Brij Mohan Lall, J. - (1.) THIS is an appeal by the plaintiff against an order passed by the learned Civil Judge of Moradabad staying, under Section 34, Arbitration Act, (10 of 1940), a suit instituted by him against the Union of India.
(2.) THE appellant is a joint Hindu family firm carrying on the business of contractors. It entered into a contract to supply large quantities of stone boulders and stone chips to the East Indian Railway at railway station Kansrao. Some differences arose between the appellant and the railway authorities. Certain letters were exchanged between them, but they served only to widen the gulf between the two. Eventually, the railway authorities cancelled the contract, removed the appellant's name from the list of approved contractors and circulated that decision to all the Station Masters with the result that the appellant became debarred from securing any contract from the railway administration in future. THEreupon, it instituted the suit which has given rise to this appeal to recover a sum of Rs. 3,787-5-3 as damages for breach of contract and a further sum of Rs. 1.00,000-0-0 as compensation for libel. Its contention was that the railway authorities had acted maliciously with a view to harm its reputation and their conduct in circulating their decision to "blacklist" the appellant amounted to a libel. This part of the appellant's case may best be slated by reproducing a portion of para 12 of the plaint. It runs as follows : "Further the removal of the name of the plaintiff firm from the list of approved contractors and blacklisting them was also made deliberately to put the plaintiff to disgrace, cause loss to them in the matter of their existing contracts, damage their professional career, injure their reputation as contractors and harass them in carrying out the running contracts with the railway department. With that end in view, the fact of the plaintiff firm having been blacklisted and removed from the list of approved contractors was circulated and published amongst other parties to bring the plaintiff into contempt and create hatred against them with the intention of ruining plaintiff's business and career as contractors." Before filing the written statement the respondent moved the learned Civil Judge to stay the proceedings under Section 34, Arbitration Act. It is common ground between the parties that para 65 of the publication entitled ''The Specifications, Instructions and General Conditions of Contract" is applicable to the present case. This para runs as follows : "In the event of any question or dispute arising under these conditions or in connection with the contract (except as to any matter the decision of which is specially provided for by these conditions) the same shall be referred to the award of an arbitrator who shall be ....." It was contended by the respondent before the Civil Judge, and the same contention is reiterated before us, that this clause barred the trial of the suit by the learned Civil Judge. The appellant concedes that the portion of the claim relating to the recovery of a sum of Rs. 3,787-5-3 on account of the breach of contract is covered by this agreement. But it is contended that the claim for recovery of Rs. 1,00,000-0-0 as compensation for libel does not fall within the four corners of this agreement.
(3.) THE language of para 65 quoted above makes it clear beyond doubt that a resort to arbitration is to be made only in the event of a dispute arising "under these conditions, or in connection with the contract." This means that if the parties are at variance as to the interpretation of any conditions of the contract, or one party asserts that any condition of the contract has been violated and the other denies it, or a demand is made by one party for getting some thing done under the terms of the contract which the other party considers to be outside the scope of the contract, the dispute has to be referred to arbitration. It is only matters relating to contract or the breach thereof that are to be referred to arbitration. It was never the intention of the parties that if one of them committed a tort giving rise to claim for compensation in favour of the other the dispute about the tortious act of the guilty party would also be referred to arbitration. Parties never contemplated that a claim for defamation brought by one party was to be referred to arbitration instead of being tried by a Court of law. THE whole tenor of the agreement indicates that the parties were at pains to provide for the due fulfilment of contract and were anxious to have such disputes settled through arbitration. A claim for compensation for defamation, such as has been brought by the appellant, is totally different, from the question of performance of contract of delivery of stone boulders and stone chips. It is totally immaterial for the decision of the claim for defamation as to whether the appellant was guilty of breach of contract to supply the aforesaid commodities, or whether the railway authorities prevented the appellant firm from performing his part of the contract. THE claim under tort brought by the appellant is totally distinct from the contractual disputes arising between the parties.;