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Allahbad High Court
D.S.MATHUR
Gaddarmal Hiralal - Appellant
Versus
Messrs. Chandrabhan Agarwal and Co. - Respondent
Decided On : 05/16/1967
ARBITRATION - AGREEMENT - IMPLIED ACCEPTANCE - FORWARD TRANSACTIONS - CONTRACT FORMS - RULES OF ASSOCIATION - BINDING ON NON-MEMBERS - KARTA OF JOINT HINDU FAMILY FIRM - AUTHORITY TO ENTER INTO TRANSACTIONS - DISPUTES REFERABLE TO ARBITRATION.
Fact of the Case:
The plaintiff, a trading member of the Agra Merchants Chamber, Ltd., Agra, entered into forward transactions with the defendant firm, Messrs. Gaddarmal Hira Lal, through its representative, Roshan Lal. The contract forms used for these transactions contained a clause for compulsory arbitration in accordance with the byelaws of the Chamber. The defendant firm did not return the contract forms, but retained them. Disputes arose between the parties, and the plaintiff filed an application under Section 20 of the Arbitration Act for referring the disputes to arbitration.
Finding of the Court:
The court held that the defendant firm had impliedly accepted the proposal contained in the contract forms by retaining them, and that this amounted to an arbitration agreement. The court also held that the rules of the Chamber were binding on the defendant firm, even though it was not a member of the Chamber, because the defendant firm had accepted the rules by implication by retaining the contract forms. The court further held that Roshan Lal was the karta of the joint Hindu family firm and had the authority to enter into the transactions on behalf of the firm.
Issues: 1. Whether the defendant firm had impliedly accepted the proposal contained in the contract forms by retaining them, and whether this amounted to an arbitration agreement? 2. Whether the rules of the Chamber were binding on the defendant firm, even though it was not a member of the Chamber? 3. Whether Roshan Lal was the karta of the joint Hindu family firm and had the authority to enter into the transactions on behalf of the firm?
Ratio Decidendi: 1. The court held that the defendant firm had impliedly accepted the proposal contained in the contract forms by retaining them, and that this amounted to an arbitration agreement. The court relied on the fact that there was a prior agreement between the parties that the contract forms, if not returned unsigned with a letter, would amount to acceptance of the transactions noted therein. The court also relied on the fact that the defendant firm had acted upon the rules of the Chamber in previous transactions. 2. The court held that the rules of the Chamber were binding on the defendant firm, even though it was not a member of the Chamber, because the defendant firm had accepted the rules by implication by retaining the contract forms. The court relied on the fact that the contract forms contained a clause stating that the defendant firm accepted the rules of the Chamber. 3. The court held that Roshan Lal was the karta of the joint Hindu family firm and had the authority to enter into the transactions on behalf of the firm. The court relied on the fact that Roshan Lal had signed a vakalatnama in a case as "karta" of the family.
Final Decision: The court dismissed the appeal and upheld the order of the lower court referring the disputes to arbitration.
2. The Chamber has its own byelaws, one of which prescribes compulsory arbitration in disputes not only between the members thereof but also between the members and non-members. The plaintiff firm is a trading member of the Chamber and it carries on the business of for ward transaction through dalals registered with the Chamber. The plaintiff's case is that the defendants entered into certain forward transactions with the plaintiff by retaining the contract forms or returning them duly signed One of the conditions of the contract printed on the reverse of the contract forms was that the rules of the Chamber and also the commercial rules and conditions were acceptable to the defendants. The plaintiff's case further is that numerous contract forms were sent to the defendant line some of which were returned duly signed and the others were not returned and in view of the contract, non-return of the contract forms amounted to acceptance, and the contract forms were not only evidence of the transactions in question but also showed that there was an Agreement for compulsory arbitration.
3. When disputes arose between the parties, the plaintiff moved the present petition under Section 20 of the Arbitration Act for the filing of the arbitration agreement and also for reference of the dispute to arbitration.
4. Roshan Lal, defendant, alone contested the proceeding. His case is that he was not the "karta of the joint Hindu family, the 'karta' of the family being his father, Hiralal, and hence he could not represent the joint Hindu family business carried on in the name of Messrs. Gaddarmal Hira Lal,; that he had not entered into the forward transactions in dispute, that he suit was not maintainable in view of the fact that the defendant-firm had not been sued through the 'karta Hira Lal, and that the suit was bad for non-joinder of parties. It was also pleaded that the Additional Civil Judge had no jurisdiction to try the suit.
5. All these contentions in so far as the Laha transactions are concerned were repelled and to this extent the application under Sec. 20 of the Arbitration Act was allowed and the disputes pertaining to the 'Laha' transactions were referred to arbitration. The application under Section 20 in so tai as the Chuhi-Arhar transactions are concerned was rejected. The plaintiff has submitted to this order and the defendants alone have preferred an appeal with regard to the 'Laha' transactions.
6. The points for consideration are :
(1) Whether Roshan Lal, defendant No. 2. was the karta of the joint Hindu family and hence the karta of the joint family business carried on in the name of Messrs Gaddarmal Hira Lal, defendant. No 1 ?
(2) Whether Messrs. Gaddarmal Hira Lal had entered into the transactions which are now to be referred to arbitration in accordance with the byelaws of the Agra Merchants' Chambers, Ltd., Agra ?
(3) Whether agreement, if any, amounts to a arbitration agreement ?
7. The agreement originally arrived at between Roshan Lal, defendant No 2, on behalf of the firm Messrs. Gaddarmal Hira Lal on one side, and the plaintiff firm Messrs Chandrabhan Agarwal and Co., on the other prior to the defendants entering into the forward transactions, was oral. The term 'arbitration agreement' has been defined in S. 2(a) of the Arbitration Act to mean a written agreement to submit present, or future differences to arbitration, whether an arbitrator is named therein or not. This
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