C V KRISHNA Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE plaintiff is the appellant. He filed a suit (it is called a suit because of convenience) for a direction to the defendant to file the arbitration agreement contained in a contract entered into between himself and the defendant in connection with the supply of an insulated milk tanker made of stainless steel. He also prayed for a reference to an arbitrator other than the arbitrator named in the arbitration agreement, who was to be appointed by the court in this suit so as to decide the disputed matters as between the contracting parties. The suit arose this way. On 26-6-1964, the defendant invited tenders under Ex. A1, for the supply of the milk tanker and such an invitation made it clear that the price was to be exclusive of sales tax. Under Ex. B-1, dated 29-7-1964, the plaintiff tendered and quoted a price of Rs. 35,000. This was accepted under ex. B-2 dated 25-8-1964, and the plaintiff was directed to supply the tanker within 60 days from 24-10-1964 and he was also directed to pay a security deposit of Rs. 4,500. The plaintiff initially committed default in the matter of the supply of the tanker within the prescribed time. It appears, therefore, that under Ex. A-2 dated 28-12-1965 the order placed by the plaintiff and later accepted by the defendant, was cancelled. But is also appears from record and the supervening events, which are not disputed before us, that the plaintiff was given yet another opportunity to supply the tanker, though in point of time, earlier to such a decision the security deposit of Rs. 4,500 was also forfeited by the defendant. Finally, revoking the earlier order of cancellation of the order the plaintiff was given an opportunity under Ex. A-3, dated 10-3-1966 to supply the tanker by 30-4-1966, but the records disclose that such supply was not made even within that time. Now it transpires that the plaintiff finally delivered the tanker in or about December 1966, which is said to have been accepted by the defendant on 10-12-1966. The plaintiff raised a bill Ex. B-3, for such supply and claimed a sum of Rupees 38,500 which included a sum of Rs. 3850 as and towards the sales tax. Curiously enough the plaintiff received a cheque enough the plaintiff received a cheque for Rs. 15,000 on 10-5-1965, with a note appended to it to the effect that the said amount was in full settlement of his bill Ex. B-3. The plaintiff accepted the said cheque under protest and called upon the defendant to submit the disputes, which have arisen by then to arbitration. We may here mention that it is not disputed that under clause 19 of ex. A-1 or B-1 any difference or dispute arising out of the interpretation or application of the terms of the contract, as entered into between the plaintiff and the defendant shall be referred to the Milk Commissioner for an award and such reference shall be deemed to be a submission to the arbitration within the meaning of the provisions of the Indian Arbitration Act, 1940, and the parties agreed that the award of the Milk Commissioner shall be final and binding on the parties. The plaintiff apparently foreseeing and having felt that differences have arisen not only in the matter of the interpretation but also the applicability of the clauses in the contract either under Ex. A-1 or Ex. B-1, wanted such disputes to be referred to arbitration. He sought for such a reference by issuing notices Exs. B-4, B-5 and B-6. The plaintiff was confronted with a reply under ex. A-4 which reads as follows-

(2.) MR. Srinivasa Varadachari, learned counsel for the appellant, says that the suit ought not to have been dismissed and the court had no option left except to refer the subject-matter to an arbitration whether to the named arbitrator or to an independent arbitrator as the case may be, but the dismissal of the suit with costs is against law. What is urged by the learned Government Pleader is that there is sufficient hypothesis in the pleadings to infer that the plaintiff was not inclined to submit the matters in dispute to the named arbitrator and as the plaintiff cannot avoid such an arbitrator having agreed to do so when the contract was formed, the dismissal of the suit was right.

(3.) IN the above circumstances, when the contract is not in dispute, when the terms of the contract are not equally disputed and when, under clause 19 of the agreement an aggrieved party can refer the current disputes under it to the arbitrator named or otherwise, then the defendant cannot under the terms of the contract itself or otherwise, refuse to accede to the request of the plaintiff to bring the arbitration agreement into court for judicial scrutiny.