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1951 Supreme(Cal) 71

HIGH COURT OF CALCUTTA
Harries, Banerjee
STATE OF BOMBAY - Appellant
Versus
ADAMJEE HAJEE DAWOOD - Respondent
A. F. O. D.  142  Of  1950
Decided On : MARCH 1, 1951

Advocates Appeared:
A.K.SEN, P.C.MISHRA, P.C.MULICK, S.ROY

Sections 32 and 33 of the Arbitration Act, 1940, do not bar a suit for a declaration that a contract is void, even if the contract contains an arbitration clause.

Headnote:

ARBITRATION ACT, 1940 - SECTION 32 - SUIT FOR DECLARATION THAT CONTRACT IS VOID - MAINTAINABILITY - SECTIONS 32 AND 33 DO NOT BAR SUIT FOR DECLARATION THAT CONTRACT IS VOID - ARBITRATION AGREEMENT AND CONTRACT ARE TWO SEPARATE THINGS - ARBITRATION AGREEMENT MAY FALL WITH CONTRACT BUT NOT VICE VERSA - SECTIONS 32 AND 33 HAVE LIMITED APPLICATION TO CHALLENGES TO ARBITRATION AGREEMENTS, NOT CONTRACTS CONTAINING THEM.

Fact of the Case:

Plaintiff filed a suit seeking a declaration that a certain contract was not made between the parties and was not binding on it, a declaration that the defendant was not entitled to make any claim in respect of the said contract, and an order that the contract be adjudged void and delivered up to be cancelled. The defendant claimed that the contract contained an arbitration clause and that the plaintiff had refused to arbitrate the dispute. The trial court dismissed the suit on the ground that it was not maintainable in view of Section 32 of the Arbitration Act, 1940.

Finding of the Court:

The High Court allowed the appeal and set aside the trial court's decree. The court held that Sections 32 and 33 of the Arbitration Act, 1940, do not bar a suit for a declaration that a contract is void, even if the contract contains an arbitration clause. The court reasoned that an arbitration agreement and a contract are two separate things, and that the arbitration agreement may fall with the contract but not vice versa. The court further held that Sections 32 and 33 have a limited application to challenges to arbitration agreements, not contracts containing them.

Issues: Whether a suit for a declaration that a contract is void is maintainable in view of Sections 32 and 33 of the Arbitration Act, 1940.

Ratio Decidendi: Sections 32 and 33 of the Arbitration Act, 1940, do not bar a suit for a declaration that a contract is void, even if the contract contains an arbitration clause. An arbitration agreement and a contract are two separate things, and the arbitration agreement may fall with the contract but not vice versa. Sections 32 and 33 have a limited application to challenges to arbitration agreements, not contracts containing them.

Final Decision: The High Court allowed the appeal and set aside the trial court's decree. The suit was remanded to the trial court for disposal in accordance with law.

BANERJEE, J.

( 1 ) THIS is an appeal from a decree made by Sarkar J. on 22-8-1950, dismissing a suit on a preliminary issue. That issue is as to whether the suit is maintainable in view of Section 32, Arbitration Act, 1940. Section 32 is as follows:"notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act. "

( 2 ) THE facts are as follows. The plff. it appears from the plaint, claims a declaration that a certain contract was not made between the parties and is not binding on it. The plff. claims a further declaration that the deft. is not entitled to make any claim in respect of the said contract and asks that the contract be adjudged void and delivered up to be cancelled. There is a prayer for an injunction to restrain the deft. , its servants and agents from making any claim or demand on the contract. There is a prayer also for damages, etc.

( 3 ) BY a telegram sent to the plff. by one Mr. Kennedy, the deft, offered to supply to the plff. certain quantity of gunny bags. This offer was accepted by a letter of the plff. to the deft. There was confirmation of the plff's acceptance.

( 4 ) ACCORDING to the plff. this correspondence constitutes the contract between the parties. It is alleged in the plaint that subsequently it was agreed between the parties that the goods would be shipped free on board the steamer, Calcutta. All the goods except 63 bales were duly delivered. The plff. makes no claim in respect of the nondelivery of the 63 bales.

( 5 ) THE deft made a claim against the plff. in respect of the 63 bales alleging that Mr. Kennedy was the plff's. agent and that he had bought the goods for the plff. from the deft. through a firm of the name of Moran and Co. It further said that the purchase was made by Moran and Co's. bought and sold notes referred to as Contract No. 94452. This contract contains an arbitration clause. It is not necessary to set out the other terms of this alleged contract.

( 6 ) IT is alleged that the plff. having refused to pay, the deft, purporting to act under the arbitration clause contained in the contract (94452) referred the dispute to the arbitration of the Bengal Chamber of Commerce. The plff. objected to the arbitration on the ground that there was no valid submission as the contract was not binding on the plff. , the reasons given being (a) that Kennedy had no authority to enter into the contract on behalf of the plff. , and (b) that the contract was not in terms of the provisions of Section 175 Govt. of India Act, which requires that the contract must be signed on behalf of the Govt.

( 7 ) THE plff. on these facts filed the suit, claiming the reliefs I have mentioned above.

( 8 ) SARKAR J. construed the plaint as one for a declaration that the arbitration agreement contained in the contract is invalid and on that view he held in view of Sections 32 and 33, Arbitration Act, that the suit was not maintainable. With great respect to the learned Judge, we are unable to construe the plaint in that way. In the plaint, the plff. states the circumstances under which, according to it, the alleged contract was entered into and claims a declaration that the contract is not binding on the plff. This is not a suit merely for a declaration that the arbitration agreement is invalid. It is a suit claiming something more, namely, claiming that the contract containing the arbitration clause is void.

( 9 ) EVERY person has a right to bring a suit which is of a civil nature and the Court has jurisdiction to try all suits of a civil nature (see Section 9, Civil P. C.) If this right has got to be taken away, that must be taken away by express terms or by necessary implication. The plff. has a right to sue for having a contract adjudged void





















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