Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Arbitration-Contract to supply goods between an Indian Firm and a Foreign Firm |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | 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 dispute to a foreign Tribunal-The Indian Firm files a suit in the High Court-Cancellation 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 Exercise 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 the 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 .Association. Disputes having arisen the appellants referred them to arbitration. The respondents thereĀ· upon filed a suit on the Original side of the Calcutta High Court for the cancellation of the contract and for the issue of a perpetual injunction restraining the appellants from taking steps in purported enforcement of the contract. The appellants then filed a petition before the same High Court for the stay of that suit under s. 34 of the Arbitration Act, 1940. This petition was heard by a Single Judge who held that the remedy of the party aggrieved by the manner in which the proceedings are conducted by foreign Tribunal was to contest the proceedings according to the law applicable to the tribunal and that the respondents have not shown sufficient reasons for not granting stay. In appeal under the Letters 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 contract 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 covenant. 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 contract. The court may in such cases refuse its assistance in a proper case when the party seeking it is without sufficient reason resiling from the bargain. It is for the court having regard to all the circumstances to arrive at a conclusion whether sufficient reasons are made out for refusing to grant stay. Whether the circumstances in a given case make out sufficient reasons for refusing to stay a suit is essentially a question of fact.In the present case all the evidence of the parties was in India, and the current restrictions imposed by the Government of India on the availability of foreign exchange, made it impossible for the respondents to carry their witnesses to New York for examination before the arbitrator. The proceeding before the arbitrator would in effect be ex parfe. The High Court was therefore right in its conclusion, on a review of the balance of convenience, that stay should not be granted. |
Judge | Honble Mr. Justice J.C. Shah |
Neutral Citation | 1962 INSC 380 |
Petitioner | Michael Golodetz And Others |
Respondent | Serajuddin & Company |
SCR | [1964] 1 S.C.R. 19 |
Judgement Date | 1962-12-12 |
Case Number | 493 |
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