Mookerjee, J.:— This is an appeal from a judgment of Mr. Justice Greaves, whereby he has, on an application by the respondents, directed an award made by the Bengal Chamber of Commerce Arbitration Tribunal on the 20th June, 1919, to betaken off the file as of no effect.
The events which led to the award are not in controversy and may be briefly recited. On the 16th August, 1918, the respondents sold to the appellants 100 bales of Japanese grey shirtings which had been purchased by them from the Nippon Munka Kabushiki Kaisa (Japan Cotton Trading Co.). The respondents allege that the appellants failed to take delivery, with the result that they had to resell the goods at a loss. On the 3rd May, 1919, the buyers made a reference to the Arbitration Tribunal of the Bengal Chamber of Commerce under the arbitration clause contained in the contract. On the 21st May, 1919, the sellers instituted a suit for damages for breach of contract. On the 20th June, 1919, the award was made, and on the 9th July following, it was filed in Court. On the 22nd July, the sellers applied to set aside the award. Mr. Justice Greaves has granted that application on the ground that where an action has been commenced upon a contract which contains a provision for reference to arbitration, even if a reference to arbitration has been made before the commencement of the suit, the award is of no effect unless the suit has been stayed pending the arbitration. In support of this view, reliance has been placed upon the decision of the majority of the Court of Appeal in Doleman & Sons v. Ossett Corporation which has been applied in this country in Dinabandhu Jana v. Durgaprasad Jana and Appavu Rowther v. Seeni Rowther .
In Doleman & Sons v. Ossett Corporation Fletcher Moulton, L.J explained the position of the parties, when notwithstanding an arbitration clause in the contract between them, a suit has been instituted by one of them. The law will not enforce the specific performance of an agreement to refer to arbitration, but if duly appealed to, it has the power, in its discretion, to refuse to a party the alternative of having the dispute settled by a Court of Law, and thus to leave him in the position of having no other remedy than to proceed by arbitration. If the Court has refused to stay an action or if the defendant has abstained from asking it to do so, the Court has session of the dispute, and it is by its decision, and by its decision alone, that the rights of the parties are settled, it follows that, in the latter case, the private tribunal, if it has ever come into existence, is functus officio, unless the parties agree de novo that the dispute shall be tried by arbitration and that the action itself shall be referred. There cannot be two tribunals, each with jurisdiction to insist on deciding the rights of the parties and to compel them to accept its decision. This is clearly involved in the proposition that the Courts will not allow their jurisdiction to be ousted. The same view was adopted by Farwell, L.J, when he stated that the plaintiffs cannot be deprived of their right to have recourse to the Court when the agreement is a mere agreement to refer, ??? the Court makes an order to that effect under section 4 of the English Arbitration Act, 1889 (corresponding to section 19 of the Indian Arbitration Act, 1899). They can, of course, deprive themselves of such rights by their own act after writ, as for example, by going on with the arbitration and obtaining an award; but when nothing has been done by them since writ, and the only matter relied upon is an award made since writ, without their knowledge or consent, under an agreement antecedent to the action, the plea is in fact and in truth a plea of the agreement and is bad, because there is no act of the plaintiffs subsequent to the writ on which reliance can be placed. It is not a question of revoking the submission; it is a question of construction of section 4 of the Act. The appellants have contended before us that the present case falls within the exception formulated by Par well, L.J, by reason of the letter, dated the 10th June, 1919, written by the respondents to the appellants. The letter, in our opinion, has no such effect; but we must not be taken to endorse the view that the respondents could deprive themselves of their right of suit by their own acts, a position which may be difficult to reconcile with the view taken by Fletcher Moulton, L.J, namely, that as soon as a suit is instituted the private tribunal becomes functus officio. Our conclusion therefore is that the view taken by Mr. Justice Greaves is right and that this appeal must be dismissed with costs.
Fletcher, J.:— I agree.
O.M
Appeal dismissed.
Attorney for the appellants: Priya Nath Sen.
Attorney for the respondents: Charu Chandra Bose.