SARDARMULL JESSRAJ Vs. AGAR CHAND MAHATA AND CO

JUDGEMENT

(1.) In this case the plaintiffs ask for an interlocutory injunction to restrain further proceedings before an Arbitration Tribunal under a commercial contract for the sale of goods. The plaintiffs deny that the alleged written contrast was ever signed by them or on their behalf. The defendants put forward a document and they allege that that document was the document of. the plaintiffs, and in this case as in may others I find there is no possibility of my deciding even provisionally with any certainty as to which of these parties are in the right. Under these circumstances I have to consider whether it is right that an interlocutory injunction should go to restrain the arbitration until this question has been determined. This is a question which has arisen before, but I have not had occasion to decide it before, and I think it desirable that the matter should be decided, so far as I am concerned, for the benefit of future oases that may arise.

(2.) Now it is to be determined according to the principles which this Court has inherited as part of its inherent jurisdiction from the old Court of Chancery, The special Indian legislation about interlocutory injunctions is contained in the Civil Procedure Code and as regards perpetual injunctions, it is contained in the Specific Relief Act; but I cannot find that there is anything in either of these statutory enactments to assist me as regards this matter. I certainly do not find any power in them which would enable me to grant this injunction, and I have to resort to equitable principles.

(3.) When one looks at the English oases one finds that they are somewhat burdened by matters with which I am not concerned, namely, by the question whether Section 25 of the Judicature Act has not extended the rights of the Courts in England to grant an injunction where, previous to that Act, the Court of Chancery could not have granted one at all. Cleared of this difficulty the position in my view stands thus. It is quite clear on the authority of Kitts v. Moore (1895) 1 Q.B. 253 : 64 L.J. Ch. 152 : 12 R. 43 : 71 L.T. 676 : 43 W.R. 84 that where an agreement has been made and where one or other of the parties to that agreement seeks to impeach it upon equitable grounds such as fraud, mistake or surprise, seeks either to have it set aside on equitable grounds or to have it rectified, in these oases the Court will and should restrain the arbitration proceedings until the question of the contract out of which they arise has been determined by the Court. Previous cases are somewhat instructive on this point. There is a care of Maunsell v. Midland G.W. By. (1863) 1 H. & M. 130 : 32 L.J.Ch. 513 : 8 L.T. 826 : 9 Jur. (N.S.) : 660 : 11 W.R. 768 : 71 E.R. 58 : 136 R.R. 54. That was a case where two companies entered into an agreement containing an arbitration clause. The plaintiff was a share-holder in one of the companies and he brought his action on behalf of himself and all the other share holders to have it declared that the agreement was ultra vires of the Director of his own company, and in that case it was decided that the arbitration proceedings should be restrained until that matter had bean determined. Again in the case of Mylne v. Dickinson (1815) G. Cooper 195 : 35 E.R. 528 14 R.R. 243 it was sought to rescind the contract and a suit was brought in equity upon that footing: in the meantime the arbitration under that contrast was restrained. The basis of those decisions is that if the Court of Equity did not interfere there would be a contract which was good in law and that an arbitration held under that contract would be an arbitration to which the parties would have no answer, if it had resulted in an award, when an action at law was brought. In that state of the law undoubtedly it was an embarrassment to a parson who had an equitable right to set aside or rectify the contract that the arbitration should be allowed without that question being determined.