BARIUM CHEMICALS LTD Vs. BOMBAY INDUSTRIAL

JUDGEMENT

(1.) PLAINTIFF filed the present suit against two defendants for recovering a sum of Rs. 34,230. 38 p. It was averred that out of that amount a sum of rupees ten thousand was recovered from both the defendants. In that suit the second defendant made an application under section 34 of the Arbitration Act to stay the suit and direct the parties to refer the dispute to arbitration as there was an arbitration clause in the agreement between the parties. It may be stated that the second defendant was the sole selling agent of the plaintiff and that the plaintiff had sold the goods to the first defendant through the second defendant. It was contended on behalf of the plaintiff that since the first defendant was not a party to the agreement the arbitration clause could not be invoked against him and that no reference of the dispute could be made to arbitration.

(2.) THE learned trial Judge negatived that contention and allowed the application. By his order he stayed the proceedings under section 34 of the Arbitration Act and directed the parties to seck adjudication of the dispute by taking the matter to arbitration within the meaning of clause 13 of the agreement concluded between the plaintiff and the second defendant. It is that order which is challenged by the plaintiff in this appeal.

(3.) THE learned Judge was in error in taking the view that since the first defendant was residing within the sole selling agency area of the second defendant, the first defendant was bound by the agreement executed between the plaintiff and the second defendant. It is beyond our imagination to think that all those who resides within the sole selling agency area of a sole selling agent will be bound by the agreement executed between the principal and the sole selling agent. THEre cannot be a more absurd view than the one which the learned trial Judge has taken. THErefore so far as the first defendant was concerned, the dispute between the parties could not be referred to arbitration and the suit could not be stayed under section 34 of the Arbitration Act.