GULABCHAND RAWATMAL Vs. SARANGPUR COTTON MANUFACTURING CO LTD

JUDGEMENT

(1.) THIS is an appeal from an order passed by the learned Joint Civil Judge (Senior Division), Ahmedabad, direction under Section 20 of the Arbitration Act, that the dispute between the plaintiff and the defendant arising out of a contract, dated 29th May, 1953 may be referred to the Ahmedabad Mill-owners' Association, for their decision as arbitrator. The plaintiff-respondents are the Sarangpur Cotton Manufacturing Co. Ltd., who are Manufacturers of textile goods at Ahmedabad. The defendant-appellants are a firm carrying on business of cloth at Calcutta. It seems that the plaintiffs have a selling agent, namely, Messrs. Balchand Bhawsingka, at Calcutta, and the defendant placed an order for purchasing 15 bales of plaintiff's manufacture through the said selling agents, under an indent bearing No. 630. dated 29th May, 1953. The said indent was signed by the defendant and was accepted on behalf of the plaintiffs by their selling agents. It is the case of the plaintiff that the delivery of the goods was to be made ex-mill godown at Ahmedabad and payment was also to be made at Ahmedabad, the time fixe for the delivery being by the end of August, 1953. According to the plaintiff, the goods were ready for delivery before the due date and were invoiced on 17th August, 1953 and 27th August, 1953. But the defendant requested that they should be sent by rail to Calcutta and that was why the plaintiff applied for transport permits and after receipt of those permits goods were sent by rail on 29th August, 1953 and the 3rd, 5th and 10th of September, 1953. The relevant railway receipts as well as the invoices were forwarded with respective drafts aggregating to Rs. 42,202-8-0 to the defendants through the Imperial Bank of India, Calcutta, on the 2nd, 7th, 8th and 12th September, 1953. It is the case of the plaintiff that the market was going down at about this time and that is why the defendant made a complaint about the delay in delivery and also that the pieces in the bales wee of 10 yards and not of 20 yards. But the defendant was informed by the plaintiffs' agent at Calcutta that his grievances were unjustified. As the defendant filed and neglected retire the drafts, despite remainders, notices were given which were met with the excuse about delay in delivery and the goods being not according to the contract. The plaintiffs, there force, resold the goods at the defendants' risk and costs and according to the plaintiffs the resale resulted in a loss of Rs. 15,400. Under Clause (15) of the contract entered into between the plaintiff and the defendant it was agreed that in case any dispute in respect of or arising out of the contract was not amicably settle,d it will have to be referred to the Ahmedabad Mill-owners' Association for arbitration and the decision of the arbitrator was to be final and binding on both the parties. By virtue of this arbitration clause, the plaintiff applied to the lower Court under Section 20 of the Arbitration Act for filing of the arbitration agreement and for necessary reliefs.

(2.) THIS application was resisted by the present appellant on several grounds. It was contended that the Court at Ahmedabad had no jurisdiction to entertain the application as the offer and acceptance of the contract had taken place at Calcutta. It was further contended that the goods were delivered at Calcutta, the payments were to be made at Calcutta and the alleged refusal by the defendant to submit to arbitration had taken place at Calcutta. Therefore it was contended that the Ahmedabad Court would have no jurisdiction to pass a final decree after the arbitrators passed their award. It was also contended that the Court could not refer the matter to arbitration under Clause (15) of the contract between the parties as the arbitrator mentioned therein was incapable and incompetent, being interested in the plaintiff. It was also urged that the Ahmedabad Mill-owners' Association which was contemplated to be the arbitrator under Clause (15) was a fluctuating body and therefore incompetent to act as an arbitrator. It was finally contended that the arbitration agreement was no longer operative because the contract had been rescinded by operation of law inasmuch as the plaintiff has elected to exercise the option of reselling the goods and it was submitted that Section 54(4) of the Sale of Goods Act would be a bar to the filing of the arbitration agreement under clause (15) of the contract.

(3.) IN this appeal, Mr. Kotwal, the learned advocate for the appellant, has raised the same contentions as were urged on behalf of the defendant before the trial Court. But the principal contention urged by him was that Section 54, Sub-section (4) of the Sale of Goods Act led to a rescission of the entire contact between the plaintiff and the defendant and, therefore, the Court was incompetent to file the arbitration agreement under Section 20 of the Arbitration Act.