CENTRAL GOVERNMENT OF INDIA Vs. CHHOTALAL CHHAGANLAL MODI

JUDGEMENT

(1.) THIS is an application in revision against an order passed by the Assistant Judge at Ahmedabad confirming the decision of the Civil Judge, Senior Division, Ahmedabad, refusing to stay the proceedings in a suit filed by the plaintiff against the Central Government of India. The plaintiff was a subscriber of telephone No.5019 and had executed a telephone hiring contract in respect of that telephone. It was signed by him in his personal capacity and not on behalf of any partnership firm. It appears that the telephone was used by other parties who had printed its number on their business letters. The Executive Engineer thereupon served the plaintiff a notice under Clause 15 of the conditions of agreement determining the contract on the expiration of seven days thereof. The telephone was accordingly disconnected on October 28, 1946. On November 2, 1946, the plaintiff gave a notice of a suit under Section 80 of the Civil Procedure Code. The Director General of Posts and Telegraphs replied to that notice on December 19, 1946, giving reasons for the disconnection of the telephone. The Assistant Deputy Director General of Posts and Telegraphs informed the plaintiff by a letter dated February 4, 1947, to refer the dispute to arbitration in accordance with condition 19 of the hiring contract. The plaintiff was also informed that Government would apply for stay of the suit, if any suit was filed by the plaintiff. The plaintiff denied having received any such intimation and proceeded to file a suit oh February 9, 1947, in the Court of the Civil Judge, Senior Division, Ahmedabad, praying for (1) a declaration that the determination of the contract of hiring of the telephone No.5019 at Ahmedabad and the subsequent disconnection and removal of the telephone instrument are illegal and ultra vires, and (2) a decree for Rs. 900 as damages for inconvenience, mental worry and loss of earnings suffered on account of the disconnection and further damages at Rs. 1,000 per month from the date of the suit till restoration of the said telephone. After the suit was filed, an application was made on behalf of the Central Government that the suit might be stayed under Section 34 of the Indian Arbitration Act, because there existed a clause in the agreement by which any dispute between the parties had to be referred for decision to the Director General of Posts and Telegraphs. The plaintiff opposed the application on two grounds : (1) that the suit involved complicated questions of fact, and (2) the Director General of Posts and Telegraphs would not be a proper person to decide the question as to whether the action of his own department was wrongful. The learned Judge held that the question involved was not complicated, but was of opinion that the stay could not be granted for two reasons : (1) that there was no provision in the agreement under which the plaintiff would be entitled to claim damages if the dispute was referred for the decision of the Posts and Telegraphs Department, and (2) that a reference to the Director General of Posts and Telegraphs, who was the head of the Posts and Telegraphs Department, was in effect a reference to a person who was one of the contracting parties and thus one of the contracting parties itself would be acting as arbitrator in the case. He therefore thought that it would not be fair to force the plaintiff to go to arbitration. The application was accordingly rejected.

(2.) AGAINST that order an appeal was preferred to the District Court of Ahmedabad and was heard by the learned Assistant Judge. The learned Assistant Judge saw no reason why the matter should not be referred to the Director General of Posts and Telegraphs in accordance with the arbitration agreement. But he held that this reference to the Director General of Posts and Telegraphs was not in fact a reference to arbitration. He thought that an official of the department which is responsible for the observance of this contract was certainly in the position of a party to the contract, and that no one could be a judge of his own cause. He seems to have been further of the opinion that a reference to arbitration did not come within the compass of the exception to Section 28 of the Indian Contract Act, and that therefore the agreement was void under that section. He, therefore, agreed with the view of the trial Court that the proceedings should not be stayed and dismissed the appeal with costs. AGAINST that order this application has been filed in revision.

(3.) THE learned Assistant Judge in the present case has clearly declined to exercise jurisdiction because of his view that there is no valid reference to arbitration. As we are of opinion that the view of the learned Assistant Judge as regards the nature of the reference to arbitration is incorrect, we think that we are entitled to interfere in revision as the learned Judge appears to have failed to exercise the jurisdiction which is vested in him by law.