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High Court Of Calcutta
Sankar Prasad Mitra, Salil Kumar Datta
SOORAJMULL NAGARMULL - Appellant
Versus
ASIATIC TRADING CO. - Respondent
Appeal 60 Of 1972
Decided On : 01/20/1978
ARBITRATION - Stay of Suit - Partnership - Dissolution - Arbitration Agreement - Validity - Maintainability of Application.
Fact of the Case:
The appellant, a registered partnership firm under the Indian Partnership Act, 1932, had entered into two contracts with the respondent for the sale of Hessian cloth. The contracts contained a provision for arbitration of disputes under the bye-laws of the East India Jute and Hessian Exchange Ltd. One of the partners of the appellant firm died during the pendency of the contracts. The respondent instituted a suit against the appellant firm and its partners for damages for breach of contract. The appellant firm filed an application under Section 34 of the Arbitration Act, 1940 for stay of the suit.
Finding of the Court:
The court held that the partnership firm did not dissolve with the death of one partner and continued during the material period as a partnership as before. The contracts between parties with the arbitration clause were thus valid and enforceable when the suit was instituted and even thereafter. The court also held that there was no possibility of conflict of awards, which may frustrate any arbitration agreement. The question of the respondents' claim being time barred is also of no consideration for a decision under Section 34.
Issues: 1. Whether the partnership firm dissolved with the death of one partner? 2. Whether the contracts between parties with the arbitration clause were valid and enforceable when the suit was instituted and even thereafter? 3. Whether there was a possibility of conflict of awards, which may frustrate any arbitration agreement?
Ratio Decidendi: 1. The court held that the partnership firm did not dissolve with the death of one partner and continued during the material period as a partnership as before. This was based on the provisions of the partnership deed which provided that the death of a partner would not automatically dissolve the partnership and that the partnership would continue upto the end of the accounting period of the year during which the death occurred. 2. The court held that the contracts between parties with the arbitration clause were valid and enforceable when the suit was instituted and even thereafter. This was based on the finding that the partnership firm continued to exist and that the arbitration agreement was a valid and enforceable contract between the parties. 3. The court held that there was no possibility of conflict of awards, which may frustrate any arbitration agreement. This was based on the fact that the parties could lodge their counter claims or make separate reference for their claims in the arbitration proceedings and that the tribunal hearing the reference could take into account the award in an earlier reference on the same contract and mould its decision accordingly.
Final Decision: The appeal was allowed and the impugned order was set aside. The application by the appellant under Section 34 of the Arbitration Act 1940 was allowed and the suit No. 440 of 1968 was stayed.
( 1 ) THIS is an appeal by the firm Soorajmull Nagarmull against the judgment and order of Salil Kumar Roy Choudhry, J. dated Dec. 6, 1971 whereby the appellant's application under Section 34 of the Arbitration Act, 1940 for stay of the connected suit was dismissed.
( 2 ) AT the material time, the appellant had been carrying on business of a jute mill under the name and style of "shree Hanuman Jute Mills". The appellant, a registered partnership firm under the Indian Partnership Act, 1932, had been a member of the East India Jute and Hessian Exchange Ltd, By a contract dated March 17, T967 through bought and sold notes, the appellant in his said business of Shree Hanuman Jute Mills agreed to sell to the respondent No 1, in the standard form of East India Jute and Hessian Exchange Ltd, for transferable specific delivery contract for jute goods, 50000 yards (25 bales) of Hessian cloth size 55" side, weight 10 1/2 oz for 40" @ Rs, 70. 50 p. per 100 yards. The number of the contract was JG 72213 while the broker was Messrs. Basantlal Mussadi and Sons. The delivery, free alongside export vessel in the port of Calcutta, was to be given and taken within April, 1967.
( 3 ) THERE was a provision for arbitration of the Bengal Chamber of Commerce and Industry under the bye-laws of the said East India Jute and Hessian Exchange Ltd. for Transferable Specific Delivery contracts in jute goods and the aforesaid' contract was made subject to the terms and conditions of such T. S. D. Contracts. The said provision is as follows;--"all matters, questions, disputes, differences and/or claim arising out of and/or concerning and/or in connection with and/or in consequence of or relating to the T. S. D. contracts including the validity thereof 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 arbitration as provided in these bye-laws,"
( 4 ) SIMILAR contract for supply of another quantity of 50000 yards of Hessian cloth of similar specification and price at Rs. 68. 25 p per 100 yards, delivery within May, 1967 was entered into on March 25,. 1967 by the appellant in its said business of Shree Hanuman Jute Mills as seller and the said respondent as buyer bearing No. 7221. 6. As the other contract, arbitration of the Bengal Chamber of Commerce was provided for in similar terms and the contract was made subject to the bye-laws of such trading of the East India Jute and Hessian Exchange Ltd.
( 5 ) BYE-LAWS 1 of Chapter X of the Bye-laws of the East India Jute and Hessian Exchange Ltd. is as follows:--"arbitration of any claims and disputes whether admitted or not arising out of or in relation to all T S. D. Contracts in raw jute and/or jute between members or between members and non-members, under the provisions of these bye-laws, shall be referred to the Tribunal of Arbitration either of the Bengal Chamber of Commerce and Industry or of the Indian Chamber of Commerce, Calcutta as is agreed in T.-S, D. Contract in accordance with the rules framed by the said chamber, for the purpose of arbitration by its Tribunal from time to time, provided where in a T. S. D. contract, the name of the tribunal of Arbitration of either of the aforesaid two Chambers for the purpose of reference to arbitration is omitted, such reference shall be made to the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry as aforesaid. "
( 6 ) THE time for delivery under contract of March 17, 1967 was extended to May 10, 1967 by mutual consent of the parties and shipping instructions were given by the respondent on April 28, 1967 but on account of non-completion of customs formalities the goods could not be shipped. The respondent by its letter of June 14, 1967 to the Jute Mills wrote as follows in respect of both contracts. "messrs Shree Hanuman Jute Mills, Ca
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