P C AGGARWAL Vs. BANARSI LAL GUPTA

JUDGEMENT

(1.) S. N. Andley, J - While dealing with this first appeal against order, the learned Single Judge (P. N. Khanna,J.) did not decide the question about the competency of a unilateral reference. He considered that:-"This question of unilateral reference to arbitration by one of the parties to an arbitration agreement, the other party having denied the existence of the arbitration agreement, even though unsuccessfully as in this case or having refused to join the reference, under the relevant provisions of Chapter II of the Arbitration Act, when disputes arise ..." was of great importance and he, therefore, referred the said question to a larger Bench. The decision of this question really depends upon the interpretation of the Judgment of the Supreme Court reported in A.I.R. 1955 Supreme Court 468 in re ; Thawardas Pherumal and another Vs. Union of India and this reference was made because the learned judge did not agree with the interpretation placed upon this judgement by a Division Bench of the Punjab High Court (Dulat and Harbans Singh JJ) in the case reported in 1966 (2) Delhi Law Times 123 in re ; Madhusudan Ltd. Vs. Ram Parkash and another.

(2.) THE facts relevant to the controversy are that the respondent is a member of the Delhi Stock Exchange and is alleged to have entered into certain dealings in securities with the appellant as a result of which certain amounts were claimed by the respondent from the appellant. THE respondent appointed Prem Chand, a member of the said Exchange, as his Arbitrator and called upon the appellant to appoint his arbitrator. THE appellant who is not a member of the said exchange failed to appoint bis arbitrator and thereupon the said Stock Exchange appointed P. S. Khambate another member of the said Exchange, as an arbitrator on behalf of the appellant in accordance with the Rules, Regulations and Bye-laws of the said Stock Exchange. THE two arbitrators made their award and filed it in the court of Competent Jurisdiction for being made a rule of the court. THE appellant, inter-alia denied the existence of the agreement of reference and asserted that the arbitrators had not been properly appointed. (THE judgement then reproduces arbitration claue).

(3.) IN cases where a contract between the parties contains what may be called an arbitration clause to refer futute disputes to arbitration, the agreement is merely an agreement to submit future differences to arbitration within the meaning of section 2 (a) of the Arbitration Act. If disputes arise in the future a reference has to be made to arbitration within the meaning of section 2 (e) of the Arbitration Act and at this stage there should be a consent of both the parties. If the consent exists, it would not be necessary to proceed under Chapter III by making application under section 20 of the Arbitration Act and the parties or one of the parties can proceed under Chapter II of the said Act. It merely reinforces our earlier view that the above quoted observations of the Supreme Court are of general application arid do not contemplate a unilateral reference.