Dawoodbhai Abdulkader v. Abdulkader Ismailji

1. This is a chamber summons taken out by the defendant for an order that all further proceedings in the suit may be stayed in order to enable the parties to refer the matter in dispute to arbitration according to their agreement. The plaintiff was the sub-partner of the defendant in a certain business of manufacturing matches under the terms of a deed of sub-partnership dated 25th May 1925 and the said deed incorporated all the articles, covenants, conditions and obligations contained in the principal partnership agreement between the defendant and his partner, which were not inconsistent with the terms of the agreement. The agreement between the defendant and his partner was executed immediately before the deed of sub partnership on the same day, i.e 25th May 1925. Cl. 20 of the agreement provides inter alia that any dispute or difference arising between the partners in regard to the construction of any of the articles contained in the agreement or to any division, act orthings relating to the said partnership or the affairs thereof shall be referred to arbitration in the manner therein mentioned. The period of duration under the agreement as well as the sub-partnership deed was from 1st April 1925 to 31st March 1927.

2. On 17th April 1930, the plaintiff through his solicitors wrote to the defendant stating that the accounts of the partnership which had been made up to 31st January 1928, showed that a large sum was due by the defendant to the plaintiff, but that defendant had failed to render an account to the plaintiff. The plaintiff called upon the defendant to make up the accounts and to pay to him the amount found due at the foot thereof. The defendant neither sent any reply to the said letter nor made up the account, and the plaintiff thereupon filed this suit on 20th June 1928, praying, that the defendant may be ordered to render a true and complete account of the profits earned by the partnership business and of the amount due to the plaintiff, and to pay the same to him. Nearly two months later the defendant by his attorneys' letter dated 18th August 1930, called upon the plaintiffs not to proceed with the suit, and to refer the matter in dispute to arbitration in terms of Cl. 20 of the agreement. What the matter in dispute between the parties was bag not been safe out by the defendant; but he took out the chamber summons on 19th August 1930, for the ??? of the suit. Even in the affidavit in support of the summons the matter in dispute has not been set out, nor explained.

3. It is laid down in Halsbury's Laws of England, Vol. 1, para. 945 (at p. 444) that the subject-matter of every reference to arbitration by consent out of Court must be soma difference or dispute arising between the parties, ??? 4, Arbitration Act 1899, defines submission” as a written agreement to submit present or future differences to arbitration; and the forms of submission given in Sch. 2 to the Act begin by saying: “Whereas differences ??? arisen and are still subsisting” between the parties. The existence of a difference or dispute is therefore an essential condition for the arbitrator's jurisdiction: see the case of Uttam Chand Saligram v. Jewa Mamooji (1). If there ??? no dispute, there can be no right to ??? arbitration. The Court must therefore be satisfied that there is some sal point of difference which has to be submitted to arbitration. In each case he arbitration must be on a point of real difference. In a decision of the House of Lords in L. & N.W and G.W Joint Ry. Co. v. J.H Billington, Ltd. (2) the Railway Act empowered the company to ??? a reasonable sum for services reneged to a trader, and enacted that any difference arising under this section shall a determined by an arbitrator to be appointed? the Board of Trade.”

4. The company sued the trader for the services rendered. The defendant applied or a stay pending arbitration. It was ??? that as there was no difference excising between the parties before the action as brought, the arbitrator had no jurisdiction in the matter. At p. 81 Lord Halsbury observes:

“It would be a condition precedent to the ??? entering upon any form of inquiry here that the person who insisted that there as a difference should show that the difference id arisen before the submission to arbitration as made. That is a matter which has been ??? decided, and I should think that no sawyer would hesitate to say that is the ??? condition of the law.”

5. There must therefore be a point of difference or dispute between the parties for the decision of the arbitrator: see also Velchand Ghhaganlal v. Lieut. Liston (3). And it is not enough to state what the point of dispute or difference is after the suit has been filed.

6. In the case of Field v. Longden & Sons (4) a workman having been incapacitated from work by an accident received weekly payments by way of compensation from his employers according to Sch. 1, section 1(b) of the workmen's compensation act of 1897 (60 & 61 vic c. 37). His employers promised to continue to pay him the weekly payments during the period of his incapacity, but the workman nevertheless filed a request for arbitration in the County Court under S. 1, sub-S. (3) of that Act. That sub-section provides that if any question arises under any proceedings under the Act regarding the liability to pay compensation, or the amount or duration of compensation, the question, if not settled by agreement, shall be settled by arbitration. The appeal Court held that under the terms of that sub-section it was a condition precedent to the right to proceed to arbitration, that a question should have arisen as to compensation, and the question should not have been settled by agreement. Upon the facts of the case it appeared that no question had ever arisen, and that there was no subject matter for arbitration, and therefore the County Court Judge had no jurisdiction to make an award. This decision is based upon a particular sub-section of the Workmen's Compensation Act, but the principle is nevertheless, the same with regard to any other proceedings in arbitration when a dispute or difference has not arisen between the parties.

7. A dispute implies an assertion of a right by one party and repudiation thereof by another. In the case before me the defendant was called upon to render an account and to pay the amount due by him to the plaintiff, which he was bound to do; but he failed to pay. Counsel for the defendant argued that the mere fact of calling for an account and failure to pay constituted a difference or dispute, and came within the terms of Cl. 20 of the agreement. But a failure to pay is not necessarily a difference, and the mere fact that a party could not or would not pay does not in itself amount to a dispute unless the party who chooses not to pay raises a point of controversy regarding, for instance, the basis of payment or the time or manner of payment. An arbitrator is always called upon to settle in a quasi-judicial manner the matter in controversy between the parties. But there can be no arbitration where no such controversy in fact exists. In my opinion therefore there was no point for the arbitrator to decide in the case before me, and under the circumstances, 01. 20 does not exclude an action for partnership accounts. The chamber summons must therefore be discharged with costs. I certify counsel.

P.N/R.K

8. Summons discharged.