DAMODAR VALLEY CORPORATION Vs. K K KAR

JUDGEMENT

(1.) ON an application under Sections 9 (b) and 33 of the Arbitration Act 10 of 1940 - hereinafter called 'the Act' - challenging the propriety of a reference to the arbitration of the sole arbitrator, the Subordinate Judge, Alipore permitted the appellant to adduce evidence to establish whether the contract was put an end to by final payment, and if it was whether the arbitration clause contained in the contract will perish with it Against this order the respondent filed a revision in the High Court of Calcutta which while setting aside the order of the Subordinate Judge dismissed the application filed by the appellant. This appeal is by certificate against that decision.

(2.) IN order to appreciate the significance of the question which has to be determined a few relevant facts may be stated. The respondent entered into a contract with the appellant to supply, certain quantities of coal at certain price but as he failed to do so in accordance with the terms of the contract, the appellant repudiated the contract, imposed certain penalties in accordance with the terms of the contract which he later waived and ultimately paid certain sums to the respondent which were due to him for the supply of coal. It is the case of the appellant that these payments including the return of the deposit amount finally settled the claims of the respondent. No doubt the respondent was asked to submit his bill along with a receipt stating that he received the payment in full and final settlement of all payments and that there was no other claim. But the respondent while submitting his bill did not give the receipt as desired. The amount of the bill was, however, paid, after receipt of which the respondent claimed further sums from the appellant including damages for repudiation of the contract. When the appellant did not agree to comply with the demands the respondent served a notice of his intention to refer the matter to the arbitration under the arbitration clause contained in the contract. By that notice he intimated the appellant that he has appointed J. N. Mullick as his arbitrator and requested the appellant to appoint its own arbitrator. The appellant did not agree to it, whereupon the respondent by a further notice intimated the appellant that the arbitrator nominated by him would be the sole arbitrator for adjudicating the dispute between the parties. Soon thereafter the sole arbitrator J. N. Mullick issued a notice to the appellant and consequently the appellant had to file an application under Section 9 (b) and 33 of the Act challenging the validity of the appointment of the sole arbitrator. IN paragraph 16 of the petition the appellant stated :

(3.) ON these facts of the short question for determination is : where one of the parties refers a dispute or disputes to arbitration and the other party takes a plea that there was a final settlement of all claims, is the Court, on an application under Ss. 9(b) and 33 of the Act, entitled to enquire into the truth and validity of the averment as to whether there was or was not a final settlement on the ground that if that was proved, it would bar a reference to the arbitration inasmuch as the arbitration clause itself would perish.