KEDARANATH BABULAL Vs. SUMPATRAM DOOGUR

JUDGEMENT

(1.) We are invited in this appeal to consider the propriety of an order made by Mr. Justice Greaves whereby he has refused an application for stay of a suit under Section 19 of the Indian Arbitration Act 1899.

(2.) On the 8th August 1919 if, the appellants agreed to purchase from the respondents 50 bales of Japanese grey shirting and sheeting. The material portion of the contract provided as follows: All conditions according to bazar (that is, importing 6rm), interest, cooly charges, according to the custom of Bazar, the goods being of Japan Cotton Company s Office." It has been argued that this implies the incorporation of an arbitration clause contained in the form of contract used by the Japan Cotton Trading Company. That arbitration clause is in these terms: "Any dispute as to damage, difference, inferiority, short quantity or measure or defeat or amount of allowance to be referred, at seller s option, to the Bengal Chamber of Commerce or two European or Japanese merchants or European or Japanese Assistants in merchantile firms, one to be named by each party; if either party shall fail to nominate an arbitrator within three days after being required to do so, the other party shall be at liberty to appoint both arbitrators or to refer to the Bengal Chamber of Commerce at his discretion."

(3.) It is alleged by the appellants that the goods delivered were not in accordance with the contract and were in fact different and defective goods. They accordingly refused to accept delivery, and, on the 13th January 1919, cancelled the contract. The respondents thereupon proceeded "to resell the goods," although exception was taken to that course by the appellants on the 2nd May 1919. On the 19th May 1919 the appellants referred the matter to the arbitration of the Bengal Chamber of Commerce on the assumption that the arbitration clause contained in the contract form used by the Japanese Cotton Trading Company had become incorporated in the contract between the parties. On the 28th May 1919 the respondents sellers objected to the arbitration as without jurisdiction, and on the 18th July 1919 they instituted a suit on the Original Side of this Court for the enforcement of their claim. On the 30th July 1919 summonses in the suit were served upon the buyers (now appellants), with the result that, on the 7th August 1919 they made an application under Section 19 of the Indian Arbitration Act for stay of the suit. This application recited the correspondence between the parties and concluded with the following prayer: "That all proceedings in the aforesaid Suit No. 1808 of 1919 may be stayed until the said Tribunal of Arbitration of the Bengal Chamber of Commerce makes and publishes the award after proceeding with and completing the said arbitration now pending and that the acts of and incidental to this application may be reserved." This application was beard by Mr. Justice Greaves. He apparently held that, in view of the construction placed by him upon the contract form used by the Japanese Cotton Trading Company in the case of Chandmull Ganeshmull v. Nippon Mankaru Kabusheki Kaisha (Appeal from Order No. 92 of 1919), the application could not be entertained.