JAGDISH CHANDRA GUPTA Vs. KAJARIA TRADERS INDIA LIMITED

JUDGEMENT

(1.) THIS appeal by special leave is directed against an order of the High Court of Bombay dated 22/03/1960 in its ordinary original civil jurisdiction. The facts are simple. By a letter dated 30/07/1955, Messrs. Kajaria Traders (India) Ltd., who is the respondent here and Messrs. Foreign Import and Export Association (sole proprietary firm owned by the appellant Jagdish C. Gupta) entered into a partnership to export between January and June 1956, 10,000 tons of manganese ore to Phillips Brothers (India) Ltd., New York, Each partner was to supply a certain quantity of manganese ore. We are not concerned with the terms of the agreement but with one of its clauses which provided:

(2.) JAGDISH Chander Gupta appeared and objected inter alia to the institution of the petition. Two grounds were urged (i) that S. 8(2) of the Indian Arbitration Act was not applicable as it was not expressly provided in the arbitration clause quoted above that the arbitrators were to be by consent of the parties and (ii) that S. 69 (3) of the Indian Partnership Act, 1932 afford a bar to the petition because the partnership was not registered. The petition was referred by the Chief Justice to a Divisional Bench consisting of Mr. Justice Mudholkar (as he then was) and Mr. Justice Naik. The two learned Judges agreed that in the circumstances of the case an application under S. 8 of the Indian Arbitration Act was competent and that the court had power to appoint an arbitrator. They disagreed on the second point. Mr. Justice Mudholkar was of the opinion that S. 69(3) of the Indian Partnership Act barred the application while Mr. Justice Naik held otherwise. The case was then referred to Mr. Justice K. T. Desai (as he then was) and the agreed with Mr. Justice Naik with the result that the application was held to be competent.

(3.) THE first question to decide is whether the present proceeding is one to enforce a right arising from the contract of the parties. THE proceeding under the eighth section of the Arbitration Act has its genesis in the arbitration clause, because without an agreement to refer the matter to arbitration that section cannot possibly be invoked. Since the arbitration clause is a part of the agreement constituting the partnership it is obvious that the proceeding which is before the court is to enforce a right, which arises from a contract. Whether we view the contract between the parties as a whole or view only the clause about arbitration, it is impossible to think that the right to proceed to arbitration is not one of the rights which are founded on the agreement of the parties. THE words of S. 69(3), "a right arising from a contract''are in either sense sufficient to cover the present matter.