LEWIS W FERNANDEZ Vs. JIVATLAL PARTAPSHI

JUDGEMENT

(1.) THE defendants have taken out this notice of motion for stay of the suit filed by the plaintiff against them by reason of "arbitration agreement" contained in the contracts which were entered into between the parties subject to the bye-laws of the East India Cotton Association, Ltd.

(2.) THE defendants are members of the Bast India Cotton Association, Ltd. , and the plaintiff employed the defendants as his brokers to effect diverse transactions on his behalf for purchase and sale of cotton for July 1944 and September 1944 settlements, through a sub-broker by name Hooseinally Currimbhoy Chagla. In accordance with the instructions conveyed by the plaintiff from time to time through the sub-broker, the defendants entered into diverse transactions for the purchase and sale of Jarila cotton on behalf of the plaintiff in accordance with the rules and bye-laws of the East India Cotton Association. Ltd. , for July 1944 and September 1944 settlements. THE defendants rendered unto the plaintiff contract notes in respect of such several transactions and in due course sent the same to the plaintiff at the address which was given to them in that behalf. THE said several transactions passed through the-clearings in accordance with the bye-laws of the East India Cotton Association, Ltd. , for July 1944 and September 1944 settlements, and the statements of: the respective clearings were sent by the defendants to the plaintiff at the said address. Disputes, however, arose between the plaintiff and the defendants because towards June 30, 1944, there was a considerable sum owed by the plaintiff to the defendants as a result of the clearings which the transactions had passed through up to that date, and the defendants intimated to the sub-broker that if the plaintiff did not make payment of the moneys due by him to the defendants in respect of the several transactions up to that date, the defendants would not keep the outstanding transactions of the plaintiff outstanding any further and would close the same. By June 80, 1944, all transactions f or July 1944 settlement had been squared and the only transaction which was outstanding was the transaction in respect of the sale of 1,000 bales of cotton for September 1944 settlement which had as aforestated passed through the various clearings up to June 30, 1944. THE defendants say that on June 30, 1944, they intimated to the sub-broker that they were not going to allow that outstanding transaction to remain outstanding any further until and unless the plaintiff made payment of the moneys which he owed to the defendants. THE sub-broker, however, pressed the defendants not to immediately close the outstanding transaction of the sale of 1,000 bales of cotton for September 1944 settlement but gave instructions to the defendants to close the same if the rate reached Rs. 431 per candy. THE defendants say that the rate was reached that day and accordingly in the exercise of their right of closing the outstanding transaction by reason of the default of the plaintiff in paying off their dues they closed the outstanding transaction on June 30, 1944, and sent the relevant contract note in respect of the closing transaction to the plaintiff together with a statement of account which they also rendered unto the plaintiff in due course. As a result of the transactions of July 1944 and September 1944 settlements there was a sum of Rs. 11,112-8-0 due by the plaintiff to the defendants which the defendants claimed from the plaintiff, and in the default of payment of that sum by the plaintiff to the defendants the defendants claimed a reference to arbitration by arbitrators appointed under the bye-laws of the East India Cotton Association, Ltd. THE said arbitration is yet pending.

(3.) ON the materials before me in the plaint as well as the affidavits of the parties, it is clear that the defendants sent to the plaintiff contract notes in accordance with the bye-laws of the East India Cotton Association, Ltd. , at the address given by the plaintiff to the defendants in that behalf and that the contract notes incorporated therein bye-law 38 of the bye-laws of the East India Cotton Association, Ltd. , which runs as under: All unpaid claims whether admitted or not, and all disputes (other than those relating to quality) arising out of, or in relation to (a) contracts (whether forward or ready and whether between members or between a member and a non-member) made subject to these bye-laws, or (b) the rights and/or responsibilities of commission agents, Muccadams and brokers not parties to such contracts, shall be referred to arbitration of two disinterested persons, one to be chosen by each party. The arbitrators shall have power to appoint an umpire and shall do so if and when they differ as to their award. It is also clear that up to June 30, 1944, and some time later there was no dispute whatever raised by the plaintiff as regards the transactions effected by the defendants for and on behalf of the plaintiff in accordance with the instructions conveyed by the plaintiff through the sub-broker and in effect the plaintiff accepted the contract notes. It was only when the contract note in respect of the closing transaction of June 30, 1944, was sent by the defendants to the plaintiff and a demand for the sum of Rs. 11,112-8-0 was made by the defendants upon the plaintiff by their letter dated July 18, 1944, that the plaintiff came out by his letter in reply of July 20, 1944, stating that the amount shown as due by him to the defendants, viz. Rs. 11,112-8-0, was not correct inasmuch as it did not show the statement of his sale of 500 bales of September 1944 delivery. It is admitted that this statement as regards 500 bales of September 1944 delivery was a mistake on the part of the plaintiff and that really it ought to have been a sale of 1,000 bales of September 1944 delivery which according to the plaintiff was outstanding on that date. The plaintiff by his letter called upon the defendants to send to him a complete statement of his account with the defendants showing separately the transactions for the month of July and September settlements after which he stated that he would settle the account of the defendants. It is significant to note that in that letter the plaintiff did not state that he had not received all the contract notes or all the statements of account in respect of the several transactions which the defendants entered into for July 1944 and September 1944 settlements as he seems to have done in the subsequent correspondence. The defendants wrote to the plaintiff on July 21, 1944, expressing their surprise at the attitude taken up by the plaintiff and referred the plaintiff to the contracts and weekly statements which had been submitted by them to the plaintiff as usual. The defendants stated that on perusing the same the plaintiff would be convinced that there was no outstanding business in his account and that the total amount of Rs. 11,112-8-0 shown by the defendants to his debit was correct. The plaintiff replied by his letter dated July 25, 1944, where he disingenuously stated that he had not been receiving the defendants' contracts and weekly statements regularly and that he had to rely upon verbal information from the sub-broker who he considered was the agent and sub-broker of the defendants for information regarding his position. The plaintiff, therefore, called upon the defendants to send to him a complete statement of account showing separately the July and September transactions. He further expressed his astonishment to learn that he had no outstanding business with the defendants and called upon the defendants to let him know under whose instructions the outstanding sale of 1,000 bales of September had been cut off, again repeating the mistake as to 500 bales instead of 1,000 bales of September 1944 settlement. It is significant, however, to note that in this letter also he did not deny that he had received the contract notes and the weekly statements of account which the defendants alleged they had been sending to him as usual, the only allegation made by him being that he had not been receiving the same regularly. The statements made by Jivatlal Partapshi, the partner of the defendants' firm in paragraph 3 of his affidavit in support of this notice of motion dated September 30, 1944, in that behalf were also denied in that affidavit of the plaintiff dated October 11, 1944, in the same vague and indefinite manner by stating: I further deny that the defendants had submitted all the contract notes and statements " of accounts as falsely alleged in the said affidavit or that I have acknowledged receipts in respect of contract notes and statements of accounts in respect of all my transactions in the off ice despatch book of the defendants. This denial, in my opinion, is not honest and leads me to the conclusion that the plaintiff in fact received all the contract notes and the statements of accounts as alleged by the defendants in the usual course at the address given by the plaintiff to the defendants in that behalf and in effect accepted the contract notes which had been so sent by the defendants to him. I am satisfied on these materials that the contract notes in respect of all the transactions except the last disputed one of the purchase of 1,000 bales of September 1944 settlement on June 30, 1944, were sent by the defendants to the plaintiff and were in effect accepted by the plaintiff by his conduct, with the result that in respect of all of the contracts except the last disputed one which I have mentioned above, there were arbitration agreements within the meaning of the Indian Arbitration Act of 1940. The judgment of Kania J. in Shriram v. Mohanlal & Co. does not militate against this position. I hold that under the circumstances I have mentioned above, the fact of acceptance or the retaining of the contract notes cannot be disputed in this case, as it was before Kania J. , and that there were arbitration agreements in respect of the contracts within the meaning of the Indian Arbitration Act of 1940.