Majeti Subbiah and Co. vs Messrs. Tetley and Whitley

Walter Schwabe, C.J.—In this case the dispute arises under a contract as to whether the vendors had broken the contract by failing to

deliver at the proper time, and whether the purchasers were entitled to sue in respect of the alleged breach an I, if so, whether they are entitled to

any and what damages

From the correspondence it would appear that there might be a counter-claim also on the ground that the vendors allege that the purchasers

failed to take and pay for the goods as they were bound to do under the contract. The contract contains an arbitration clause, Article 12, in the

following; terms: ""Should any dispute arise as to the interpretation of this contract or any matter in connection therewith or with the carrying out

thereof, the same shall be submitted to arbitration,"" and it gives the merchants an option as to the form of arbitration. An application was made to

stay the suit pending reference to arbitration under Article 12 of the contract. The learned Judge stayed the action and this is an appeal from that

order.

It is argued before us that the learned Judge bad no power to stay the action, because the claim made, as appears from the plaint, was for

damages for breach of the contract, and it was argued that, under such an arbitration clause, claims for damages for breach of the contract are

excluded. I asked, in the courser of the argument if such claims were excluded, and I received no answer. Authority for the proposition there is

none. Reference to arbitration under similar clauses in respect of breaches of contractus of daily occurrence in England and, as far as my

experience goes, no one ever ventured to suggest to the Court there that there was no power to refer in matters of breach of contract, the read

reason being that it is only in respect of breaches of contract that references arise. There may be questions of interpretation of contract not

involving a breach which would also be covered, but these must be very rare. The ordinary scope of such a clause is that the ordinary commercial

disputes which almost always involve an alleged breach, on one side or the other should be referred to a Tribunal chosen by the parties, namely,

arbitration, instead of going to Court. The learned Judge puts the test in this way: ""The test is whether the claim is made in respect of a contract

which parties declare binding on them or in respect of a matter arising de hors the contract in a cause of action based on its invalidity."" I do not

know where those words come from, but I thinks they are quoted from some leading author it and, at any rate, in my judgment, correctly state the

position in law. If the case is on a matter arising out of the contract, the most usual instance of that being case of breach of contract like the present,

there is no doubt whatever that there is power in the Court to refer to arbitration. It is true that in certain cases the Court will not exercise that

power. Those are cases where, either by reason of the fact that there are charges of fraud, or by reason of the Court coming to the conclusion that

in arbitration complete justice cannot be obtained between the parties, or for some other proper cause that the matter should be kept in Court than

be referred to arbitration, the Court can decline to stay the action. There is nothing of that sort in this case, and, in ray judgment, the learned Judge

was perfect correct in staying this action. This appeal must be dismissed with costs.

Ramesam, J.

I agree. Wallis v. Hirsch (1857) 1 C.B.316 : 26 L.J.C.P. 72 : 140 E.R. 131 : 28 L.T. 159 : 107 R.R. 677 is a case in which a question of fraud

was raised and the learned Judges refused to exercise their discretion in referring the case to arbitration and staying all proceedings Nobel Brothers

Petroleum Production Co. v. P. Stewart & Co. (1890) 6 T.L.R. 378 does not help the appellant, as the facts are rather peculiar. But, apart from

this, the case seems to be one of doubtful authority and very near the line. The decision in Piercy v. Young (1880) 14 Ch. D. 200 : 42 L.T. 710 :

28 W.R. 84 states the principle correctly and it is clear that the appellant has no case.