Law: Arbitration Act, 1940

Section: 34,37(2)

(a) Arbitration Act (X of 1940)----- -------Ss. 34, 37 (2)-Arbitra­tion clause in contract-Arbitration not necessarily condition precedent to action in Court-Jurisdiction of Civil Court not ousted by such clause-Stay of suit not applied for before filing written statement-Effect. The plaint in a suit based on a contract-one of the terms of which contract was that "in matters of dispute the case shall be referred to the Superintending Engineer of the Circle whose order shall be final"-was returned by the trial Court holding that in view of the arbitration clause the Court had no jurisdiction to hear the suit. The order returning the plaint was upheld in appeal. Held (on revision by the High Court), that in accordance with section 37 (2), Arbitration Act (X of 1940), a cause of action had accrued to the plaintiff: and it could not be said that the Court had no jurisdiction over the suit. In the circumstances of the case the suit could not be stayed under section 34 of the Act inasmuch as the defendant had not asked for stay of the suit at any stage of the proceedings. The trial Court must therefore proceed to decide the suit on merits. Arthur Andrew Cipriani v. Macdonald Burnett A I R 1933 P C 91 Scott v. Avery (1856) 5 H. L. 811 Collins v. Locke 1879 (4) A C 674, Woodall v. Peal Assurance Company Limited 1919 (1) K B 593 and Freshwater v. Western Australian Assurance Company Limited (1933) 1 K B 515 examined. The arbitration clause in a contract is not necessarily a condition precedent to the institution of a suit and the relevant clause in the contract in dispute was not such a condition. Roper v. Lendon (1859) 1 E & E 825; Brown v. Overbury (1856) 11 Ex. 715 ref. The word "final" in the expression "whose order shall be final" in condition No. 5 of the contract cannot be said to point necessarily' to the conclusion that the condition was intended by the parties to operate as a condition precedent. There was no reason for holding that by agreeing to refer their disputes under the contract to the arbitration of the Superintending Engineer, the parties intended that reference to arbitration was to be a condition precedent for seeking redress in a Court of law…

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