1949 Supreme(Cal) 482
CALCUTTA HIGH COURT
Chatterjee, J.
Bajrang Lal Laduram - Appellant
Versus
Agarwal Brothers - Respondent
Decided On : 19-08-1949
A.C. Ganguly, for the Appellant; N. Barwell, for the Respondent
The main legal point established in the judgment is that a person who denies the existence of an arbitration agreement cannot apply under the Arbitration Act, and the court may reserve judgment on the existence or validity of the arbitration agreement.
Headnote:
Arbitration Agreement - Maintainability of Application - Sections 31, 32, 33 of the Arbitration Act - Summary of Acts and Sections: Sections 31, 32, and 33 of the Arbitration Act were discussed by the court in determining the maintainability of the application to adjudicate the existence of an arbitration agreement. The court analyzed conflicting judicial authorities and interpretations of the sections, ultimately dismissing the application and directing the arbitration to proceed.
Fact of the Case:
The petitioner sought an adjudication that an arbitration agreement between the parties is still subsisting, based on a contract for the purchase of heavy cees bags. The respondent denied the transaction, leading to a dispute referred to the arbitration of the Bengal Chamber of Commerce. The Court was asked to determine the maintainability of the application.
Finding of the Court:
The court dismissed the application, emphasizing that a person who denies the existence of an arbitration agreement cannot apply under the Arbitration Act. The court directed the Tribunal of Arbitration to proceed with the arbitration and reserved judgment on the existence or validity of the arbitration agreement.
Issues: The main issue was the maintainability of the application to adjudicate the existence of an arbitration agreement under the Arbitration Act.
Ratio Decidendi: The court held that a person who denies the existence of an arbitration agreement cannot apply under the Arbitration Act, and emphasized that the arbitrators should proceed with the reference. The court reserved judgment on the existence or validity of the arbitration agreement.
Final Decision: The application was dismissed, and the Tribunal of Arbitration was directed to proceed with the arbitration. Costs were to abide the result of the arbitration.
JUDGMENT
Chatterjee, J. - This is an application by Bajranglal Serowgee who carries on business under the name and style of Bajranglal Laduram for having the effect of an arbitration agreement determined by this Court. The application is really for an adjudication that an arbitration agreement between the parties is still subsisting.
2. By contract No. 1633 dated 28th July 1948 the petitioner alleges that he agreed to purchase from the respondent 80,000 heavy cees bags in 200 bales at the rate of Rs. 140/4/- per 100 bags, delivery August 1948. The terms of the agreement appear from a copy of the Bought Note included in the annexure to the petition.
3. Clause 13 of the said contract contained an agreement for arbitration in very wide terms.
4. The petitioner's case is that on 16th August 1948 he sent shipping instructions to the respondent to bring 50 bales, that is, 20,000 heavy cees bags, and on 18th August 100 bales, that is, 40,000 heavy cees bags alongside the vessel "Kutsang." The respondent failed to bring the aforesaid goods alongside the ship and a letter was sent to the respondent complaining about this failure.
5. It is alleged the petitioner by letter dated 31st August 1948, again requested the respondent to tender the pucca delivery order in respect of the balance of 50 bales of goods, that is, 20,000 heavy cees bags and offered to pay for and take delivery of the said pucca, delivery order. The respondent neither sent the 150 bales in terms of the shipping instructions nor did they give any delivery order. The petitioner's attorneys demanded payment of the different bills amounting to Rs. 15,992/6/4 but the respondent failed to pay. Thereupon on 13th December 1948 the petitioner filed a statement of case and referred the dispute to the arbitration of the Bengal Chamber of Commerce and claimed the said sum from the respondent.
6. The reply of the respondent was a complete denial of the transaction. Their case is, they never entered into the contract in question and they repudiated liability in toto. Some statements and counter statements were filed before the Tribunal of Arbitration of the Bengal Chamber of Commerce who, it is alleged, heard oral evidence.
7. On or about 8th April 1948, the petitioner was informed by a letter from the Registrar, Bengal Chamber of Commerce that the Arbitrators were not prepared to proceed with the arbitration until the question of the existence of the arbitration agreement was decided by this Court.
8. On receipt of this letter from the Registrar of the Bengal Chamber of Commerce dated 8th April 1948 the present application was presented.
9. The real question I have got to determine is the maintainability of this application.
10. The question argued before me is this : can a person who affirms the existence of an arbitration agreement apply to the Court u/s 33 or any other section of the Arbitration Act for an adjudication by the Court that such an agreement exists and is binding on the parties ?
11. In Manik Lal v. Shiva Jute Bailing Ltd. 62 C. W. N. 389, Das J. held that the "existence" of an arbitration agreement which by Section 32, Arbitration Act, 1940, cannot be challenged by a suit is not the factual but the legal existence of an agreement on grounds like mistake, fraud, illegality, etc, under Sections 19 to 30, Contract Act. His Lordship further held that Section 33 applies only when the applicant admits the factual existence of an agreement but challenges the "legal" existence thereof on such grounds as misrepresentation, fraud, etc. In Baijnath Narseria Vs. Chhotulal Sethia , Clough J. followed the judgment of Das J.
12. Sinha J. has differed from the judgments of both these learned Judges in Chaturbhuj v. Bhicamchand Chororia & Sons 53 C. W. N. 410. According to the learned Judge the intention of the framers of the Arbitration Act was that the right and liabilities of the parties in respect of an arbitration agreement or an award such as are mentioned in Sections 31 and 32 of the Ac