JYOTI BROTHERS Vs. DURGA MINING CO

JUDGEMENT

(1.) THIS is an application for stay of a suit under Section 34, Arbitration Act. The Arbitration clause in this case is in the following terms:--

(2.) THE suit which the plaintiff filed in this case is a suit claiming damages for breach of contract for non-delivery of the goods. THE allegation is that the defendant agreed to sell and the plaintiff agreed to buy certain cargo loads of iron ore. THE Arbitration clause that I have set out appears in this contracts.

(3.) I know of no reported decision where any Arbitration clause used the word "can" as in this case. The Arbitration Clause in this case can at best mean that the dispute "can" be settled by Arbitration. But that does not mean that the dispute shall be settled by Arbitration. It only means this that after the dispute has occurred, the parties may go to Arbitration as an alternative method of settling the dispute instead of going to the Courts. But that means that after the dispute has arisen, the parties will have to come to a further agreement that they shall go to Arbitration. In other words, the clause at best means that it is a contract to enter into a contract. It denotes the possibility of Arbitration in the event of a future dispute. I do not consider a contract to enter into a contract to be a valid contract in law at all. I am, therefore, of the opinion that this is not a valid submission to Arbitration. The word "can" by the most liberal interpretation only indicates a possibility. A legal contract is more than a mere possibility. It is possibility added to obligation. If a seller says "I can sell goods" that does not mean an immediate or present contract to sell. Similarly, if a person says "I can go to arbitration" that statement does not make an immediate contract to send disputes to arbitration. A mere pious wish or desire for arbitration does not make a contract for arbitration. An arbitration agreement has to be couched not in precatory but obligatory words. No particular form can be laid down as universal for framing an arbitration agreement but this much is certain, words used for the purpose must be words of choice and determination to go to arbitration and not problematic words of mere possibility. Section 2 (a) Arbitration Act defines an Arbitration agreement to mean "a written agreement to submit present or future differences to Arbitration whether an Arbitrator is named therein or not". It is quite true that it may be a present or future difference that is intended to be the subject of Arbitration. But nevertheless it is essential in my opinion for an Arbitration agreement to be a present agreement to submit present or future differences. The Agreement must be a present agreement and a concluded agreement according to the test of an ordinary contract. If it fails in that test, then there is no submission and no Arbitration agreement at all. If in law it is not an agreement at all, it is no answer to say that this clause appears as one of the terms and conditions of the contract in Clause 11 as "other conditions". An invalid contract does not become valid by describing it as a "condition". Here the Arbitration clause which is Clause 11 is; "In the event of any dispute arising out of this contract the same can be settled by Arbitration held by a Chamber of Commerce at Madras". On a proper construction of this clause, I have come to this conclusion that it means that after a dispute has arisen, the parties have further to agree that their dispute shall be referred to Arbitration and I suppose then to decide also which Chamber of Commerce at Madras. But the Arbitration clause as it stands is not an Arbitration agreement and is not a present contract to submit disputes to Arbitration.