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1961 Supreme(Cal) 74
HIGH COURT OF CALCUTTA
P. C. MALLICK, J.
Satyendra Nath Mitra
Versus
Union of India
Suit No.1735 of 1960
Decided On : 24-04-1961
D.K. Sen, for Applicant; A.M. Paul, for Respondent.
A party to an arbitration agreement cannot be compelled to arbitrate a dispute with a person who is not a party to the agreement or a person claiming under a party to the agreement.
Headnote:
ARBITRATION - STAY OF SUIT - SECTION 34 OF THE INDIAN ARBITRATION ACT - CONDITIONS FOR STAY - WHETHER THE CLAIM AGAINST UMA SANKAR IS A CLAIM IN TORT OR CONTRACT - WHETHER UMA SANKAR IS A PARTY TO THE CONTRACT OR A PERSON CLAIMING UNDER A PARTY TO THE CONTRACT - WHETHER THE ARBITRATION CLAUSE IS HARD AND UNCONSCIONABLE.
Fact of the Case:
The plaintiff, a solicitor, filed a suit against the Union of India and Uma Sankar, the General Manager of Calcutta Telephones, for damages for breach of contract and negligence, respectively. The Union of India applied for a stay of the suit under Section 34 of the Indian Arbitration Act, 1940, on the ground that the disputes were covered by an arbitration clause in the telephone hiring contract.
Finding of the Court:
The court held that the claim against Uma Sankar was a claim arising out of the contract and therefore covered by the arbitration clause. However, the court held that Uma Sankar was not a party to the contract or a person claiming under a party to the contract, and therefore the suit against him could not be stayed. The court also held that the claim against the Union of India was covered by the arbitration clause and that the conditions for stay under Section 34 of the Arbitration Act were satisfied. The court further held that the arbitration clause was not hard and unconscionable.
Issues: 1. Whether the claim against Uma Sankar is a claim in tort or contract? 2. Whether Uma Sankar is a party to the contract or a person claiming under a party to the contract? 3. Whether the arbitration clause is hard and unconscionable?
Ratio Decidendi: 1. The court held that the claim against Uma Sankar was a claim arising out of the contract and therefore covered by the arbitration clause. However, the court held that Uma Sankar was not a party to the contract or a person claiming under a party to the contract, and therefore the suit against him could not be stayed. 2. The court held that the claim against the Union of India was covered by the arbitration clause and that the conditions for stay under Section 34 of the Arbitration Act were satisfied. 3. The court further held that the arbitration clause was not hard and unconscionable.
Final Decision: The court granted a stay of the suit against the Union of India and directed the other defendant to file his written statement within three months.
2. The respondent is a subscriber of the telephone No.55-4139 and had executed a telephone hiring contract in respect to that telephone. The contract is signed on behalf of the President of the Indian Union by one S.N. Chaudhury and not the defendant Uma Sankar. The terms and conditions of the contract are set out in the schedule annexed to the contract. Reference may be made to certain terms hereunder stated:
"3. The Government shall not be liable in damages for any interruption or failure of service, but shall use every reasonable endeavour to repair defects as speedily as possible after receipt of notice in writing."
"13. If the rental or call charges or any fee, charge, expense or damage payable by the subscriber under this contract shall be due and not paid or if the Subscriber shall have failed to, make a deposit when called upon to do so, the Government may without notice and without prejudice to the other clauses and conditions of this contract disconnect the Exchange line and may decline to make any connection involving an additional charge without payment of such."
"17. If any dispute shall arise touching the meaning or the effect of this contract or in any way relating thereto, the decision of which is not expressly provided herein or in the conditions, the same shall be referred for the sole arbitration of the Director General of Posts and Telegraphs and his decision thereon shall be final and binding on the parties and the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof and the rules made thereunder from time to time shall apply to such arbitration"
It is contended that the disputes in suit are covered by the arbitration clause and the other conditions laid down in Sec.34 of the Indian Arbitration Act have been satisfied in the instant case.
3. I will first take up the case as against the defendant Uma Sankar. It is contended by Mr. D.K. Sen learned counsel appearing in support of the application that the claim against Uma Sankar is a claim for damages for breach of contract. In any view of the matter it is a claim arising out of the contract and therefore covered by the arbitration clause which is in so wide terms as to cover all dispute, relating to
