K.N.SAIKIA - (1.) THIS appeal by special leave is from the appellate judgment of the Calcutta High court in Appeal No. 75 of 1981 dismissing the appeal and upholding the judgment of the learned Single Judge granting stay of the appellantS suit on the respondentS application under S. 34 of the ARBITRATION AND CONCILIATION ACT, 1940.
(2.) THE appellant as plaintiff has instituted Suit No. 736 of 197 8/09/1978 in the original side of the Calcutta High court against the respondent as first defendant and Canara Bank as second defendant stating in the plaint, inter alia, that the first defendant, was the sole and absolute owner of two fishing trawlers, Ave Maria-I and Ave Maria-11, registered under No. .1567 dated 30/01/1974 and No. 1568 dated 30/01/1974 with the Registrar of Indian Ships, Cochin; that the said trawlers were imported by the first defendant with financial assistance of the second defendant, Canara Bank, under Import Licence No. P/CC/2062299 dated 3/03/1971 issued by or on behalf of the Chief Controller of Imports and Exports, Ministry of Commerce, government of India, New Delhi, that in or about March 1977 the first defendant as owner agreed to charter and the plaintiff as charterer agreed to take on charter for the purpose of deep sea fishing, the said two trawlers on the terms and conditions contained in a "Bare Boat Charter Party" dated 21/03/1977, hereafter called, the agreement, executed at Calcutta, subject to the owner first defendant obtaining the requisite permission in writing from the Chief Controller of Imports and Exports and the no objection certificate of the second defendant for chartering the said trawlers ; that within seven days of receipt of the approval of the Chief Controller of Imports and Exports or no objection certificate from the Canara Bank the first defendant owner will deliver the said trawlers to the plaintiff charterer at the Port of Vishakapatnam for carrying out the inspection of the said trawiers by its authorised agents to ascertain repairs to be carried out to the trawlers for making them fully operational without any defect whatsoever and also to ascertain the cost of such repairs and thereafter the charterer will undertake the repairs at the cost of the owner and bring them to fully operational condition without any defect including all aspects of refrigeration equipment, that the charterer will then conduct fishing trials to ascertain actual condition of the trawlers and in case the condition is fully satisfied according to the charterer, and the owner furnishes to the charterer all documents certifying seaworthiness and also supplies proof of compliance of preconditions, the Charter hiring shall commence on or from the date fishing trials are ended; that the charterer shall pay to the owner Rs. 50,000.00 per trawler per month payable in advance every month and shall continue to pay up to and including the date of redelivery of each trawler to the owner at Vishakapatnam (unless lost/sunk); that he shall keep a deposit of Rupees one lakh per trawler with the owner during the period of the agreement to be adjusted without interest towards the charter hire against the last two months of charter period; that by a Letter No. CG/N-2-143-70-71 dated 18/08/1977 the Chief Controller of Imports and Exports granted permission to the first defendant to charter the said trawlers to the plaintiff on a charter rental of Rs. 50,000.00 per month per trawler for a period of three years; that the owner delivered the said two trawlers for repairs to the plaintiff at Vishakapatnam on or about 30/09/1977 and thereafter on or about 2/02/1978 the parties agreed to modify the agreement in the manner stated in a subsequent written agreement dated 2/02/1978 executed at Calcutta; and that according to the agreement after modification, the charter hire commenced from 15/01/1978 and the charter hire revised to Rs. 6,25,000.00 per trawler per year. The plaintiffS main averments in the plaint are that the permission dated 18/08/1977 granted by the Chief Controller of Imports and Exports to the first defendant for chartering the said trawlers to the plaintiff was given under the said Import Licence to the first defendant and the permission was given subject to two conditions, namely, that the charter rental would be Rs. 50,000.00 per month and that the charter would be for a period of three years but the agreement dated 21/03/1977 was, in fact, for a period of two years with an option to the plaintiff to continue the hire for a further period of three years and as such the agreement was in contravention of and contrary to the terms of the said permission and consequently to the said Import Licence, and hence, illegal, against public policy and void ; that the plaintiff and the first defendant entered into the agreement and its modifications dated 2/02/1978 on the basic, essential and fundamental assumption that the trawlers would be made fully operational and free from all defects by effecting repairs as contemplated thereby but the assumption was mistaken and not true and was subsequently discovered to be so mistaken that it rendered the. agreement with its modifications void; that pursuant to the agreement the plaintiff paid to the first defendant through the second defendant the initial deposit of Rupees two lakhs in respect of the said two trawlers of the charter rent as agreed up to and for the month of July 1978, but in or about early September 1978 the plaintiff having discovered the agreement to have been void and illegal called upon the first defendant to take back or obtain permission of the said trawlers lying at Vishakapatnam at the risk and cost of the first defendant but he failed and neglected to do so; and that the first defendant is bound to pay or make compensation for all the advantages which he had received under the agreement and its modifications and the costs, charges and expenses which the plaintiff has incurred on the said trawlers, being assessed at Rs. 39,64,341.00 as per Schedule 'D' to the plaint. In the alternative it has been averred that in supplying the said trawlers the first defendant committed a fundamental breach of the agreement and its modifications which went to the root and affected the very substance of the same and which made its performance impossible and such a breach on the part of the first defendant has produced a situation fundamentally different from anything which the parties could as reasonable persons have contemplated when the agreement was entered into, and as the plaintiff has not been able to use or obtain any benefit out of the said trawlers, the plaintiff never was nor is bound by the obligation under the agreement and the modification thereof and was entitled to and had duly rescinded the same and the plaintiff had in the premises suffered loss and damages which the first defendant is bound to compensate and such loss and damage is assessed reasonably at Rs. 39,64,341.00 particulars whereof have been given in Schedule 'D' thereof; and that the plaintiff is entitled to recover the said sum of Rs. 39,64,341.00 as money paid to and/or on account of the first defendant and expenses so incurred without any consideration and/or for consideration which has totally failed and/or to the use of the first defendant.
(3.) THE plaintiff accordingly claimed, inter alia, a declaration that the agreement dated 21/03/1977 and the modifications thereof dated 2/02/1978 were, and are illegal, against public policy and void; a decree for Rs. 39,64,341.00 against the first defendant; alternatively an enquiry into the amount due to the plaintiff from the first defendant and decree for a sum found due on such enquiry; in the alternative decree for the same amount as compensation for loss and damage and/or as money paid to or expenses incurred without .my consideration or for consideration which lias totally failed or to the use of the first defendant; and further and other reliefs.;