- (1.) THIS is an appeal against an order by which S. K. Datta J. refused to stay an action under section 34 of the Arbitration Act.
(2.) ON January 7, 1960, the appellant union of India, accepted a tender submitted by the respondent No. 1 for transporting, loading and unloading goods at or around Katihar. Under the contract, the respondent No. 1 was liable to make good any compensation, demurrage or other charges or expenses that might be incurred by the appellant on account of delays in loading or unloading of trucks and wagons unless the delay was for reasons beyond his control. The decision of the Officer-in-charge, Government of India Godowns, in that respect was to be final and binding on the contractor. Moreover, under the contract, the appellant had the right to reimburse itself from the security deposit for any damage or loss suffered or incurred by the appellant owing to the negligence or unworkmanlike performance of any of the services or breach of any of the terms of the contract on the part of the respondent no. 1. The contract contained an arbitration clause, the material portion of which provided as follows : - "all disputes and differences arising out of or in any way touching or concerning this agreement whatsoever, shall be referred to the sole arbitration of any person nominated by Secretary of the Ministry of the Government of india administratively dealing with the contract at the time of such nomination or if there be no Secretary, the administrative head of such Ministry at the time of such nomination. It will be no objection to any such appointment that the person appointed is a Government servant, that he does deal with the matters to which the agreement relates, and that in the course of his duties as such Government servant he had expressed views on all or any of the matters in dispute or difference. The award of such arbitrator shall be final and binding on the parties to this agreement. It is also a term of this agreement that no person other than person nominated by the Secretary or administrative head of the Ministry as aforesaid should act as Arbitrator and, if for any reason, that is not possible, the matter is not to be referred to arbitration at all. Subject as aforesaid, the Arbitration act, 1940 shall apply to the arbitration proceedings under this clause. " On June 1, 1965, the respondent no. 1 brought an action against the appellant and the respondent No. 2 one J. S. Narayana, Regional Director (Food), for recovery of Rs. 6,671. 92 P. payable under 22 bills in respect of works done under the contract and for refund of security deposit of Rs. 3,003/ -. In the plaint the respondent No. 1 contended that the monies due under those bills as also the security deposit became payable under the contract. Alternatively, the respondent No. 1 claimed that he lawfully paid to the appellant the security deposit and did the work covered by the bills not intending to do so gratuitously and the appellant enjoyed the benefit thereof. In the premises, he claimed that the appellant is bound to compensate him in respect of these monies.
(3.) IT is also pleaded that should it be held that the contract is not enforceable against the appellant the agreement was entered into between the respondent No. 1 and the respondent no. 2 and the respondent No. 1 executed the work at the request of the respondent no. 2. The respondent No. 1 is entitled to claim refund of the security deposit and the value of the bills from the respondent No. 2.;