal was appointed a selling agent and sales organiser by Messrs Teamco Private Ltd. , the defendant in the action and the appellant herein under an agreement in writing dated 1-4-61. There is an arbitration clause contained in Clause 11 of the said agreement. Clause 11 of the said agreement provides as follows: in case of any dispute arising between the parties, the matter should be referred to the arbitrators, elected by the parties and their decision on the subject will be final". T. M. S. Muni filed an action under Section 20 of the Arbitration Act in the 10th Court of the Subordinate Judge, 24 Parganas, Alipore praying that the agreement be filed in court. The said action was registered as Title suit No. 40 of 1963 in the 10th Court of the Subordinate Judge, 24 Parganas, Alipore with T. M. S. Mani as the plaintiff in the suit and Messrs Teamco Private Ltd, as the defendant therein, The suit was contested by the defendant. Two principal points were urged on behalf of file defendant in the trial court. The first point was that the suit was not maintainable in law, as it was not open to the plaintiff to proceed under Section 20 of Chapter III of the Arbitration Act, the plaintiff having" previously taken steps under Section 8 of Chap, it or the said Act. The second point argued was that the arbitration agreement in question was vague and uncertain and the same, therefore, could not be enforced in law. The learned subordinate Judge held against the defendant on both the points and decreed the suit in favour of the plaintiff. Hence this appeal has been filed by the defendant.
( 4 ) MR. Bhabra, the learned counsel appearing on behalf of the defendant-appellant, has raised before us the very same points and has submitted that the decision of the learned Subordinate Judge is erroneous and wrong.
( 5 ) THE main contention of Mr. Bhabra, the learned counsel for the appellant, has been that the arbitration agreement in question is ague and uncertain and is not enforceable in law.
( 6 ) THE arbitration clause in the agreement has already been set out. Mr. Bhabra argues that the arbitration agreement is vague and uncertain for two reasons; firstly, it is vague and uncertain with regard to number of arbitrators to be appointed, and secondly it is vague and uncertain with regard to the manner or mode of appointment of the arbitrators. Mr. Bhabra submits that the arbitration clause provides that disputes should be referred to "the Arbitrators" and he contends that there may be any number of arbitrators provided the number is more than one. According to Mr. Bhabra, the expression "the Arbitrators" used in the said clause is absolutely vague and does not indicate bow many arbitrators will be there except that the said expression clearly indicates that the number of arbitrators must be more than one. Mr. Bhabra contends that, as there is no certainty to the number of arbitrators to be appointed except that such number must be more than one, the said clause becomes vague and uncertain and there can be no valid arbitration agreement, enforceable in law. Mr. Bhabra has also drawn our attention to the judgment of the Court below wherein the learned Subordinate Judge has himself held "no doubt the number of arbitrators has not been mentioned and there is some vagueness in this respect". Mr. Bhabra further contends that the Arbitration Act provides for referen
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