PEARL HOSIERY MILLS Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is an application for stay under S. 34 of the Arbitration Act moved in respect of a suit filed by the plaintiff for the recovery of some amount (over Rs. 1-1/2 lacs) said to be due as a result of a contract for the supply of 4,000 jerseys. The plaint states that the goods were supplied and were passed by the Inspector and then payments were not made. The plaintiff also claims some interest under S. 61 of the Sale of Goods Act. The suit is, therefore, a suit for the recovery of price of goods supplied. The application under S. 34 is to the effect that there is an arbitration clause and the matter has to go to the arbitrator.

(2.) THE subject-matter of this application, namely, that there is an arbitration clause and the matter should be referred to arbitration is the subject-matter of many reported cases. In spite of those cases which have fully clarified the whole legal position, there seems to be some misapprehension or misconception regarding the scope of S. 34 of the Arbitration Act which results in applications of the present type being moved on the assumption that because there is an arbitration clause hence all claims have necessarily to be referred to an arbitrator and a suit based on such a claim should be stayed. I must say that the argument that such a matter should be referred to arbitration has points in its favour and also points against it. As far as the points in favour of the matter being referred to arbitration are concerned it is useful to say that if a simple claim for price could be referred directly to an arbitrator it might avoid considerable expense to the parties. However, if the dispute is such that it cannot properly be referred to arbitration then there is no choice for the parties but to institute a civil suit in spite of the additional expenses involved.