MICHAEL GOLODETZ AND OTHERS v. SERAJUDDIN & COMPANY
Citation: [1964] 1 S.C.R. 19; 1962 INSC 380
Court: Supreme Court of India
Bench: P.B. GAJENDRAGADKAR , K.N. WANCHOO, K.C. DAS GUPTA, J.C. SHAH
Judgment date:
Case summary
1962 INSC 380. Supreme Court of India judgment dated 1962-12-12. MICHAEL GOLODETZ AND OTHERS v. SERAJUDDIN & COMPANY. Read the judgment and case details on...
Judgment text
1 S. C. R. SUPREME COURT REPORTS 19 MICHAEL GOLODETZ AND OTHERS v. SERAJUDDIN & COMPANY (P. B. GAJENDRAGADKAR, K. N. WANCHOO, K. C. DAS GUPTA and J. C. SHAH, JJ. ) Arbitration-Contract to supply goods between an Indian Firm and a Foreign Firm-Arbitration clause to refer disputes to a foreign Tribunal-The foreign Firm refers the dispu. te to a foreign Tribunal-The Indian Firm files a suit in the High Court-Cancellati·m of the Contract-Injunction to restrain the other party from proceeding with arbitration-Petition in the High Court to stay suit-power of court to entertain the Suit- Exercist of discretion-Arbitration Act, 1940 (X of 1940) s. 34. The appellants are a firm carrying on business in the United States of America. The respondents are an Indian Firm. These two firms entered into a contract in writing by which t. 1e appellant agreed to buy certain goods from the respondents.
An arbitration clause in the contract provided that disputes arising out of the contract are to be settled by arbitration in New York according to the rules of the American Arbitration ~. le to the tribunal and that the respondents have not shown sufficient reasons for not granting stay. In appeal under the Leite'• Patent the order was set aside and the appellants appealed with special leave. The main question before this Court was whether the Court of first instance has or has not exercised its discretion properly in granting stay. Held, that a clause in~ a commercial contract between merchants residing in different countries to go to arbitration is an integral part of the contract on the faith of which the cont; ract is entered into, hut that docs not preclude the court having territorial jurisdiction from entertaining a suit at the instance of one of the parties to the contract even in breach of the cove• nant.
The court ordinarily requires the parties to resort for resolving disputes arising under a contract to the tribunal contemplated by them at the time of the cnntract. The court may in such cases refuse its assistance in a proper crue when the party seeking it i• without sufficient reason resiling from the bargain. It is for the court having regard to all the circum· stances to arrive at a conclusion whether sufficient reasons are made out for refusing to grant stay. Whether the circumstan· ces in a ! {iven case make out sufficient reasr,ns for refu~ing to ~tay a suit is es:. tntially a qu~tion of fa-:. t. In the present ca. rc right in its conclusion, on a review of the b~lance of convenience, that stay should not be granted. Cn·1L APPELI. An: jURI8IJICTION : Civil Appeal No. 493 of l! l60. Appeal by special leave from the judgment and order dated April 29, 1959, of the Calcutta High Court in Appeal from Original Order No. 177 of 1958. S. T. Desai, D. N. :llnH1erjee and B. N. Ghosh.
for the appellants. C. K. D1iphtary, Solicitor Grnernl of lndicl, 8. K. Kapur and P. C. Ch«tte1jee, for the respondent. 1962. December 12. The Judgment of the Court was delivered by SnAH,J . -The appellants are a firm carrying on business as importers in the name and style of ". M. Golodetz & Company" at 120, Wall Street, New York in the United States of America. The respondents are a firm carrying on business, among others as exporters of manganese ore and their principal office of business is at Bentinck Street in the town of Calcutta. By a contract in writing dated July 5, 1955 the respondents agreed to sell and the appellants agreed to buy 25,000 tons of manganese ore on the terms and conditions set out therein. The contract contained the following arbitration clause : "Arbitration : Any dispute arising out of the contract is to be settled by arbitration in New York according to the rules of the American Arbitration Association. " B. etween September 19,j6 and August 11!
57 the respondents supplied 54 78 tons oi manganese ore. Disputes havmg arisen between the parties about the liability of the respondents to ship the balance of the goods not delivered, the appellants referred them on· or about January 15, 1958 to the arbitration of the American Arbitration Association and claimed compensation on the plea that the respondents had unlawfully made default in shipping the balance of the goods agreed to be sold. On February 2, 1958 the respondents commenced an action on the original side of the High Court of Calcutta claiming a decree that the written contract dated July 5, l! J55 be adjudged void and delivered up and cancelled, that a perpetual injunction be issued restraining the appellants, their servants and agents from taking steps in purported enforcement of the said contract and that a declaration (if necessary) be made that the said contract stands discharged and that the parties have no rights and obligations thereunder.
It was the case of the respondents that the appellants had accepted manganese ore shipped till August 1957 in full satisfaction of their liability and that the contract was discharged and the rights and liabilities of the parties thereunder came to an end. In the alternative the respondents pleaded that the appellants had repudiated the contract or had commi· tted breaches thereof and on that account also the contract stood discharged or had become void or voidable at their option and that they had avoided the same. In the further alternative they pleaded that the contract had become impossible of further performance and that the same stood frustrated or discharged and they were exempted from further performance thereof. The appellants thereupon petitioned the High Court of Calcutta for an order that the proceedings in suit Xo. 194 of 1958 commen· ced by the respondents be stayed by an order under s. 34 of. the Arbitration Act X of !! HO.
and that an injunction be issued restraining the respondents, their agents and servants from proceeding with the hearing of the suit. Ray, J, who heard the petition held that to the agreement to submit the disputes to arbitration to a foreign arbitral body s. 34 of the Indian Arbitration Act, I ! J.! 0, applied that the remedy of the party aggrieved by the manner in which the proceedings are conducted, or by the award was to contest the arbitrati ~Ue, and the denial is not sworn on matters within the personal knowledge of the deponent, it is a somewhat singular circumstance, that Sanyal who swore the affidavit relied upon, did not when he swore an affidavit in support of the petition for certificate under Art. 133 of the Consti-tution before the High Court, make any such assertion. Hut on the view expressed by us, we deem it advisable not to express any opinion on the question as to the law applicable to the contract.
It will be for the Court trying the suit to deal witl1 that question, and to dt'cidc the suit. ' The appeal therefore fails and is dismissed with costs. Appeal diamiued.
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