NARSINGH PRASAD BOOBNA Vs. DHANRAJ MILLS

JUDGEMENT

(1.) Miscellaneous Appeal No. 203 of 1941 is an appeal by the plaintiffs from an order of the learned Subordinate Judge of Patna, dated 3 May 1941, staying the hearing of a suit under Section 19, Arbitration Act (Act 9 of 1899). Civil Revision No. 420 of 1941 has been filed in the alternative praying for the same relief. It will be convenient to dispose of both the appeal and the revision petition in the same judgment. To appreciate the points involved, it will be necessary to set out the facts giving rise to this litigation in some detail. The plaintiffs are members of a joint Hindu family carrying on business in Patna and in various places in Bihar as dealers in cloth and brokers for the sale of cloth. They carry on business under the style and firm name of Manohar Das Bhimraj. The defendant company is a limited liability company having its registered place of business at Bombay and carries on business as cloth manufacturers. By an agreement dated 31 December 1938 the plaintiff firm was appointed guarantee brokers of the defendant company for the sale of cloth at Patna and other places. This agreement was subsequently varied in a manner which is not relevant to this case. In pursuance of this agreement the plaintiff firm entered into various contracts with the defendant company for the purchase of cloth. It is to be observed that these contracts gave the defendant company no option to cancel the contract or to refuse deliveries if the latter did not or could not work night shifts at their mill. On 12 November 1939, it is alleged that a contract was entered into between the parties for the sale of 2001 bales of cloth to the plaintiff firm at fifteen annas per pound. The delivery of the cloth was to take place between the months of January a June, 1940 as and when the cloth was manufactured. This contract, it is alleged, contained an arbitration Clause by which all disputes arising thereunder were to be referred to the decision of a single arbitrator.

(2.) According to the plaintiff firm, this contract was negotiated by their agent at Bombay, one Murlidhar Lathe. According to the usual practice, which, it is said, was well known to the defendant firm, Murlidhar Lathe, before signing the contract, informed the plaintiff firm at Patna by telephone of its main terms. Murlidhar, on receiving the assent of the plaintiffs to the terms of the contract, signed it on 12 November 1939. It is alleged by the plaintiff that on 13th November 1939 a further Clause was added to the contract, which was signed on that day by Murlidhar Lathe. This Clause is in these terms: The contract is made under a clear understanding that the management want to work the mill night shift. If however the management does not work the mill night shift or stop working night shift due to increase in labour charges or whatsoever other reason this contract will be cancelled without claiming any allowance by the buyers. Whatever goods of the contract then ready will be taken delivery by the buyers at contract rate.

(3.) It will be observed that this clause, which, it is said, was added to the original contract, gives the defendants a right to refuse further deliveries if the working of a night shift becomes impossible or difficult or even if the management no longer desired to work a night shift. According to the plaintiff firm, their agent Murlidhar at first refused to add his signature to this clause. It is alleged that he was subsequently persuaded to do so by one Babu Jwala Prasad Singhania, a member of the firm Ramgopal Ganpat Rai, who were the managing agents of the defendant company. According to the plaintiff company, Singhania informed Murlidhar that the managing agents were desirous of working a night shift at the mills and that if such a Clause was added to the contract it would strengthen the hands of the managing agents in inducing the Board of Directors of the defendant company to work such night shifts. Further, it is alleged that it was made clear to Murlidhar that whatever happened the contract would not be cancelled and the defendants would not refuse delivery by reason of any stoppage of the night shift. Believing this representation, it is said that Murlidhar added his signature to the additional clause, and this he did without communicating with the plaintiff firm or taking their consent.