Mookerjee, J.:— This is an appeal, from a judgment of Mir. Justice Greaves whereby he has refused to set aside an arbitration award. The events which led up to the award in question lie in a narrow compass and may be briefly recited.
2. On the 4th August, 1918, the plaintiffs-appellants bought from the defendant-respondent 30 bales of dhoti.
3. The defendant himself had purchased the goods from an importer Lakshmi Chand Jaggannath under a contract, dated the 29th July, 1918. The terms of the contract between the plaintiffs and the defendant were as follows: “We sold the goods as were bought by us of Lakshmi Chand Jagannath, Batta (allowance) chafage, all terms according to Bahar (importing) firms, godown due according to Bahar-interest, cooly hire, according to Bhitar (bazar).” On the 7th January, 1919, the defendant instituted a suit in this Court in respect of 27 out of the 30 bales, on the allegation that the plaintiffs had wrongfully refused to accept delivery. On the 11th June, 1919, the defendant referred to arbitration by the Bengal Chamber of Commerce a similar dispute in respect of the remaining three bales. On the 29th July, 1919, an award was made in his favour, and it was filed on the 12th August, 1919. The plaintiffs thereupon instituted the present proceedings and applied for cancellation of the award. Mr. Justice Greaves has refused the application. On the present appeal, the validity of the award has been questioned on two grounds first, that the arbitration clause embodied in the contract between the defendant and the importers was not incorporated into the contract between the plaintiffs and the defendant; and secondly, that even if the arbitration clause be deemed to have been incorporated, the defendant, by reason of the institution of the suit in respect of 27 bales, was not competent to make a reference to arbitration with regard to the three remaining bales. In our opinion, both these contentions are well founded, and the award must be set aside as made without jurisdiction.
4. As regards the first point, we have to consider the terms of the arbitration clause contained in the contract between the defendant and the importers. The fourth clause of that contract was in these terms: “Any dispute or claim under this contract is to be settled by the Bengal Chamber of Commerce or at the option of the seller by two merchants on the Bengal Chamber's list, one to be chosen by each party.” Now if we read the contract between the plaintiffs and the defendant as also the contract between the defendant and the importers it is impossible to hold that the arbitration clause contained in the latter has become incorporated in the former by virtue of the expression “all terms according to the importing firm.” Reliance has been placed by the appellants upon the decision of the House of Lords in the case of Thomas & Co. Ltd. v. Portsea Steamship Co. Ltd. (1), where the decision of the Court of Appeal in Hamilton & Co. v. Mackie & Sons (2) was approved. In the latter case a bill of lading contained the words “all other terms and conditions as per charter-party” and the charter-party contained an arbitration clause. In an action by the shipowners against the consignees of the cargo and the endorsees of the bill of lading, the Court refused a stay on the ground that the arbitration clause in the counterpart was not incorporated in the bill of lading. Lord fisher, M.R said that where in a bill of lading there was such a condition as all other conditions as per charter-party, the conditions of the charter-party must be read verbatim into the bill of lading as though they were there in txtenso. Then if it was that any one of the conditions of the charter-party on being so read, was inconsistent with the bill of lading, they were insensible and must be disregarded. The arbitration clause referred to disputes arising not under the bill of lading but under the charter-party. The condition was therefore insensible and had no application to the dispute, which arose under the bill of lading. This view was approved by the House of Lords. Reference, however, was made, on behalf of the respondent, to the decision of the Court of Appeal in the case of Temperley Steamship ping Co. v. Smyth and Co. (3). That case, in our opinion, is clearly distinguishable. The arbitration clause in that case, contained in a charter-party, was held to apply to a dispute as to delay in the unloading of a ship after the completion of the loading, notwithstanding that the charterparty contained the usual cesser clause, providing that the charterers' liability should cease upon the shipment of the cargo. The bill of lading, however, incorporated “all the terms and exceptions” contained in the charter-party, and gave the owner or master a lien on the cargo, inter alia, for demurrage. But, the fundamental point in that case was, that the parties to the bill of lading and the charter-party were the same. In the case before us, the first contract is between the defendant and the importers and the second, between the defendant and his purchasers. The clause sought to be incorporated clearly refers to a dispute or claim “under this contract,” that is, the contract between the defendant and the importers, and if that clause were incorporated into the contract between the plaintiffs and the defendant, the result would be that, to use the language of Lord Esher, the contract would be insensible. We must hold accordingly that the arbitration clause was not incorporated into the contract between the plaintiffs and the defendant, and the reference to arbitration was completely ultra vires.
5. As regards the second point, we have to examine the effect of the twelfth clause of the contract between the defendant and the importers, assuming that this clause was incorporated by reference in the contract between the plaintiffs and the defendant. The clause was in these terms: “this agreement is to be deemed and construed as a separate contract in respect of each instalment of goods, and the rights and liabilities of the sellers and buyers respectively shall be the same as though a separate contract had been made out and signed in respect of each instalment.” Now, the goods, under the contract between the plaintiffs and the defendant, were to be delivered according to “shipments May and June.” Presumably, in the absence of an indication to the contrary, [Bilasiram Thakurdas v. Gubbay (4)] the goods were to be delivered in two equal instalments, of 15 bales each. Consequently, when the defendant instituted a suit with regard to 27 bales, he must be deemed to have sued in respect of the first instalment and a portion of the second instalment. Now, although the defendant might be at liberty (Dinabandhu v. Durga Persad (5); to resile from the arbitration clause (assuming the same to have been incorporated into the contract between himself and the plaintiffs), and to have recourse to a suit in respect of either instalment (treated as the subject-matter of a separate contract), he could not, in respect of one portion of an instalment, institute a suit, and in respect of the remaining portion of that very instalment, take recourse to arbitration, when he instituted the suit for the 27 bales, he made his election with regard to, not only the first, but also the second instalment; he cannot now be permitted to resile from the position deliberately taken up by him and to fall back upon the arbitration clause in respect of the remaining 3 bales. We cannot, in this connection, overlook the significant fact that, in his suit, the defendant has obtained leave under Order 2, Rule 2 of the CPC reserving his right against his adversaries in respect of these three bales, and has asked for liberty to add to his claim for the 27 bales such sum as he may be entitled to recover on account of the three bales. In these circumstances, the conclusion is inevitable that he was not competent to make a reference to arbitration, even if the arbitration clause be deemed to have been incorporated in his contract with the plaintiffs.
6. The conclusion follows that the arbitration proceedings were held and the award made Without jurisdiction. The appeal is allowed, and the application to set aside the award is granted, with costs both here and in the Court below.
Fletcher, J.:— I agree.
7. Appeal allowed.
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