Decided on May 06,1983

Premier Road Carriers Ltd. Appellant


Pratibha Bannerjee, J. - (1.) In July, 1980, Indian Oil Corporation (hereinafter described to as I.O.C. entered into two contracts with Premier Road Carriers (Hereinafter referred to as the Carrier) for carriage of mobil oil to different destinations and pursuant to the said contracts, I.O.C. entrusted to the carrier I diverse quantities of mobil oil for transport. The carrier submitted its bills but the correctness of the same were disputed by the I.O.C. It is the I.O.Cs case that there were shortages in delivery of the goods and about 546 barrels of goods were contained during transit. It is alleged that on account of the aforesaid facts, the I.O.C. suffered damages to the extent of Rs. 11,81, 364.62 besides other claims against the carrier. The carrier also demanded from the I.O.C. Rs. 4, 55, 868. 75 by letter dated 22. 1.80 through its solicitors on account of transport charges. The carrier was also claiming escalation of rates. The I.O.C. by letter dated 27. 2. 81 demanded payment of damages by the carrier. Thereafter the carrier instituted a suit against the I.O.C. in this Court being Suit No. 204 of 1981 for recovery of Rs 6,73,314. 97 under agreements dated 22. 7. 80, 25. 7. 80 and the standard agreement referred to in the letter dated 22. 2. 79 and for escalation of rates. The agreement between the parties contained arbitration clauses. Under the circumstances, the I.O.C. took out an application under section 34 of the Arbitration Act being Matter No. 806 of 1981 for stay of the Suit No. 204 of 1981 on the ground that the disputes in suit were covered by the arbitration agreements and that the main dispute to be decided in the suit was the issue of alleged contamination of 546 barrels of mobil oil during transit as would clearly appear from the extracts set out below from the petition under section 34 of the Arbitration Act: "The lubricating oils in not less than 546 barrels out of the said goods of the value of not less than Rs. 11,81,364 82 was found to be contaminated during the transit thereof and the petitioner suffered damages" (Vide para 4 of section 3, 4 application). "By its letter dated 27th February, 1981 written to the respondent by the petitioners solicitor the petitioner intimated the respondent of its claim which until then could be ascertained to the extent of only Rs. 6,04,21l 52 in repeat of contamination/adulteration during transit by the respondent and stated that the wrongful claim in the said letter dated January 22, 1980 was being verified" (vide para. 8 of section 34 application).
(2.) The only object of moving the Court under section 34 of the Arbitration Act was to have all the disputes including the dispute regarding contamination/adulteration of 546 barrels of goods tried, by the Arbitrator. In the affidavit-in-opposition filed by the carrier in section 34 proceeding, the carrier denied and disputed the said allegations in the petition and wanted a trial in open Court on the ground that there was an insinuation of fraud against the carrier by the I.O.C. The relevant pleading is set out below:- "The said alleged damages, if any, (which is disputed) still remain ; to be ascertained. By alleging shortage and contamination of the goods the petitioner in effect alleges and/or insinuates fraud as against the respondent warranting trial in open Court. The respondent ; company desires that the said serious allegations should not be tried in a private forum and that too by the Chair mi a of the petitioner or ] his subordinate nominees."
(3.) The said stay application was disposed of on 11.6.8) holding:- "The respondent carried certain quantities of lubricating oil under the agreements between the parties. The petitioner alleges and the respondent denies that out of those goods certain quantities were contaminated during tram it. The respondents further case is that at the instance of the petitioner, C. B. I. has started proceedings relating to the aforesaid allegations made against the respondent and yet the petitioner has not denied it in its affidavit-in-reply. Substantial questions of law are also involved in the suit as pointed out from the plaint by Mr. Gupta. In the premises, it is not a fit ease for exercising the courts discretion under section 34 of the Act. This application is, therefore, dismissed.";

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