TMI Blog1973 (11) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase from them heavy cement bags and between February, 1969 to August, 1969 they dispatched to the defendants these bags by rail or truck under railway receipts or truck consignment notes, and along with the railway receipts or the truck consignment notes they sent through the Central Bank of India, Darya Ganj, Delhi, relevant invoices and twenty-two bills of exchange, payable 1.20 days after sight, representing the price of the bags supplied and interest for 120 days. The railway receipts and/or truck consignment notes were delivered by the Bank to the defendants, on the latter's acceptance of the said 22 bills of exchange and the defendants on the basis of these receipts and consignment notes took deliveries of the bags. On maturity of the bills they failed to honour them and to make the payments. According to the plaint, the defendants represented that they were in financial difficulties and the amount due from them aggregating to ₹ 31,42,064.30 may be accepted in Installments. They also offered to get the payment of Installments guaranteed by defendant No. 2 and further to secure the amount by pledge of debentures and shares held by defendant No. 2 in Edward Keven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the notice of injunction were duly served on the defendants. On May 22, 1970 the defendants filed a reply to the injunction application (I.A. 630 of 1970) and made a request to the Court that since the written statement had to be filed on July 29, 1970 this application may be taken up after the written statement had been filed. On May 23, 1970 the defendants applied under Order 39 rule 4 read with section 151 for setting aside the ex-parte order of injunction. The plaintiff took notice of this application and the application was adjourned for arguments at first to May 29, 1970 and then to July 29, 1970. On July 28, 1970 defendants filed an application under section 34 stating that the original contract of sale out of which the claim for the amount in suit arose contained an arbitration clause and the suit may, therefore ,be stayed and the matter be referred to the arbitration of Bengal Chambers of Commerce Industry, Calcutta in terms of this arbitration clause. The learned single Judge dismissed this application by the order under appeal. (4) The learned Judge held that the subsequent agreement dated the September 13, 1969 was an independent agreement which did not conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady and willing to give possession of the goods to the buyer in exchange for the price and the buyer should be ready and willing to pay the price in exchange for possession of the goods. In the instant case the parties agreed that the price of the bags would be payable by the defendants on maturity of the twenty-two bills of exchange accepted by them. Delivery and payment of the price had, Therefore, not to be concurrent but by agreement between the parties was postponed to the date of maturity of the bills of exchange. The defendants failed to make payments on these dates. They, Therefore, committed breach of the original contract. Then they came out with fresh proposals to secure plaintiff's forbearance from securing performance of the original contract and recover the price of the bags sold and entered into a fresh arrangement which is incorporated in the agreement dated September 13, 1969. To it was annexed a Schedule headed as Schedule of Payments to be made by Dadri Cement Co. to Bird Co. (Private) Ltd. In implementation of this agreement and on the same date, defendant No. 2 executed a deed of guarantee Exhibit P/7 in favor of the plaintiff holding himself responsibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an obligation arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged, and the satisfaction is the consideration which makes the agreement operative. It is not necessary that the consideration should be executed; the consideration on each side may be an executory promise, the two mutual promises making an agreement enforceable at law. (8) This exposition of law found approval of the Supreme Court in the Union of India v. Kishorilal Gupta and Bros. [1960]1SCR493 . (2). (9) After assenting to the fresh arrangement the position of the plaintiff changed. He could not have filed a suit for recovery of the sale price on the basis of the dishonoured bills of exchange. In fact, the sale price ceased to be the money due under the contract of sale. After execution of Exhibit P/9 it became a debt recoverable by Installments only in terms of this agreement and not independently of it. Right to proceed against the shares and the debentures of defendant No. 2 accrued to the plaintiff by reason of this arrangement and it is in this context that relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India v. Kishori Lal Gupta and Bros. [1960]1SCR493 (4). The respondents in this case entered into three several contracts with the appellant for the fabrication and supply of diverse military stores. Each contract contained an arbitration clause. Before the contracts were fully executed, disputes arose between the parties. The parties entered into three fresh settlement contracts purporting to settle the disputes on the terms contained in these contracts. The respondents failed to carry out the terms of the settlement contracts. In pursuance of the arbitration clauses contained in the original contracts, the appellant referred its claim for breach of the three original contracts to arbitration. The arbitrator made award in respect of the first and the third original contracts, the claim under the second contract having been abandoned. The respondents applied for a declaration that the arbitration clause in the original contracts had ceased to have any effect and the contracts stood finally determined as a result of the settlement contracts and for an order for setting aside the award as void and nullity. One point, amongst others, urged was that in the facts of the case there had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, the subsequent arrangement in this case was not a modification of the original contract of sale but an altogether new contract introducing a new subject matter of the contract, namely, shares and debentures and created new rights and obligations between the parties and secondly because in the facts of this case, we find nothing in the new arrangement to indicate that the parties intended to introduce any arbitration clause. Further, the substituted contract in the cited case was sought to be proved by means of affidavits. The Court observed on page 426, Col. I of the report that the halting and cautious allegation made in the affidavit did not amount to a plea of express agreement of abrogation and supersession of the arbitration agreement. Having regard to the nature of the original contract and the change in the terms, the Court also noticed that the terms of the new arrangement were in no way inconsistent with the continuance of the arbitration agreement. All these considerations are absent in the present case. The cited case, Therefore, does not help the defendants. (16) For all these reasons, we are in agreement with the finding of he learned single Judge that the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 34 of the Arbitration Act. This section in clear terms states that the application for stay should be made before filing the written statement or taking other steps in the suit proceedings. The expression steps in the proceedings connotes the idea of doing something in aid of the progress of the suit or submitting to the jurisdiction of the Court for the purpose of adjudication of the merits of the controversy in the suit. When defendants in this case in reply to the injunction application undertook to detail the circumstances under which the agreements dated 13-9-1969 came to be written , they clearly submitted to the jurisdiction of the Court for the decision of the controversy in suit. In the State of Uttar Pradesh and another v. M/s. Janki Saran Kailash Chandra and another [1974]1SCR31 , the mere taking of an adjournment by counsel for the defendants for filing the written statement was held by the Supreme Court to be taking steps in the proceedings within the meaning of section 34. In Ford's Hotel Co., Ltd. v. Barlett 1895 All ER 1041 a prayer for extension of time for filing the defense upon which 14 days time was granted was held to be a step in the proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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