Puran Mal Bansal vs Rajdhani Oils And Oil Seeds ...
1986 Latest Caselaw 260 Del

JUDGMENT

D.K. Kapur, C.J.

(1) We are concerned in this appeal with an order passed under Section 34 of the Arbitration Act staying the suit brought by the plaintiff-appellant. The suit in question was for the recovery of Rs l,28,750.00 based on a claim that the forward contract entered into between the plaintiff and defendant No. 2 should have been settled at Rs. 106.00 per 40 Kgs instead of Rs. 96.00 per 40 Kgs. The other parties in the suit are the Association, Rajdhau Oils & Oil Seeds Exchange Ltd., defendant No. 1 and defendants 3 to 7 are the Directors of this Association/Exchange. According to the claim in the suit, the contract was entered into in April, 1984 and the due date was 31st May, 1984. On that date, the goods bad to be supplied to the purchaser or the rate (if settlement was to be determined by the Association through its Directors according to the difference in rates. According to the claim of (be plaintiff, the market rate prevailing at other places was Rs. 110.00 per 40 per Kgs. but, due to certain limitation placed on the Association by the Forward Market Commission, the maximum rate which could have been fixed was Rs. 106.00 per 40 Kgs ; instead of filing this rate, the Directors fixed the rate at Rs. 96.00 . According to the claim in suit, this was done fraudulently with a view to deprive the plaintiff and it is alleged that dependants 3 to 7 the Directors of the Association/Exchange, who were connected with the second defendant and were the real sellers.

(2) In short, the claim of the plaintiff is that the deprivation of some of his profit has resulted due to lower fixation of the due rate. The question is whether this matter can be referred to arbitration. There is an arbitration clause in the bye laws and articles of the Association showing that disputes arising out of the contract of members and even contract between members and non-members which are dealt with by the Exchange/Association have to be referred to arbitration. If this suit was limited to the contract between the plaintiff and defendant No. 2, we have no doubt that this suit bad to be stayed but as there is also claim regarding a wrongful act done by the Association or its Directors, we are doubtful whether this matter can be referred to arbitration. There is no actual contract between the plaintiff and defendant No. 1 Association or its Directors, defendants 3 to 7. Of course, if these persons are held to be the real sellers then it may be that there is a hidden contract but on the face of it there appears to be no contract to which the plaintiff is a party and defendant No. 1 and defendants No. 3 to 7 are also parties. The dispute regarding these parties is therefore based on wrongful loss because of the wrongful act which would amount to tortious liability. We are of the view that the matter cannot be referred to arbitration under arbitration clause operating to dealings in the Exchange between members and non-members and members and members. For this reason, we think it is better that this matter should be dealt with by Court particularly in view of the peculiar allegations in the plaint.

(3) We make it clear that the fact that we are not staying the suit by itself does not mean that we accept the plaintiff's case being true but we are merely deciding the case on the basis of the allegations contained in the plaint. The appeal is accepted. The stay order is dischargred. The parties will bear their own costs. The parties may appear before the Deputy Registrar on 4th August, 1986.