Back
1959 Supreme(Cal) 44
HIGH COURT OF CALCUTTA
K. C. Das Gupta, R. S. Bachawat
BHAGWATI PROSAD HARLALKA - Appellant
Versus
KAMALA MILLS LTD. - Respondent
A. F. O. O. 193 Of 1958
Decided On : FEBRUARY 19, 1959
Bhabra, SUBRATA ROY CHAUDHURI
An arbitration agreement is not void for uncertainty merely because it provides for reference to arbitration in accordance with the rules of a particular association, even if those rules are subject to change.
Headnote:
ARBITRATION - AGREEMENT - UNCERTAINTY - ARBITRATION CLAUSE PROVIDING FOR REFERENCE TO ARBITRATION IN ACCORDANCE WITH RULES OF MILLOWNERS' ASSOCIATION, BOMBAY - WHETHER UNCERTAIN - INTERPRETATION.
Fact of the Case:
The plaintiff filed a suit against the defendant. The defendant applied for a stay of the suit under Section 34 of the Arbitration Act, arguing that there was an arbitration agreement between the parties. The plaintiff resisted the application, contending that the arbitration agreement was void for uncertainty.
Finding of the Court:
The court held that the arbitration agreement was not void for uncertainty. It interpreted the clause to mean that there would be a reference to arbitration and that the arbitration would be conducted in accordance with the rules of the Millowners' Association, Bombay.
Issues: Whether the arbitration agreement was void for uncertainty.
Ratio Decidendi: The court held that the arbitration agreement was not void for uncertainty because: * The words "in accordance with the rules of the Millowners' Association, Bombay" could be interpreted to mean that the arbitration would be conducted in accordance with the rules of the Millowners' Association, Bombay. * The words "for the time being in force" did not create any ambiguity because they referred to the time when the disputes in question arose and were required to be referred to arbitration.
Final Decision: The court dismissed the appeal and vacated the stay order.
( 1 ) THE main question for decision in this appeal against an order of Ray, J. , allowing an application, under Section 34 of the Arbitration Act for the stay of a suit, is whether the agreement as contained in the arbitration clause in the contract, in respect of which the suit was brought, is void and unenforceable because of vagueness and uncertainty. The clause is in these 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 hereunder or as to any clause or thing herein contained or any account or valuation to be made hereunder or as to any other matter in any way relating to these presents shall be referred to arbitration in accordance with the rules of the Miliowners' Association. Bombay, for the time being in force regulating arbitrations with respect to piecegoods. "according to the plaintiff who resisted the application for stay, the agreement was void for uncertainty the uncertainty being the result of the use of the words in the concluding portion of the clause, namely, "shall be referred to arbitration in accordance with the rules of the Miliowners' Association, Bombay, for the time being in force regulating arbitrations with respect to piecegoods. " The main contention, on which it was urged before the learned Judge and also here that these words introduced an element of uncertainty and vagueness, is that the phrase "in accordance with the rules of the Mill-owners' Association, Bombay," really modifies the verbal verb (sic) "shall be referred". It is said that if the rules of the Miliowners' Association, Bombay, do not contain any provision as regards how a reference shall be made, an agreement to make a reference in accordance with the rules of the Miliowners' Association--which, it is stated was meant by the words used--will be uncertain as it will not be known in accordance with what rules the reference should be made. It is proper for me to mention that in the facts of this particular case, this argument is of little avail as turning to the rules of the Mill-owners' Association, Bombay, a copy of which is in the paper book, we find that Rules 7 (a), and (b) provide for the mode of appointment of arbitrators. It is reasonable in my mind to hold that when a party to a dispute appoints an arbitrator, he is hereby, by the very act of appointment of the arbitrator, also referring the dispute to the arbitrator. A reasonable construction of Rules 7 (a) and (b) of these Rules, therefore, justifies in my opinion the conclusion that these Rules do provide for a reference to arbitration. The basis of the argument that once the clause is
interpreted so as to mean that the reference has to be made in accordance with the Rules of the Miliowners' Association, Bombay, the agreement becomes unenforceable because of uncertainty, therefore disappears.
( 2 ) ASSUMING, however, the Rules did not contain any provision as regards the mode how a reference to arbitration should be made and assuming also that the result of that would be that a reference could not be made in accordance with the Rules, it should, I think, be the attempt of anybody trying to interpret the clause to see if on a reasonable interpretation some other meaning could be attached to the words used--some meaning which would instead of frustrating the obvious intention of the parties give effect to it. In my opinion, such an interpretation is not only possible but reasonable.
( 3 ) THE relevant words we have to consider are "shall be referred to arbitration in accordance with the Rules of the Miliowners' Association, Bombay". Supposing, as I have for the purpose of argument, that the words "reference has to be made in accordance with the Rules of the Miliowners' Association, Bombay," make the agreement unenforceable because of uncertainty, it seems to me clear
