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High Court Of Calcutta
SABYASACHI MUKHERJI, C. K. BANERJEE
I.T.C.LTD. - Appellant
Versus
GEORGE JOSEPH FERNANDEZ - Respondent
Appeal 75 Of 1981
Decided On : 02/03/1982
The Court held that the arbitration clause in the contract was valid and enforceable, and that the dispute between the parties should be referred to arbitration. The Court also held that the plaintiff's claim was not barred by limitation, as the time spent in prosecuting the suit would be excluded under Section 14 of the Limitation Act.
Fact of the Case:
The plaintiff, a charterer, entered into a charterparty agreement with the defendant, an owner, for the use of two fishing trawlers. The agreement contained an arbitration clause. A dispute arose between the parties, and the plaintiff filed a suit in court. The defendant applied for a stay of the suit under Section 34 of the Arbitration Act, 1940, on the ground that the dispute should be referred to arbitration. The plaintiff opposed the application, arguing that the arbitration clause was invalid and that the claim was barred by limitation.
Finding of the Court:
The Court held that the arbitration clause was valid and enforceable, and that the dispute between the parties should be referred to arbitration. The Court also held that the plaintiff's claim was not barred by limitation, as the time spent in prosecuting the suit would be excluded under Section 14 of the Limitation Act.
Issues: 1. Whether the arbitration clause in the contract was valid and enforceable. 2. Whether the dispute between the parties should be referred to arbitration. 3. Whether the plaintiff's claim was barred by limitation.
Ratio Decidendi: 1. The Court held that the arbitration clause was valid and enforceable because: - The parties had agreed to the arbitration clause in the contract. - The arbitration clause was not contrary to public policy. - The arbitration clause was not void for uncertainty. 2. The Court held that the dispute between the parties should be referred to arbitration because: - The dispute arose out of the contract containing the arbitration clause. - The arbitration clause was wide enough to cover the dispute. 3. The Court held that the plaintiff's claim was not barred by limitation because: - The time spent in prosecuting the suit would be excluded under Section 14 of the Limitation Act.
Final Decision: The Court dismissed the plaintiff's appeal and upheld the trial court's order staying the suit and referring the dispute to arbitration.
( 1 ) THIS is an appeal from a judgment and order passed by Mr. Justice Salil Kumar Roychoudhury on 11th of February, 1981 granting the stay asked for and directing the parties to take immediate steps for initiation of the reference under the arbitration agreement contained in the contract mentioned in the plaint. The judgment was passed on an application under Section 34 of the Arbitration Act, 1'940 for stay of Suit No. 736 of 1978 instituted by I. T. C. Ltd. v. G. J. Fernandez. Before I refer to the relevant averments in the plaint it will be important to understand the background under which this application came to be made. The suit was filed on 29th of September, 1978 by the Charterer, for a declaration that the contract and modifications mentioned in the plaint were void and illegal and a decree for Rs. 39,64,341/- or an enquiry as to what amount was due to the plaintiff. In that suit instituted by I. T. C. Limited there were two defendants namely, G. J. Fernandez who was defendant No. 1 and secondly, Canara Bank, defendant No. 2. George Joseph Fernandez being the defendant No. 1 made an application on 24th of April, 1979. George Joseph Fernandez was the absolute owner of two fishing Trawlers Avemaria I and Ave Maria II registered under Nos. 1567 and 1568 dated the 30th of January, 1974 with the Registrar of Indian Ships, Cochin. The said trawlers were imported by the said petitioner under an import licence No. P/cg/ 2062299 dated 3rd of March, 1971. As good deal of arguments were advanced on the conditions of licence it would be relevant to refer to some of the relevant provisions of the licence. The licence was headed "industry Processed Food (Fishing)". Under Column No. 2 the description and quality of the goods were indicated as two Nos. of fishing trawlers as per list. The approximate value of CIF was stated to be Rs. 23,55,000/-only. The period of shipment was indicated 12 months the date of issue and revalidated up to 6th of January, 1973. The licence was granted, under Govt of India, Ministry of Commerce and Industry Order No. 17/55 dated 7th of December, 1955 as subsequently amended, issued under the Import and Export Control Act, 1947 and was without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which might be enforced at the time of their arrival. In the instruction columns it was stated that the provision which was inapplicable should be struck off. It was further stated that the licence was issued from file No. CGIII/25/143/71. In column I which was not struck off, indicated as follows: --" (i) This licence is issued with an initial validity period of twelve/twenty-four months from the date of issue. It will be revalidated at or before the end of the said period of twelve-twenty-four months, for a further period of two-one year (s), upon request provided the licensing authority is satisfied that a firm order has been placed on and accepted by the foreign supplier but shipment could not be effected within the initial validity period of the licence. Normally the validity period will not be extended beyond three years from the date of issue. (ii) This licence will be subject to the conditions in force relating to the goods covered by the licence, as described in the relevant import Trade Control Policy Book, or any amendment thereof made up to, and including, the date of issue of the licence, unless otherwise specified. (iii) It is also the condition of this licence that:-- (a) where an irrevocable letter of credit is opened by the holder of licence to finance the import of any goods covered thereby, then the authorised dealer hi foreign exchange through whom the credit is opened shall be deemed to be a joint holder of this licence to the extent of the goods covered by the credit, (b) The goods imported under this licence will be utilised in the licence holder's factory and that no portion thereof will be sold to or be permit
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