- (1.) The facts of the case are as follows : The petitioner entered into a contract No. JG/E/1528 dated 7-6-83 for supply of two lakh yards of hession cloth to respondent No. 1 at the rate of Rs. 167/- per 100 yards on terms and conditions contained in Annexure-'A' to the petition. The petitioner is a jute mill and is a member of the East India Jute and Hessian Exchange Ltd. It is alleged in the petition that it was agreed between the parties that there would be no 'option' in respect of the said contract. It is admitted that the contract contained an arbitration clause and is governed by the provisions of Forward Contract Regulation Act 1952 and the bye-laws of the East India Jute and Hessian Exchange Ltd., Calcutta. The petitioner alleged that the respondent No. 1 accepted the said contract and issued shipping instructions No. L/1871 dated 8-6-83 for delivery of the said goods. This shipping instruction is annexure-'B' to the petition. The petitioner in accordance with the said shipping instruction placed on board the export vessel S.S. Jalarashmi, 100 bales each containing 2000 yards of hessian cloth an 18-6-83 and obtained mate's receipt. Thereafter the petitioner presented its bill No. L/298 dated 6-7-83 along with the mate's receipt for Rs. 3,34,728.34 being the value of the said goods to the respondent No, 1 on 7th July, 8th July, 11th July, 14th July and 15th July 1983 respectively but the respondent No. 1 failed and neglected to pay the same or any portion thereof in spite of demands. The petitioner made a demand by a letter dated 26-7-83. The petitioner further alleged that the said goods were carried by the said vessel and it reached its destination and the respondent No. 1 received delivery of the said goods from the said vessel at the destination by giving indemnity bond and production of the xerox copy of the mate's receipts. It is also alleged that the respondent No. 1 did not submit sales-tax declaration from 'C' and as such the petitioner did not and/or could not furnish any E.1 form. In the premises, the disputes relating to non-payment of the price of the said goods as well as the disputes for non-furnishing of sales-tax declaration form 'C' were referred to the Tribunal of Arbitration of the Bengal Chamber of Commerce on 13-8-84 by the petitioner in terms of the Arbitration Agreement contained in the contract. The respondent No. 1 repeatedly obtained extension of time on the plea of inspection of the documents and for submitting its counterstatement of facts and then actually took inspection of the documents on 12-11-84. The respondent No. I took further two extension on 23-11-84 and 7-12-84 for filing counterstatement of fact but instead of filing the same, the respondent No. 1 through its Advocate-on-record informed the Tribunal of arbitrators about the institution of the suit No. 2288 of 1984 in the City Civil Court at Calcutta against the petitioner and other two defendants. The main prayer in the said plaint was for declaration that the contract No. JG/E 11528 dated 7-6-83 entered into between the parties to this proceeding was illegal and void as it violated the provisions of the Forward Contract Regulation Act of 1952. In prayer (c) of the plaint, the respondent No. 1 as the plaintiff in the suit prayed for a declaration that the purported reference Case No. 74 of 1984 before the Tribunal of Arbitration, Bengal Chamber of Commerce and Industry was void and illegal and/or without jurisdiction. In the said plaint, the respondent No. 1 the plaintiff also prayed for a declaration that out of the sale proceeds due to the petitioner under Contract No. JG/E/11528 dated 7-6-83 and the hill No. 4298 dated 6-7-83 the respondent No. 1 as the plaintiff would be entitled to retain Rs. 86,435.94 with interest thereon at the rate of 19% from 1-7-83 on account of Central Sales-tax which the defendant No. 1 in that suit failed to give credit to the plaintiff. It is significant to note that this alleged claim for adjustment of Central Sales-tax to the extent of Rs. 86,435.94 was made by the plaintiff against all three defendants in the said suit in respect of three different contracts made with them respectively on the allegation that all the defendants belonged to Jardin Henderson Group of Mills. This suit was filed with deficient Court fees and in spite of the suit being placed before the Court for consideration of that said deficiency no order was passed by the City Civil Court regarding same up to the time present petition was moved. The respondent No. 1 as the plaintiff in the said suit in spite of this defect in the suit, served a notice on the Tribunal of Arbitration, the respondent No. 2 herein, who stopped the hearing of the arbitration proceeding as the plaintiff alleged that the said suit covered the entire subject-matter of the reference. The petitioner alleged in the present petition that the respondent No. 1 deliberately instituted the said suit with deficient Court fees with the mala fide motive to stop the hearing of the arbitration proceeding as well as to prevent the petitioner from taking out an application for stay of the suit under Section 34 of the Arbitration Act. No such application could be made due to the fact that the suit was defective.
(2.) The petitioner, under the circumstances, being unable to proceed with the reference or to stay the suit, took out the present application under Sections 28, 31, 32 and 33 of the Arbitration Act for declaration that the arbitration agreement and the reference are valid and the suit is barred under Sec. 32 of the Arbitration Act.
(3.) This application is contested by the respondent No. 1 mainly on the ground that this T.S.D. Contract dated 7-6-83 is illegal.;