LLOYDS COMMERCIAL CORPORATION Vs. VEERAVILLI SATYANARAYANA AND SATTI RAMI REDDI REGISTERED FIRM KAKINADA

JUDGEMENT

(1.) THIS is a defendants Second Appeal from the judgment and decree of the Subordinate Judge. Kakinada who, on appeal, reversed the decision of the District Munsif, Kakinada and decreed the suit of the plaintiff. The suit was for a stun of Rs. 2,229-13-9 which was made up of a principal sum of Rs. 1,840-2-1 and interest thereon at 12 per cent per annum. The plaintiff was the agent of the defendant for the sale of certain fertilisers in Kakinada District. The defendant was the representative of the then undivided Madras State in respect of these fertilisers. The agreement between the defendant and the plaintiff provided for payment of a sum of Rs. 10 as commission to the plaintiff for every ton of fertiliser sold by him. The plaintiff (agent) was to deposit a sum of Rupees 000 as agency deposit" with the defendant. He was also to deposit in advance (apart from the agency deposit) as security the approximate value of the fertilisers delivered to him for sale by the principal (defendant). The other important provisions contained in Clause 7 of the written agreement between the parties were the following: : "Any dispute or difference or any other matter arising in relation to this agreement, shall be referred to Arbitration in Madras in accordance with the provisions contained in the Arbitration Act (X of 1940) or any statutory modification thereof. Any suit or legal proceedings arising out of this agreement should be filed in the Courts at Madras and not in any other Court in Muffasil. The only other clause in the agreement that needs to be mentioned is the one relating to the return of the agency and security deposits. That provision contained in the last paragraph of Clause 6 of the agreement reads:

(2.) THE trial Court held that the Court at Kakinada had no jurisdiction to try the suit because under the written agreement between the parties the suit had to be instituted only in the Madras Court. THE learned District Munsif also expressed the view that the arbitration clause in the agreement covered the suit claim and that therefore the suit was not maintainable. He further found that the accounts between the plaintiff and the defendant had not been settled. On these findings, he dismissed the suit. On appeal by the plaintiff, the learned Subordinate Judge, Kakinada, reversed the decision of the District Munsif and decreed the suit. THE learned Subordinate Judge held that there was a settlement of accounts between the parties and that considering the view expressed by this Court in Civil Revision Petition No. 601/55 which arose out of an application filed by the defendant in the trial Court under Section 34 of the Arbitration Act it has to be held that the Court at Kakinada had jurisdiction to try the suit. It is against this judgment that the present Second Appeal is preferred by the defendant.

(3.) REGARDING the arbitration clause also, the position appears to my mind to be against the plaintiff. The arbitration clause is drawn up in very wide terms. It says that any dispute or difference or any other matter arising in relation to this agreement shall be referred to arbitration in Madras. I find it extremely difficult to say that the suit claim is not a matter arising in relation to the agency agreement. Therefore, the claim in the present suit comes within the mischief of the arbitration clause in the agreement. This being so, the suit is not maintainable before steps are taken for referring the matter to arbitration. The decisions in A. M. Mair and Co. v. Gordhandas Sagarmull, AIR 1951 SC 9, Gaya Electric Supply Co. v. State of Bihar, AIR 1953 SC 182 and Dhanrajmal Gobindram v. Shamji Kalidas and Co., AIR 1901 SC 1285 support this position.