TMI Blog1959 (1) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... Any dispute arising out of this contract shall be settled by a court of arbitration which is to be made up as follows: One member to be appointed by the Buyer. One member to be appointed by the Seller. One member to be appointed by the first two members. Failing such mutual agreement as to the third member, he shall then be appointed by the-International Chamber of Commerce in Paris. The Seat of the arbitration shall be according to mutual' agreement. Failing such agreement the Seat of the arbitration shall be in Zurich, Switzerland . 2. Only 3,500 tons of ore were shipped during the period January to April, 1957, leaving a balance of 6,500 tons unshipped. The buyer had difficulty in procuring shipping space for the balance goods. The seller repeatedly complained that it might not be allowed to ship any iron ore after June, 1957, having regard to the changing policy of the Government of India, There were exchange of cablegrams between the buyer and the seller in May, June and July, 1957. The buyer requested the seller to load the ore by the vessel Commerz and contended that notice of readiness of the vessel was given to the seller on July 11, 1957. The seller contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll demurrage accrued subsequent to 25-7-1957; (3) the seller would be responsible for obtaining from the Reserve Bank of India the necessary permission under Foreign Exchange Control Regulations to implement its obligations under the guarantee; (4) the buyer would pay the demurrage for the period 11-7-1957 up to 24-7-1957 both days inclusive subject to reimbursement by the seller, in the event of the matter being referred to arbitration in terms of the provisions in that behalf contained in the contract and the legal liability of the buyer to pay such demurrage not being established in any such arbitration proceedings. The seller instituted the suit on 12-8-1957 impleading as defendants both the buyer and its local representative Swetozar Babie. Paragraphs 1 and 2 of the plaint plead the contract dated 20-11-1956. In paragraph 3 the seller mentions the supply of 3588 tons of iron ore and claims a sum of ₹ 9,666-5-2-being the 5 per cent balance of the price and a further sum of ₹ 9,066-11-2 being the proportionate despatch money. In paragraphs 4 and 5 the seller claims that the buyer committed breaches of the contract and failed to procure the shipping space for the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequently proof of a subsequent agreement to rescind the arbitration agreement is barred by proviso (4) to Section 92 of the Indian Evidence Act. I am unable to accept Mr. Ginwalla's contention. I am of the opinion that an arbitration agreement is not by law required to be in writing. It is true that the Indian Arbitration Act does not, for the purposes of that Act, recognise an arbitration agreement unless it is in writing. But for purposes other than the purposes of the Indian Arbitration Act, our law still recognises an arbitration agreement which is not in writing. It is therefore necessary to examine Mr. Deb's contention that the arbitration agreement has been abrogated and superseded by an express oral agreement on 6-8-1957. 4. The seller's version of the arrangement of 6-8-1957 has varied from time to time. In its letter of 8-8-1957, the seller nowhere alleged that the arrangement of 6-8-1957 was a substituted new agreement and that the contract dated 20-11-1956 was abrogated or superseded. Subsequently to paragraphs 6 and 8 of the plaint the seller alleged that the contract dated 20-11-1956 in so far as it concerned the balance of 6500 tons of iron ore was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us that there was no such oral agreement, and we decide that issue against the appellant. The assertion that there was no oral rescission of the arbitration agreement on 6-8-1957 is an afterthought. We do not consider it necessary that the matter should be tried on oral evidence. In an application under Section 34 of the Indian Arbitration Act the Court has the power to decide such an issue on affidavit. This power should be exercised sparingly and with caution. In the exercise of our discretion we are satisfied that the power should be exercised in this case. 5. In paragraph 10 of the affidavit of Tribeni Prosad it was boldly alleged that the whole of the contract on 20-11-1956 including the arbitration agreement was given a complete go-by, In his argument before us Mr. Deb, however, conceded that the contract dated 20-11-1956 including the. arbitration agreement so far as it related to 3588 tons of iron ore was not rescinded. His case before us was that the contract dated 20-11-1956 including the arbitration agreement therein was abrogated and superseded only in respect of the balance 6500 tons of iron ore. 6. Plainly the claim in paragraph 3 and prayer (b) of the plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that plea has already been negatived. I have already decided that the arbitration agreement has not been rescinded. I may add that in an application under Section 34 of the Indian Arbitration Act the Court may in the exercise of its discretion decide an issue as to the continued existence of the arbitration agreement although such decision may indirectly involve a decision on an issue in the suit itself as to the continued existence of the parent contract: see Anderson Wright Ltd. v. Moran and Co. [1955]1SCR862 . 7. In support of his contention Mr. Deb relied upon Turnock v. Sartoris (1889) 43 Ch. D. 150 and Ramdas Dwarkadas v. Orient Pictures. In (1889) 43 Ch. D 150 there was a lease with an arbitration clause. Subsequently, another agreement in writing was entered into between the parties without any arbitration clauses. The existence and the validity of the subsequent agreement was not disputed but disputes arose between the parties as to their rights under both the lease and the subsequent agreement. The lessee having filed a suit in respect of these disputes, the lessor applied for stay of the suit. The court held that the arbitration clause referred to questions arising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er a contract of sale containing an arbitration clause is extended by a subsequent agreement, the disputes between the parties arising out of the modified contract may be referred to arbitration under the arbitration clause in the parent contract. In Uttam Chand Saligram v. Jewa Mamooji ILR Gal 534 : (AIR 1920 Cal 143), Rankin, J. decided that where the original contract for sale of goods is followed by a settlement contract whereby the buyer sells back the goods to the seller and the claim by the buyer for the consequential money difference is disputed by the seller the dispute arises out of the contract and it is open to the buyer to found his claim upon the submission contained in the original contract. 8. Mr. Deb argued that even assuming that the arbitration clause in the original contract has not been rescinded the dispute whether there was a subsequent arrangement in substitution of the original contract is not covered by the arbitration clause. I am unable to accept this contention. In Balabux Agarwala v. Luchminarain Jute Mfg. Co. Ltd 51 CWM 863 Das, J. held that a dispute whether there is a valid contract in settlement of the original contract is a dispute arising out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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