CHATTURBHUJ CHANDUNMULL Vs. BASDEODAS DAGA

JUDGEMENT

(1.) This is an appeal from a judgment of Mr. Justice Greaves, whereby he has refused to set aside an arbitration award. The events which led up to the award in question lie in a narrow compass and may be briefly recited.

(2.) On the 4th August 1918, the plaintiffs-appellants bought from the defendant-respondent 30 bales of dhotis. The defendant himself had purchased the goods from an importer, Lakshmichand Jagannath, under a contract, dated the 29th July 1918. The terms of the contract between the plaintiffs and the defendant were as follows: "We sold the goods as were bought by us of Lakshmichand Jagannath Batta (allowance), chafage, all terms according to Bahar (importing) firms, godown due according to Bazar interest, only hire, according to Bhitor (Bazar)" On the 7th January 1919, the defendant instituted a suit in this Court in respect of 27 out of the 30 bales on the allegation that the plaintiffs had wrongfully refused to accept delivery. On the 11th June 1919, the defendant referred to arbitration by the Bengal Chamber of Commerce a similar dispute in respect of the remaining three bales. On the 29th July 1919 an award wan made in his favour and it was filed on the 12th August, 1919. The plaintiffs thereupon instituted the present proceedings and applied for consolation of the award. Mr. Jastice Greaves has refused the application. On the present appeal the validity of the award has been questioned on two grounds first, that the arbitration clause embodied in the contract between the defendant and the importers was not incorporated into the contract between the plaintiffs and the defendant, and, secondly, that even if the arbitration clause be deemed to have been incorporated, the defendant, by reason of the institution of the suit in respect of 27 bales, was not competent to make a reference to arbitration with regard to the three remaining bales. In our opinion, both these contentions are well founded and the award must be set aside, as made without jurisdiction. 2. As regards the first point, we have to consider the terms of the arbitration clause contained in the contract between the defendant and the importers. The fourth clause of that contract was in these terms: Any dispute or claim under this contract is to be settled by the Bengal Chamber of commerce or, at the option of the seller, by two merchants on the "Bengal Chamber s list, one to be chosen by each party." Now, if we read the contract between the plaintiffs and the defendant, as also the contrast between the defendant and the importers, it is impossible to hold that the arbitration clause contained in the latter has become incorporated in the former by virtue of the expression all terms according to the importing firm." Reliance has been placed by the appellants upon the decision of the House of Lords in the case of Thomas of Co. Limited v. Portsea Steamship Company, Limited (1912) A.C. A.C. 1 : 81 L.J.P. 17 : 105 L.T. 257 : 12 Asp M.C. 23 : 55 S.J. 615, where the decision of the Court of Appeal in Hamilton of Co. v. Mackie & Sons (1886) 5 T.L.R. 677 was approved. In the latter case, a bill of lading contained the words "all other terms and conditions as per Charter-party" and the Charter-party contained an arbitration clause. In an action by the ships owners against the consignees of the cargo and, the endorsees of the bill of lading, the Court refused a stay, on the ground that the arbitration clause in the Charter-party was not incorporated in the bill of lading. Lord Esher, M.R., said that where in a bill of lading there was such a condition as "all other conditions as per Charter party," the conditions of the Charter-party must be read verbatim into the bill of lading, as though they were there in extenso. Then, if it was that any one of the conditions of the Charter-party on being so read, was inconsistent with the bill of lading, they were intensible and mast be disregarded. The arbitration clause referred to disputes arising not under the bill of lading but under the Charter party. The condition was, therefore, insensible and held no application to the dispute which arose under the bill of lading. This view was approved by the House of Lords. Reference, however, was made on behalf of the respondent to the decision of the Court of Appeal in the case of Temperley Steam Shipping Co. v. Smyth and Co. (1905) 2 K.B. 791 : 74 L.J.K.B. 876 : 93 L.T. 471 : 51 W.R. 150 : 10 Com. Cas. 301 : 10 Asp. M.C. 123 : 21 T.L.R. 739. That case, in our opinion, is clearly distinguishable. The arbitration clause in that case, contained in a Charter-party, was held to apply to a dispute as to delay in the unloading of a ship after the completion of the loading, notwithstanding that the Charter-party contained the usual cessor clause, providing that the Charter s liability should cease upon the shipment of the cargo. The bill of lading, however, incorporated all the terms and exceptions," contained in the Charter-party and gave the owner or master a lien on the cargo, inter alia, for demurrage. But the fundamental point in that case was, that the parties to the bill of lading and the Charter-party were the same. In the case before UP, the first contracts is between the defendant and the importers and the second between the defendant and his purchasers. The clause sought to be incorporated clearly refers to a dispute or claim "under this contract," that is, the contract between the defendant and the importers, and if that clause were incorporated into the contract between the plaintiffs and the defendant, the result would be, that, to use the language of Lord Esher, the contract would be insensible. We must hold, accordingly, that the arbitration clause was not incorporated into the contract between the plaintiffs and the defendant, and the reference to arbitration was completely ultra vires.

(3.) As regards the second point, we have to examine the effect of the twelfth clause of the contract between the defendant and the importers, assuming that the clause was incorporated by reference in the contract between the plaintiffs and the defendant. The clause was in these terms: "this agreement is to be deemed and construed as a separate contract in respect of each instalment of goods, and the rights and liabilities of the sellers and buyers respectively shall be the same as though a separate contract had been made out and signed in respect of each instalment." Now, the goods, under the contract between the plaintiffs and the defendant, were to be delivered according to "shipments May and June." Presumably, in the absence of an indication to the contrary Bilasiram Thakurdas v. Ezekiel Abraham Cubbay 33 Ind. Cas. 1 : 43 C. 805 : 23 C.L.J. 62 : 20 C.W.N. 240 the goods were to be delivered in two equal instalments of 15 bales each. Consequently, when the defendant instituted a suit with regard to 27 bales, he must be deemed to have sued in respect of the first instalment and a portion of the second instalment. Now, although the defendant might he at liberty Dinabandhu Jana v. Durga Prasad Jana 51 Ind. Cas. 80 : 46 C. 1041 : 29 C.L.J. 390 : 23 C.W.N. 716 to resile from the arbitration clause (assuming the same to have been incorporated into the contract between himself and the plaintiffs) and to have recourse to a suit in respect of either instalment (treated as the subject-matter of a separate contract), he could not, in respect of one portion of an instalment, institute a suit, and, in respect of the remaining portion of that very instalment, take recourse to arbitration. When he instituted the suit for the 27 bales, he made his election with regard to not only the first, but also the second instalment; he cannot now be permitted to resile from the position deliberately taken up by him and to fall back upon the arbitration clause in respect of the remaining 3 bales. We cannot, in this connection, overlook the significant fact that, in his suit, the defendant has obtained leave under Order II, Rule 2, of the Code of Civil Procedure, reserving his right against his adversaries in respect of these 3 bales, and has asked for liberty to add to his claim for the 27 balls such sum as he may be entitled to recover on account of the 3 hales. In these circumstances, the conclusion is inevitable that he was not competent to make a reference to arbitration, even if the arbitration clause be deemed to have been incorporated in his contract with the plaintiffs.