UNION OF INDIA Vs. NARAYAN COLD STORAGE LTD

JUDGEMENT

(1.) THIS is a first appeal under Section 39 of the Arbitration Act from the order of the Subordinate Judge 1st Class, Amritsar, rejecting the application of the appellants Messrs Narain Cold Storage Ltd. Amritsar, instituted a suit for the recovery of Rs. 56,767/- as the principal sum and interest relating to the price of potatoes supplied in excess of the contracted quantity. The appellants who were defendants in the trial Court presented an application under Section 34 of the indian Arbitration Act of 1940 alleging that the agreement dated the 19th January, 1951, entered into between the parties provided that a difference or dispute arising between them was referable to the arbitration of the officer sanctioning the contract. It was also alleged that the appellants were willing and ready to make a reference to the arbitrator and that the suit should not proceed in view of the provisions of Section 34 of the Act.

(2.) EXHIBIT D. 2 is tender dated the 19th January, 1951, whereby the defendants agreed to supply a quantity of potatoes, it being agreed that the approximate requirements which were to be deemed only as a rough guide were 4,88,400 lbs. at tendered rates. Para 22 Exhibit D. 2. provided.-the provisions of this contract, settlement of which is not herein before provided for, shall be referred to the arbitration of the officer sanctioning the contract, whose decision shall be final and binding.

(3.) THE trial Court framed the following issues:-1. Whether there is valid subsisting arbitration agreement between the parties to the suit relating to the matter in dispute? O. D. 2. Whether the defendants were ready and willing at the time of the institution of the suit to do everything for the proper conduct of the arbitration? O. D. 3. If issues 1 and 2 are proved, should the suit be not stayed? O. P. The trial Court by its order held on the first issue that the dispute between the parties was covered by clause 22 of the tender and that there was a valid subsisting arbitration agreement between the parties relating to the matter in dispute. The first issue was, there fore, decided in favour of the defendant. The second issue was also decided in favour of the defendants and it was held that the department was ready and willing to a reference to arbitration.