In The Matter Of The Petition Of Lucas Ralli v. Noor Mahomed

Davar, J.:— The petitioners, who are well known merchants carrying on business in Bombay, have presented a petition to this Court praying that the legal proceedings instituted against them by Noor Mahomed Vulley in the Court of Small Causes at Bombay may be stayed under the provisions of the Indian Arbitration Act, and the clause in the contract, in respect of which disputes and differences have arisen, providing for a reference to Arbitration, may be enforced against the respondent. It appears that by a contract in writing bearing date the 30th of January 1900, the respondent agreed to purchase 150 tons of Belgian sugar imported into Bombay by the petitioners. The first clause of the contract, a copy of which is annexed to the petition, provides that the respondent should on arrival of the goods forthwith pay for and take delivery of the goods from the steamer's deck. The goods arrived by the steamship Trantenfels, and the petitioners, on the 19th of March, wrote to the respondent asking him to take delivery in terms of his contract. Copy of the petitioners' letter is annexed to the petition and marked B. The petitioners allege that the respondent did not pay for the goods forthwith on their arrival in Bombay and did not take delivery of the goods from the steamer, that the goods had to be lauded and the respondent took delivery of 750 bags on the 26th of March 1906, 426 bags on the 27th of March 1906, and the remaining 324 bags on the 4th of April 1906. After taking delivery the respondent contended that some of the bags of sugar were slack and torn and that portion of the goods were damaged. He claimed Rs. 382-2-3 as damages and on the petitioners refusing to pay him this sum he instituted a suit against them in the Small Causes Court, being Suit No. 12052 of 1906. The petitioners, applied to the Judge of the Small Causes Court on whose Board the suit appeared to stay proceedings under the provisions of the Indian Arbitration Act and the learned Judge erroneously made the order. Against this order the respondent appealed to the full Court and the full Court correctly held that the Small Causes Court had no power to make such an order and set the same aside. Thereupon the petitioners presented a petition to this Court and the matter was argued before me in Chambers on Saturday the 1st instant. Mr. Lowndes, who appeared in support of the petition, contended that clause 9 of the contract was very wide in its terms and under that clause he was entitled to enforce Arbitration. Mr. Lowndes stated to the Court that it was a matter of principle on which his clients were fighting—that they had a great many similar contracts with other merchants and if they did not enforce the provisions of this clause his clients would be subjected to much harassing litigation. Mr. Robertson for the respondent contended—

First, that the indian arbitration act was not intended to apply to the Small Causas Court and that therefore I had no power or jurisdiction to stay proceedings in that Court;

Secondly, that the petitioners in applying to the Small Causes Court had taken steps and that therefore under section 19 of the Act their present petition must fail;

Thirdly, that I had a discretion in the matter and that I ought under the circumstances of the case to exercise that discretion in his client's favour; and

Fourthly, that the questions involved in the Small Causes Court suit do not fall within the terms of clause 9 of the contract.

After giving careful consideration to Mr. Robertson's argument I had no doubt in my mind as to what my Judgment should be, but, as it was pointed out to me that the questions that I have to decide on this petition have not arisen before, I thought it desirable to write my Judgment.

As to the first contention of Mr. Robertson, no doubt, section 4 of the Act provides that “the Court” in Presidency towns means the High Court, but I do not think it follows, as argued by Mr. Robertson, that the legal proceedings referred to in section 19 must necessarily be legal proceedings in the High Court or as he contends in that Court. If this was held to be the right construction of the section it would mean that it would be open to one of the parties to a submission to give the go bye to such submission by instituting a suit in the Small Causes Court, Again section 4 provides that outside the Presidency towns the ‘Court’ means the Court of the District Judge, and if the respondent's counsel's contention is correct it would come to this that the District Judge would have no power to stay proceedings in Courts subordinate to his Court and consequently the agreement to submit disputes to Arbitration would be abortive if one of the parties choose to file a suit in any of the Courts subordinate to the District Court. To my mind the language of section 19 of the Act is quite clear and it gives jurisdiction to the High Court to stay proceedings in any Court in the Presidency town subordinate to its jurisdiction. The section in the beginning refers to a party to a submission commencing any legal proceedings; then it goes on to refer to such legal proceedings and then provides for staying the proceedings. Nowhere is there any indication in the section or the Act that the legal proceedings contemplated must be proceedings in that Court. To hold that I have no jurisdiction to entertain this application and stay proceedings would be tantamount to holding that the provisions of the Indian Arbitration Act applied only to the High Court in Presidency towns and to the District Court in the Mofussil. This could never have been the intention of the Legislature. I am therefore clearly of opinion that I have jurisdiction to entertain this petition and to order stay of proceedings in the Presidency Small Causes Court if I am satisfied that I ought to make the order.

While considering the point it is interesting to notice that section 19 of the Indian Arbitration Act is almost a verbatim reproduction of section 4 of the English Arbitration Act of 1889 (52 & 53 Vic., c. 49). By section 27 of that Act “Court” is defined as meaning Her Majesty's High Court of Justice. I could hardly conceive that that Act was intended only to apply to the High Court and that the High Court of Justice had no power to stay proceedings in Courts subordinate to its jurisdiction.

I do not agree with Mr. Robertson's second contention that the proceedings taken by the petitioners in the Small Causes Court to stay proceedings are a bar to the present application. The Small Causes Court had no jurisdiction to make the order asked for and the proceedings there proved abortive, but I am of opinion that any proceedings taken by a party to a suit to stay legal proceedings under the provisions of section 19 of the Arbitration Act are not “steps in the proceedings.”

I hold that the proceedings taken by the petitioners are not “steps in the proceedings” contemplated by section 19 of the Arbitration Act, and are no bar to the present proceedings.

As to the third contention that I should not exercise my discretion in favour of staying proceedings, I am very strongly of opinion that if the matter was entirely within my discretion I ought to exercise that discretion in favour of staying proceedings. If this was a suit filed in this Court it would have been classed as a commercial cause and it is a case eminently suited for the decision of two merchants. When entering into the contract the parties specifically agree that in case of disputes they will go to the arbitration of certain parties named or designated. Why should I encourage one of the parties deliberately to give the go-bye to his agreement and harass the other party by litigation? It is possible that if the respondent had refused to agree to the arbitration clause the petitioners might have ref used to enter into the contract with them. But the matter does not rest here. I do not think that it is entirely within my discretion to make or refuse the order asked for. The section provides as follows:—“And the Court if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission …. may make an order staying the proceedings.” Is there any sufficient reason to satisfy me in this case that this matter should not be referred? There is none that I can appreciate, while there are many reasons which convince me that it would be most unjust to allow the respondent to harass the petitioners with litigation after his specific agreement that he would go to arbitration.

The only other question that remains is—do the disputes and differences that have now arisen between the parties fall within the 9th clause of the agreement of the 30th of January 1906? By that clause the respondent stipulates as follows :—“In case any dispute arise between us and Messrs. Ralli Brothers as regards the quality of the said goods or in, reference to any of these conditions we agree to refer such dispute to the arbitration, etc.” Now what are the disputes that have arisen. The respondent through his counsel contends that though the petitioners wrote to say he should take delivery from the steamer's deck he never had the opportunity to do so and the goods were landed in the docks before he could take delivery on board. The petitioners' counsel contended before me that the respondent had no moneys or was for some reason unable to take delivery on board and that as a matter of fact he did not take delivery on board the ship as stipulated by the first clause of the agreement. This breach on the respondent's part is specifically alleged in paragraphs 4 and 5 of the petition. The respondent does not deny the allegation in the affidavit he has put in in reply. The petitioners contend that under the terms of their contract they are not liable for any damage to the goods if the respondent did not perform his obligation under clause 1 of the contract by paying for the goods forthwith and taking delivery of the same from the deck of the steamer. It may be that the respondent is right in his contention that he got no opportunity to take delivery on board the steamer although he does not say so in his affidavit. Whatever may be the merits of the different contentions I find that the disputes between the parties are in “reference to the conditions” of the contracts and therefore fall within clause 9 of the contract.

Having regard to all the circumstances of the case I have come to the conclusion that the petitioners are entitled to the order they ask for.

I grant the prayer of the petition and order that proceedings in Suit No. 12052 of 1906 instituted by the respondent in the Small Causes Court of Bombay be stayed. The respondent must pay the petitioners' costs. I certify for counsel.

Attorneys for plaintiff: Messrs. Unwalla and Phirozshah.

Attorneys for defendant: Messrs. Craigie, Lynch & Owen.

B.N.L