Back
HIGH COURT OF ALLAHBAD
R. N. GURTU, D. N. ROY, JJ.
Ram Bahadur Thakur
Versus
Thakur Das
F. A. F. O. No. 333 of 1955
Decided On : 18-02-1958
ARBITRATION - STAY OF PROCEEDINGS - APPLICATION BY ONE PARTNER - ESTOPPEL - INTRICATE QUESTIONS OF LAW AND FACT - DISCRETION OF COURT - COSTS.
Fact of the Case:
The plaintiff, a registered partnership firm, sued the defendants, also a registered partnership firm, for the recovery of Rs. 1,05,388/5/- on alleged breach of contract. Defendant no. 4 applied under S. 34 of the Arbitration Act for a stay of the proceedings, contending that there was an arbitration clause in the contract and the dispute should be settled through arbitration. The plaintiff contended that the application was misconceived as it was made by one partner alone and not by all the defendants, and that the defendants were estopped by their letter dated 24-12-1951, from taking up the plea of S. 34 of the Act. The plaintiff also contended that the court below erred in holding that no intricate question of law was involved.
Finding of the Court:
The court held that the application under S. 34 of the Arbitration Act was not misconceived as it was made by one partner on behalf of the firm and the other partners had ratified the act by their acquiescence or silence. The court also held that the defendants were not estopped by their letter dated 24-12-1951, from asking the court to grant the relief under S. 34 of the Arbitration Act. The court further held that the court below was wrong in holding that there was no question of law involved in the suit, but that the discretion exercised by the court below under S. 34 of the Arbitration Act was correct.
Issues: 1. Whether the application under S. 34 of the Arbitration Act was misconceived as it was made by one partner alone and not by all the defendants? 2. Whether the defendants were estopped by their letter dated 24-12-1951, from taking up the plea of S. 34 of the Act? 3. Whether the court below erred in holding that no intricate question of law was involved?
Ratio Decidendi: 1. The court held that the application under S. 34 of the Arbitration Act was not misconceived as it was made by one partner on behalf of the firm and the other partners had ratified the act by their acquiescence or silence. The court relied on the case of Hanuman Chamber of Commerce v. Jassa Ram, AIR 1949 E. P. 46 (A), where it was held that where an act is done by one person on behalf of another without that others knowledge or authority, the latter can ratify that act and on such ratification the same effects will follow as if the act had been performed by his authority. 2. The court held that the defendants were not estopped by their letter dated 24-12-1951, from asking the court to grant the relief under S. 34 of the Arbitration Act. The court held that the defendants did not in terms refuse arbitration in their reply to the plaintiff's notice, and that the plaintiff could have just as well had the matter decided by arbitration in terms of the contract. 3. The court held that the court below was wrong in holding that there was no question of law involved in the suit, but that the discretion exercised by the court below under S. 34 of the Arbitration Act was correct. The court held that the making of an order staying proceedings is a matter largely in the discretion of the court, and that the court should exercise its discretion in refusing to stay a suit in a sparing and cautious way as the primary duty is cast upon the court to act upon such an agreement.
Final Decision: The court dismissed the plaintiff's appeal and allowed the defendants' cross appeal. The court varied the order of costs made by the lower court and directed that the defendant No. 4 will bear his own costs of the lower court and will pay the costs of the plaintiff in regard to the proceedings under S. 34 of the Arbitration Act. The court made no order as to costs of the appeal by the defendants and left the matter of costs of the suit to the discretion of the lower court.
D. N. ROY, J.:
These are two cross appeals the one by the plaintiff and the other by the defendants, under S. 39 of the Indian Arbitration Act of 1940, arising out of an order dated 13-9-1955, passed by the First Civil Judge of Kanpur on an application under S. 34 of the Indian Arbitration Act. The order is to the following effect:
"The defendants application under S. 34 of the Indian Arbitration Act is allowed. The present suit is ordered to be stayed so that the parties may get their dispute settled through arbitration in pursuance of and in accordance with the provisions of the arbitration clause contained in the standard contract form of Messrs. Begg Sutherland and Co. Ltd., Kanpur, a copy of which form is on the file of this Suit as Ex. 1. The plaintiff firm will get its full cost of this suit from the defendants."
2. In the present appeal the plaintiff has contended that the order of stay was wrong and S. 34 of the Arbitration Act was not properly applied to the case, because the application had been made by Kundan Das defendant alone and not by all the defendants, and also because the defendants were estopped by their letter dated 24-12-1951, from taking up the plea of S. 34 of the Act.
The plaintiff has also contended that the court below erred in holding that no intricate question of law was involved, and it has been suggested that, since the matter involved intricate question, both of law and fact, the matter could not have been referred to arbitration.
3. The defendants in their cross appeal have assailed that part of the order of the court below which allows full costs of the suit from the defendants.
4. The plaintiff is a registered partnership firm and the suit was instituted through Madan Mohan Sharma one of the partners. Defendant no. 1 was also a registered partnership firm carrying on business in the name and style of Ram Bahadur Thakur and Co. and it was sued through three of its partners, namely Thakur Das, Bassomal and Kundan Das.
In paragraph 3 of the plaint it was stated that Thakur Das, Bassomal and Kundan Das, besides being partners in the Firm of defendant no. 1 are being sued in their representative capacity also as members of their respective joint families. The claim was for the recovery of Rs. 1,05,388/5/- on alleged breach of contract.
5. On the 12-2-1952, defendant no. 4 applied under S. 34 of the Arbitration Act and alleged that in the contract there was a clause under which it was necessary that the matter should be referred to arbitration and the hearing of the suit should remain stayed till the decision by the arbitrators.
The plaintiff, however submitted that in the events that had taken place the arbitration clause had become nugatory and the suit could therefore be no longer stayed under S. 34 of the Arbitration Act. The learned Judge of the court below held that the contention of the defendants was right and he stayed the suit as prayed for under S. 34.
6. Before we proceed to dispose of the various points urged on behalf of the parties, it would be necessary to reproduce that part of the contract between the parties which relates to arbitration. It is as follows :
"in the event of any dispute arising under this contract, the matter shall be submitted to a sole arbitrator who shall be appointed with the mutual consent of the seller and buyer within three days of a notice by either party to the other requiring such an appointment to be made and his decision shall be final and legally binding.
In the event of the seller and buyer being unable to agree within three days upon a sole arbitrator, then within a further period of three days one arbitrator shall be appointed by each of the parties and the award of these two arbitrators shall be final and legally binding.
These two arbitrators shall before proceeding to consider the matter under dispute, first appoint an umpire, whose decision is to be final in the event of any disagreement between them. If one party fails to appoint an arbitrator
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
