The Judgment of the Court was as follows:—
Panckridge, J.:— This is an application under sec. 19 of the Indian Arbitration Act to stay a suit, in which the Plaintiffs claim to recover Rs. 2,184-7-3 as damages occasioned by the alleged wrongful failure of the Defendants to take delivery of and pay for certain piece-goods, which were sold by the Plaintiffs to them under a contract dated February 7th, 1939.
It is admitted that the parties did in fact agree to refer any dispute arising out of the contract to arbitration under the rules of the Tribunal of Arbitration of the Indian Chamber of Commerce. The Plaintiffs, however, say that this term of the agreement is not enforceable, as there is no valid submission to arbitration as defined by sec. 4, cl. (b) of the Indian Act which states that submission means a written agreement to submit present or future differences to arbitration whether an arbitrator is named therein or not. One of the terms of the agreement for sale was that the goods were sold “mill monopoly,” and it is conceded that term means that during the currency of the contract the Plaintiffs undertook not to sell similar goods to other customers. The Defendants took delivery of some of the goods, but on April 28th, 1939, they wrote to the Plaintiffs that they had recently come to know that, in contravention of the monopoly term, the Plaintiffs had sold similar goods in the market. They stated that in the circumstances they had no further concern in the goods, and considered the contract to be determined. They also said that they would hold the Plaintiffs liable for breach of the monopoly stipulation in the contract.
I need not deal with the correspondence at any length, and I will now consider whether there was a submission within the meaning of sec. 4.
The Plaintiffs' case is that there was an oral contract, the particulars of which were recorded in the Plaintiffs' sales' book and it was understood that the general terms of the contract should be those which appeared in the Plaintiffs' printed form of contract, with which the Defendants are admittedly familiar, having had a number of previous transactions with the Plaintiffs.
The Defendants' case is that when the entries were made in the sowda book, the particulars of the contract were entered on one of the contract forms by setting out on the face of it the serial number, the date of the contract and the name of the Defendants and entering on the back of it the particulars of the goods sold.
The arbitration clause which the Defendants now seek to invoke appears in the common form. The decisions I think make it clear that it is not necessary that each party should sign a submission to arbitration. Indeed, that has been expressly ruled in a case binding upon me Radha Kanto Das v. Baerlien Bros., Ltd. . I also accept as good law what was said in Shankar Lal Lachmi Narain v. Jainy Brothers . There the Court observed at page 388:
“The Act merely specifies a written agreement and we see no reason to read into the plain words of the Act that the execution of a submission to arbitration is necessary. All that is required is that both parties accept a written document as containing the agreed terms; it might be in the form of a signed document by both parties containing the terms, or a signed document by one party containing the terms and a plain acceptance either signed or orally accepted by the other party, or, in the third case, an unsigned document containing the term of the submission to arbitration, agreed to orally by ‘both parties’.”
However, I think it appears from another passage that the learned Judges were of opinion that all the terms of the contract must directly or by implication be embodied in a document. At page 387 they observe
“The plain acceptance of a document containing all the terms is sufficient.”
It is common ground that the entry in the sowda book is not the contract, but only a record of the contract, Therefore unless the Defendants' story is correct that on the day the contract was entered into, its details were inserted in one of the contract forms there was no specific document to which one could point as containing a submission to arbitration. It is not enough that the parties orally agreed to be bound by the arbitration clause, as it appears in the common form. If they had recorded in writing that the common form of the arbitration clause was to be applied that would be a different matter, and I should be disposed to say that there was a submission within the meaning of the Act. Now it is for the Defendants who are invoking the Arbitration Act to prove their right so to do, and in my opinion they have not succeeded. In the correspondence they begin by stating that the contract has not been sent to them for signature, and in an affidavit it is said that the usual course of business was for the broker concerned to bring the completed contract form to the Defendants' place of business, where they would sign it. That may have very well been the case: but if the Defendants' witness Dharamchand, who is one of the partners in their firm, is speaking the truth when he says that the document was completed by the Plaintiffs in his presence, there was no reason why he should not have signed it then and there, and one would not expect the Defendants to be asking for it so that they might sign it two months later.
The strongest point in favour of the Defendants is that the Plaintiffs attached to their plaint one of the contract forms in which all the particulars of the actual contract are entered. It seems to me to have been quite unnecessary if the Plaintiffs' story is correct to have entered these particulars in the annexure because they are set out at length in paragraph I of the plaint. However, there is nothing in the plaint which can reasonably be construed as an admission that the document annexed thereto is a copy of a previously existing document with particulars entered in it in ink.
It is also possibly significant that in the petition to refer to arbitration there is no statement that the agreement was ever reduced to writing, but the Defendants limit themselves to saying that the agreement for purchase and sale was made on the terms and conditions contained in the printed contract form of the Plaintiff firm, “a true copy of which is hereto annexed and marked with the letter A.” In my opinion the matter is not entirely free from doubt, but the Defendants have not succeeded in showing that there was a contemporaneous document in writing containing a submission to arbitration.
The Plaintiffs have also argued that the Defendants have not shown that at the time the proceedings commenced they were ready and willing to do all things necessary to the proper conduct of the arbitration. It is true that they never in the course of the correspondence suggested arbitration, but that may have been, because they were treating the contract as at an end. It is also true that they were holding out threats of making claims against the Plaintiffs for breach of contract. I do not think these threats were seriously intended, and I do not attach much importance to them. There is nothing which leads me to suppose that, if the Plaintiffs had sought to enforce their claim by a reference to arbitration, the Defendants would not have done what was necessary to its proper conduct. It does not seem to me right to insist that the party who applies to stay a suit under sec. 19 should put himself out of Court because before suit he has not called on the Plaintiff in the suit to go to arbitration. Had it been necessary to decide the question I should have held that the Plaintiff failed upon the second ground they have advanced for resisting the application. Inasmuch as however I have held that there was no submission within the meaning of sec. 4 the application must be dismissed with costs.
Solicitors: P.C De for the applicant; P.D Himatsingka & Co. for the Respondents.
C.C